The months and days leading up to a bankruptcy filing can make or break your financial future, and possibly stop you from being able to file for bankruptcy. The following six (6) mistakes must be avoided if you are thinking of filing bankruptcy:
Retirement Accounts
Borrowing against or cashing in your retirement accounts to try to solve your debt problem is usually not a good idea. In Nevada, debtors are allowed to keep up to $500,000 per individual during a bankruptcy. By cashing out these accounts you run the risk that these funds will be treated as a non-exempt asset. As such, these funds will not be protected in bankruptcy and you might be forced to turnover these funds to the Trustee. Therefore, before removing any funds from a retirement account, you should speak with a bankruptcy attorney. An attorney can help you determine if, in your circumstances, these funds may be used to avoid bankruptcy or if moving them would be a costly mistake.
Home Equity
Much like your retirement accounts, raiding the equity in your home to service your debts can be a costly mistake. Nevada allows debtors to retain $550,000 in equity in their home when they file a bankruptcy. Borrowing this equity can make it more difficult to stay in your home if you eventually need to file a bankruptcy. Speak with an attorney to determine if the equity in your house is sufficient to avoid bankruptcy or if it should remain in your home.
Incurring Additional Debt
Do not go into additional debt if you are seriously considering bankruptcy as an option. Racking up additional debt when you know you cannot repay and have no intention of ever repaying the debt is considered fraudulent. If you find yourself considering payday loans or high interest title loans to buy groceries, pay the energy bill, or put gas in your car, it is probably time to speak with a bankruptcy attorney about your options.
Ignoring Your Problems
When debts begin to pile up, there is a temptation to bury your head in the sand and hope the problem goes away. Waiting to deal with your problems can cause you irreversible financial harm. In addition, you are not helping yourself by dodging people trying to serve you with papers. Creditors only need to attempt to serve you. The only thing you have accomplished by not receiving service is that you will not know what court proceedings have been filed against you.
Paying Back Relatives or Business Partners
Do not repay a relative, friend, or business partner before filing bankruptcy. The bankruptcy court can make your relative or business partner repay to your bankruptcy estate anything you have paid them for up to a year. If you have any question on whether or not to pay a creditor, contact a bankruptcy lawyer.
Trying to Beat the System
Do not transfer any assets out of your name prior to filing bankruptcy without consulting an attorney. Unless the transfer is in the ordinary course of business and for fair market value, you run the risk of the transfer being found fraudulent. Do not keep any information from your attorney. Federal bankruptcy crimes are committed by people trying to keep the court from knowing about debts, assets, or transfers and can result in a loss of a discharge and, in some case, fines and prison time.
Randy M. Creighton, Esq.
Nevada is a first-in-time recording state, which means that the lien recorded on real property first has priority over subsequently recorded liens. Huntington v. Mila, Inc. 119 Nev 355, 357, 75 P.3d 354, 356 (2003). However, there are exceptions to this rule. In cases of equitable subordination, a lien recorded first in time can be subordinated to a later-recorded lien. The issue usually arises when there are several liens on a property and the purchaser fails to identify a junior lien holder. In certain circumstances, the court will allow the purchaser or subrogee to step into the shoes of the superior lien holder. The rationale behind equitable subordination is that, to do otherwise gives the junior lien holder an undeserved windfall. Houston v. Bank of Ma. Fed. Sav. Bank, 119 Nev, 485, 490 (2003).
The federal government provided new Home Affordable Modification Program (HAMP) outreach and communication guidelines for foreclosure actions while evaluating the borrower. These guidelines provide additional protection for delinquent borrowers who have filed bankruptcy but would otherwise be eligible for HAMP benefits. Some key highlights from the directive include:
Nevada Supreme Court Justice James W. Hardesty announced that more than 3,400 homeowners who received notices of default have requested mediation in the Nevada Foreclosure Mediation Program as they seek to hold on to their homes. Since the program first began on July 1, 2009, 372 mediations have been conducted and another 805 mediations have been scheduled. An additional 1,401 cases have been assigned to mediators, who are working to schedule and hold those mediations within 90 days of the notices of default being recorded. Justice Hardesty announced that the statistics are current as of November 16, 2009
The pundits are suggesting that the economic recovery will be far slower than they had originally anticipated. Despite the slug of government money and programs, the consumer is the chief factor in determining how deep and how long this recession will be. Despite moderately good news on the stock market and employment sector, consumers remain cautious and are choosing to pare down debt and save rather than extend credit and spend. This is a gloomy picture considering that consumer consumption accounts for roughly seventy percent (70%) of the GDP.
