Common Mistakes to Avoid in Chapter 7 Bankruptcy: Insights for Maryland ResidentsOctober 7, 2023
You can get a fresh start if you can emerge from the Chapter 7 bankruptcy process. What you do during the bankruptcy process can dictate your chances of success. You must avoid all mistakes because they could deny you a debt discharge. Even worse, you could get in trouble. Here are some mistakes during the bankruptcy process that you need to avoid. When in doubt, you should always consult with an experienced attorney.
Not Disclosing All of Your Assets
You are legally obligated to tell the truth when you disclose your assets as part of the bankruptcy process. The bankruptcy trustee may take or sell your assets to satisfy your debt. The failure to disclose assets can even be a criminal defense if done willfully and knowingly. The bankruptcy can also be reopened if the hidden assets were discovered after the process was completed.
Transferring Assets to Family or Friends
The bankruptcy trustee will look at your finances before and during bankruptcy. They will scrutinize your accounts to see if you fraudulently transferred assets to friends or family before or during bankruptcy. A fraudulent conveyance can be made within two years of bankruptcy when you transfer property with little or no consideration. If you are found to have made a fraudulent transfer, the property can be brought back into the bankruptcy estate, or you could be assessed a monetary penalty equivalent to the amount that was transferred.
Running Up Debts Right Before Bankruptcy
If you intend to file for bankruptcy, you must be careful not to run up debts on your existing accounts or even open new ones. The debt discharge in Chapter 7 comes at the expense of your creditors. The bankruptcy court would view it as fundamentally unfair if you were discharged from debts you incurred before bankruptcy. While you may still qualify for Chapter 7 bankruptcy, these debts may not be discharged. Thus, you may still emerge from bankruptcy with something hanging over your head.
Failing to Understand What the Bankruptcy Trustee Does
The court will appoint a trustee in your Chapter 7 bankruptcy case. The trustee’s job is to bring assets into the estate and sell or distribute them to pay creditors. The trustee has a say in whether your bankruptcy petition is successful. If you are not meeting your obligations, the trustee may ask the court to dismiss your case. It is critical that you take whatever they say extremely seriously. They have the power to recommend to the court whether your case can go forward.
Trying to Go Through Bankruptcy Without a Lawyer
Making common errors can jeopardize your bankruptcy. An experienced attorney can guide you through the process to inform you of your legal obligations and help you with the paperwork. Your lawyer could make a technical and challenging process go more smoothly. If you try to handle bankruptcy, you may not even know you are making a mistake until it is too late. The failure to know the law is not a defense if you are accused of wrongdoing.
Contact a Baltimore Chapter 7 Bankruptcy Attorney at LeViness, Tolzman & Hamilton Today
For legal help with the process, contact a Baltimore Chapter 7 bankruptcy attorney at LeViness, Tolzman & Hamilton. We can guide you so you can avoid some of these common errors. Call us at 800-547-4LAW (4529) or contact us online to schedule a free initial consultation.
We have offices in Baltimore, Glen Burnie, Lanham, and Owings Mills, allowing us to represent clients in Maryland, including those in Anne Arundel County, Baltimore County, Carroll County, Harford County, Howard County, Montgomery County, Maryland’s Western Counties, Prince George’s County, Queen Anne’s County, Southern Maryland, and the Eastern Shore, as well as the communities of Catonsville, Essex, Halethorpe, Middle River, Rosedale, Gwynn Oak, Brooklandville, Dundalk, Pikesville, Nottingham, Windsor Mill, Lutherville, Timonium, Sparrows Point, Ridgewood, and Elkridge.