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Things to Consider Before Filing Chapter 7 Bankruptcy

When people think about bankruptcy, they often refer to Chapter 7 personal bankruptcy. This type of bankruptcy can cancel most if not all your debts, but in exchange you may have to give up some of your assets.

When planning to file for bankruptcy under Chapter 7, there are some things that you should bear in mind as they will help you be in an even better position after the filing.

In your bankruptcy petition, you are expected to declare to the court all of the pertinent details about your financial affairs. You must be honest in your filing to avoid bankruptcy fraud issues.

If you want to keep a nonexempt asset, it is possible to do it in a legitimate manner. You may be able to trade your nonexempt property with an exempt asset. Nevertheless, whether the trustee will allow such a swap depends on the value of a property and ease of converting it to cash. The trustee may refuse to exchange an exempt property with a nonexempt property that is tough to sell. Another option is to buy the property back from the trustee. You may also be able to negotiate a lower price.

You probably need or want to sell some of your possessions before you considered filing for bankruptcy. For example, you might want to sell an old car, or some pieces of equipment to pay your bills. Selling things might cause some problems when you file for bankruptcy. If you sell something improperly, particularly something with substantial value, then the bankruptcy trustee can reverse the transaction. Sometimes they even use such a sale as grounds to deny you your debt discharge. Hence, it is very important that you sell a property for reasonably equivalent value. You can hire an appraiser or check the blue book values to know the fair price of a property.

Filing bankruptcy under Chapter 7 can discharge nearly all unsecured debts. It may be reasonable to stop making payments on those debts that are likely to be discharged under Chapter 7. In addition, this prevents preferential payments or preferences. It is also a good idea to stop paying on a secured loan if you have little equity in his property. The property will not be sold by the trustee because the lien holders will have to be paid first, which will leave only a little for the unsecured creditors.

Do not change the form of ownership to fend off creditors. This mainly applies to a property in a tenancy by the entirety state. Given that all tenancy by entirety properties are exempted in bankruptcy, you may be lured to convert your type of property ownership into tenancy by entirety. The court is going to reverse a property ownership conversion.

To know more about prebankruptcy planning, and things to avoid before bankruptcy, consult a Bankruptcy lawyer San Antonio. An experienced attorney will be able to help you file your bankruptcy case properly.

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