Attorney Jon Ginter
Eight Ways to Ruin Your Bankruptcy, and Maybe Your Life
If you file bankruptcy but don't follow the court's rules, it's going to make your life worse, not better. If you want your bankruptcy to crash and burn and your life to be ruined, do everything on the list below.
1. Spend your tax refund even though it belongs to the federal government. If you declare bankruptcy and have a tax refund coming to you, that tax refund isn't necessarily yours. Part of it might belong to the government, and if you spend it you're spending the government's money. If you spend the government's money and can't pay it back, the court will deny your bankruptcy discharge. This means that not only will your debts not be wiped out, but they will become permanent. You will not be able to wipe these debts out by filing another bankruptcy.
2. Don't pay your court filing fee. The court charges you a $306 filing fee that is above and beyond what your attorney is charging you. You can either pay this fee up front to your attorney or you can pay it directly to the court in installments after your case is filed. However, paying in installments is a dangerous thing to do because if you do not pay according to the court's schedule then the court will dismiss your case. The court is loaning you money at zero percent interest to try to help you but it isn't going to be happy if you don't pay on time.
3. Don't take the mandatory second credit counseling course. Prior to filing bankruptcy, everyone must take a credit counseling course to help them understand the situation they are in and how to develop better financial habits in the future. However, there is a SECOND credit counseling course that you have to take after that in order for your bankruptcy to go through. The deadline for completing this course is 45 days AFTER the mandatory bankruptcy hearing. The mandatory bankruptcy hearing occurs 1-2 months after your case is filed.
4. Lie. From time to time potential clients ask me to help them lie to the court, and I always say no. I do that for three reasons. First, it's wrong. Second, it's illegal. Third, it's stupid. If you get caught lying under oath you could end up in prison or have your bankruptcy discharge denied so that your debts become permanent. You will not be able to eliminate these debts by just filing bankruptcy again.
5. Hide assets. Sometimes people try to conceal a house, car or other piece of property from the court because they are afraid that they will lose it in the bankruptcy process. What these people don't realize is that the bankruptcy court has been playing this game a lot longer than they have, and has seen just about every trick in the book. If you think you can outsmart the bankruptcy court, you're wrong, and if you lie to the court, you're risking prison (see #3, above).
6. Give all your stuff away right before you file bankruptcy. Giving stuff away or selling it for substantially less than it is worth just prior to bankruptcy is referred to as a "fraudulent transfer." In other words, it is a transfer that was not sincere and was just motivated by the fact that you were about to file bankruptcy. The court can undo fraudulent transfers and can impose other penalties, such as denying your discharge to make your debs permanent. You will not be able to eliminate these debts by just filing bankruptcy again.
7. Pay friends or family members money that you owe to them right before you file bankruptcy. When you owe multiple people money, the court doesn't view it as fair when you pay off some of them and not others right before filing bankruptcy. It's favoritism. If you pay your Uncle Joey $2,000 that you owe him in the year prior to filing bankruptcy, the court is probably going to sue Uncle Joey to get that money back so it can be distributed fairly between all of your creditors.
8. Don't answer questions or produce the documents the court asks for. When you declare bankruptcy you are basically giving the court permission to know everything there is to know about you and see any document or other paper you might have. If the court asks you a question you pretty much need to answer it and if the court asks you for a document you pretty much need to give up that document. If you do not cooperate with the court's requests for information the court will probably deny your bankruptcy discharge, meaning your debts become permanent. You will not be able to wipe out these debts just by filing bankruptcy again.