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Bankruptcy Do's and Dont's
You will feel better
after talking with us
PRE-BANKRUPTCY DO'S AND DON'TS

If the wolves are circling, but you aren't sure that you will have to file bankruptcy,
there are some Do's and Don'ts which may protect some of your property if you do
eventually have to file.

*        Do continue making payments on vehicles which you intend to keep.  Creditors
secured by a car or truck can usually repossess the vehicle without notice to you
anytime you are in default in your payments.  It will ordinarily take longer for other
creditors (including those secured by other property) to act on a debt that is in default.
Note: If your car has been repossessed but not yet sold, you may be able to get it back
if you file Chapter 13 immediately.

*        Don't borrow from or withdraw 401k, IRA, and ERISA qualified savings and
retirement plans to pay bills.  Early withdrawal of these funds makes you liable for
penalties and taxes which may not be discharged in bankruptcy.  ERISA and 401K
funds are exempt from creditors in bankruptcy, as are IRA funds in Tennessee (except
deposits made within 6 months before filing) and many other states.  If you don't use
these funds, you are very likely to have them to draw on after bankruptcy.

*        Don't borrow money on your home to pay unsecured (i.e. credit card, utility or
medical) bills.   If you take out a second mortgage on your home, you may be
converting debt which would have been discharged in bankruptcy into debt which you
will still have to pay in order to keep your home.  These additional payments could be
high enough to cause you to lose your home.

*        Do give "friendly" creditors a security interest in non-exempt property.  If you
have to borrow money from a friend or relative you could give that creditor a security
interest in the property which you own. For example, if you have a car which is not
exempt and you are borrowing money from a relative, he or she could take a security
interest in the car for the loan.  This will reduce your equity in the car, and the
likelihood that the trustee will take the car.  It will also protect your relative by insuring
that they will be paid from the proceeds if the trustee does take the car since he must
pay off creditors secured by property which he takes.
Caution: The loan must be a legitimate transaction (you must actually receive the
money), and the security interest must be granted at the time the loan is made. You
cannot give a security interest for a previous loan. Giving a security interest for an
existing loan could be a transfer of a property interest in fraud of other creditors which
could result in a denial of your discharge. All laws and formalities regarding secured
transactions must be followed, such as placing the creditor's name on the title for
loans secured by vehicles and the recording of a deed of trust for loans secured by real
property.

*        Don't pay $600 or more back to relatives or business associates who have lent
you money.  Payment of a total of $600 or more to an "insider" (which includes
relatives and business associates) within one year before you file bankruptcy is a
"preference." The trustee may recover preferences from the person that was paid and
divide the money between all of your creditors. (Payment of $600 or more to any
other creditor within 90 days before the case is filed is also a preference.)

*        Don't put property you own into someone else's name to avoid it being taken by
creditors or the trustee. That kind of transfer is a fraud on creditors and can result in
your discharge being denied.  In addition, the trustee can take the property from the
person to whom it was transferred.

*        Do reduce the amount withheld from your pay for taxes. If you expect to get a
tax refund, reduce your withholding so that you do not get refund. Federal and state
tax refunds are routinely taken in Chapter 7, and may effect plan payments in Chapter
13.
Caution: Don't reduce the withholding for tax so much that you will have a big tax bill
to pay!

POST-FILING BANKRUPTCY DOS AND DON'TS

CHAPTER 7

If I have already filed a Chapter 7 Bankruptcy for you there are some important DOs
and Don'ts which come into play during the pendency of your case.

*        Do continue making payments on vehicles which you intend to keep.  Creditors
secured by a car or truck can usually repossess the vehicle without notice to you
anytime you are in default in your payments.  It will ordinarily take longer for other
creditors (including those secured by other property) to act on a debt that is in default.
Note: If your car has been repossessed but not yet sold, you may be able to get it back
if you file Chapter 13 immediately.

*        Don't Sell or Transfer or give away any Assets you have without contacting me
first.  The filing of your Chapter 7 Bankruptcy petition creates a Bankruptcy Estate
which temporarily comes under the control of the Trustee who is assigned to your
particular case.  The Trustee's job is to Liquidate (sell and reduce to cash) any
property that is not exempt under State or Federal Law.  Typically, few Chapter 7's
that I file have any assets that are liquidated, and usually if there are likely to be assets
in a case, I will have informed you of any potential Trustee liquidation before filing.  
Nevertheless, DO NOT sell, give away, transfer title, settle any personal injury
lawsuits or otherwise dispose of any of your property while your Chapter 7
Bankruptcy is pending.

*        Don't be concerned if a few Creditors still attempt to Contact you or send you
bills or collection letters after filing.   99% of your creditors will stop harassing phone
calls or threatening letters shortly after the filing of your bankruptcy.  By operation of
law, immediately upon the filing of your bankruptcy petition, the "Automatic Stay"
goes into effect.  This stay prevents all of your creditors from taking any action to
attempt to collect a debt.  This includes calling you by phone at home or at work,
sending collection letters, starting or continuing lawsuits against you, garnishing
wages, repossessing vehicles or other security and foreclosing on your home.  
Occasionally, a creditor will still call or send a letter after the Notice of
Commencement of Bankruptcy case has gone out in the mail. If this happens to you,
simply send a copy of this Notice to the creditor who is still contacting you or tell
them to call my office to verify the filing of your case.

*        Do call my office when you get your Notice of Meeting of Creditors (this is
your Chapter 7 Court Hearing date and you MUST ATTEND.  DOCUMENTATION
REQUIRED AT .341 HEARING PURSUANT TO LOCAL BANKRUPTCY RULE
2003-2. Be sure to bring the following items to your hearing with you, neatly organized
for the Trustee.  Arrive 1/2 hour early and be prepared.

DOCUMENTATION REQUIRED AT .341 HEARING PURSUANT TO LOCAL
BANKRUPTCY RULE 2003-2

1.   DRIVER LICENSE OR STATE I.D.

2.   SOCIAL SECURITY CARD  (or something with SS# on it)

3.   PROOF OF INSURANCE for all vehicles.  This includes boats, mobile homes,  
motorcycles.  

4. BE SURE TO BRING BALANCE ON ATTORNEY FEE OR ANY REMAINING
COURT FILING FEE.

FAILURE TO BRING ANY OF ABOVE WILL RESULT IN ADDITIONAL COURT
APPEARANCES, DELAY IN OBTAINING DISCHARGE OF YOUR DEBTS, OR
COMPLETE DISMISSAL OF YOUR CASE!!!!!

*        Don't pay $600 or more back to relatives or business associates who have lent
you money.  Payment of a total of $600 or more to an "insider" (which includes
relatives and business associates) within one year before you file bankruptcy is a
"preference." The trustee may recover preferences from the person that was paid and
divide the money between all of your creditors. (Payment of $600 or more to any
other creditor within 90 days before the case is filed is also a preference.)  

*        Don't put property you own into someone else's name to avoid it being taken by
creditors or the trustee. That kind of transfer is a fraud on creditors and can result in
your discharge being denied.  In addition, the trustee can take the property from the
person to whom it was transferred.

*        Do give my Name, website address and phone number to any friends or family
members.  A referral from a happy client is the best compliment I can get!!  Tell them
to call for a free start-up packet by calling 1-800-706-7863 toll free or visit my website
at nashville-bankruptcy.com or e-mail me at alanalder@nashville-bankruptcy.com.