Bankruptcy Planning? Who plans to file bankruptcy!
Not many, at least not until it looks like the only option.
How about Bankruptcy Planning as a contingency, just
in case things do not work out like you expect?
You do not want to end up at the building in the picture, bankruptcy court.
But if there is a chance you might, shouldn’t you be ready?
Most Americans Are One Paycheck Away From The Street
Quentin Fottrell wrote on the Market Watch site:
Approximately 63% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to a survey released Wednesday of 1,000 adults by personal finance website Bankrate.com, up slightly from 62% last year. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (23%), borrowing from family and/or friends (15%) or using credit cards to bridge the gap (15%).
Now, how many of these folks do you think are planning for a POSSIBLE bankruptcy?
Right, not many.
Filing bankruptcy is, and should be, a last resort.
But there are many things that you can do wrong before filing.
Do Not Transfer Property
This includes vehicles. So many of my clients think that they can just give that car away or transfer a bank account or stock or even real estate, and then file bankruptcy and tell the court, hey! I’m broke!
I always say, if that worked, Bill Gates could give everything to a friend and then file bankruptcy.
Transferring stuff when you are insolvent, a fancy legal term for broke, does not work. In the bankruptcy court, the trustee can sue whoever you gave the stuff to and get it back for the benefit of your creditors.
And, possibly file papers to deny your discharge in bankruptcy.
Another reason to talk to an expert BEFORE you do something.
It is a lot easier for my to give you good advice ahead of time, than try to clean up something that you thought was a good idea, but just gets others in trouble.
More on this next week.