What are the Pitfalls of Chapter 7 Bankruptcy?

Chapter 7 has some pitfalls. That is why you should always hire an attorney to guide you through the law. If you don’t then you may lose assets and money that would far exceed the cost of a good attorney. A good Bankruptcy Attorney should be able to prevent your assets from being taken by the Trustee by placing the correct State and Constitutional exemptions on your assets.  If the value of the assets exceeds the amount you can exemption then a buy back is always a good option. If the buyback is too high then you may have to do a chapter 13 bankruptcy to protect the assets.

Most of the Pitfalls of Chapter 7 Bankruptcy are associated with your Chapter 7 Trustee. The Trustee is the person who is going to try and take assets from you.  The assets will be sold to pay your debts. Assets that are generally at issue are paid of vehicles with equity above $3,000.00 or more, the next year’s tax refund, money in bank accounts, CD, investment accounts that are not considered retirement accounts, children’s bank accounts with your name attached, cars that you have given away or transferred in the last year or two, payments made to family or friends for money they loaned you and gifts.  These are just a few of the main issues that chapter 7 debtors run into after they file. When you file for bankruptcy you have to fill out a petition and schedules. In these schedules you are require to answer questions. These questions relate to all the issues and assets listed above. If you don’t answer the questions truthfully and the trustee finds out then you could be prosecuted criminally and lose your discharge. That’s why it’s important to answer the questions truthfully so that your attorney can address these issue or assets before you file. In most cases if you tell your attorney about all your assets he or she can find a way to protect them or discus your options with regards to a buyback or chapter 13 bankruptcy.  How will the trustee know that you have these bank accounts with you children or transferred vehicles to a friend? The Trustee will require you to provide them with bank statements, the trustee will do back ground checks and asset check with the DMV.  So tell the truth and you will get through the case.