Pre Bankruptcy Thoughts

The bankruptcy court ultimately is a court of fairness to all involved.   If you are considering filing bankruptcy, here are some situations most people don’t consider or realize are unfair.  In fact, in the examples below, most people would feel these recommendations would not be following Spike Lee’s suggestion:  

Paying off a friend or an family member money borrowed 

     Paying back a friend, relative, or even your grandmother who lent you money is considered a “preference”.   Anyone whom you borrow money from is a “creditor” and paying back that person too close to filing your bankruptcy may result in the bankruptcy court demanding that person give that money back.   

Giving away or returning property you were holding for someone 

    -Your brother asked you to co-sign for a car loan and your name is on the title as co-owner.   Even though you, your brother and entire family know this is your brother’s car, LEGALLY and under the bankruptcy laws, you are a co-owner of this car.  If you were to “give” your interest to your brother, you are in fact giving away your property before filing bankruptcy.   Your bankruptcy lawyer can explain the consequences of this further.   

Forgetting about a lawsuit 

    -You were in a fender-bender last week and hired a lawyer.   You’re told that you will get a settlement, but it may take several months or a year to get the full amount you deserve.   Even though the proceeds of the future settlement are not in your pocket or bank account or even on the horizon, the right to this payment is still a possible asset in your bankruptcy.   Please remember to discuss this with your bankruptcy lawyer in full detail.    

AUTHOR: ERIC SOLLERS, STAFF ATTORNEY FOR CENTER FOR ARKANSAS LEGAL SERVICES