Filing Personal Bankruptcy – Honesty Is the Best Policy

Hearing the old adage “honesty is the best policy” can’t be more true when it comes to filing bankruptcy. When an individual files for personal bankruptcy they need to remember to be totally honest with the bankruptcy court. If the bankruptcy trustee finds any discrepancies in the schedules along with improper valuations of property, they can charge the debtor with fraud. The debtor should always give full disclosure to their bankruptcy attorney of their property and their finances and let the attorney decide how the bankruptcy petition should be filled out. When filing personal bankruptcy, you never know who your friends are. Many times, creditors, neighbors and sometimes even friends and family members will call the court to disclose hidden property. The bankruptcy attorney needs enough information to defend the debtor, just in case there is any accusation.

After making the decision to file Chapter 7, it is important to go over your work schedule with your bankruptcy attorney. Some individuals that have been working a lot of overtime might have a problem qualifying under the means test. This is something for the debtor to discuss with their bankruptcy attorney and not do it on their own. Quitting an extra job or suddenly stopping the overtime work might sound like a good solution, but the bankruptcy trustee just might not see it in the same light. In most cases, bankruptcy attorneys believe it is not required for a debtor to work overtime just to make ends meet. After discussing this with a bankruptcy attorney, the debtor should be able to stop working all the additional hours. With the debtor’s income reduced, the attorney should be able to re-evaluate the bankruptcy schedules to qualify the individual with the means test. Depending on how much extra income the individual is earning it might be necessary delay the filing up till six months. The decision to quit working so many hours can have many consequences for the debtor. This puts the debtor in a tough situation with a choice of working an exorbitant amount of hours to try and dig out of a financial hole, or risk not being able to file bankruptcy.

Another income involved problem when filing bankruptcy is the way that the court views income. Any finances given or loaned to an individual in the six months prior to filing bankruptcy, is considered income. Most people don’t understand this and attorneys battle with it constantly. An example of this is an individual is on unemployment making $2000 a month. This not being enough to live on, they decide to take money out of their pension to the sum of $20,000. Thinking their pension is protected and the court cannot take this money would be incorrect. Looking at the timeframe when the money was taken out, if it falls in the six-month look back period is considered income. So now you could say that this individual made $32,000 in the past six months or $5400 a month. Depending on what state you’re in this might disqualify you to file for

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