“If Only I’d Gone to See My Bankruptcy Attorney Sooner . . . “

Those are the words I hate to hear from a new client.

Bankruptcy attorneys are in the business because we want to help people. It’s an emotionally tough area of law, dealing all the time with clients who are financially hurting. Usually my clients are also hurting in other ways that are related to the cause of their financial problems—illness, injury, divorce, a decline in business, or a job loss. What makes my day is to give great news to a client, that they will now get relief from their debts, or that there is a feasible plan to save their home, or to deal with their child support arrearage or their income tax debt.

The information I share with clients is what they are unaware of before they contact me and it is what they need to know. There may be tough choices to make. I am here to arm you with the law and to guide you through the process.

But the most frustrating situations for both me and my clients are when we find out that they have self-inflicted wounds. These wounds are the easily-preventable-but-now-it’s-too-late bad decisions they’ve made, often just a few months or weeks earlier, without getting legal advice beforehand.

Here’s are some of the most common issues:

1) Preferences:  If you pay a creditor any significant amount before filing a bankrutpcy—especially a relative you hope not to involve in that bankruptcy—the bankruptcy trustee may well be able to force that relative, through a lawsuit if necessary, to pay to the trustee whatever amount you paid to that relative.  The trustee can then turn around and pay that money to your creditors.

2) Squandering exempt assets:  Many clients tell me that they have borrowed against or cashed in retirement funds in a desperate effort to pay their debts, using precious assets that would have been completely protected in the bankruptcy case they later file.  Unfortunately, these clients use their retirement money to pay debts that would have been discharged in their bankruptcy.

3) Rushing to sell a home:  Bankruptcy provides some extraordinary tools for dealing with debts that have attached as liens against your home, such as judgments and 2nd mortgages. If you hurriedly sell your home to avoid involving it in your bankruptcy case, or for some other reason, you could lose out on opportunities to save tens of thousands of dollars.

As you look at this list, notice that the legally and financially wrong choice is often what seems to be 1) the morally right one, and 2) the common-sense one. Doing what seems right and sensible can really backfire. But nothing takes the place of legal advice about your own unique situation from an experienced attorney. Avoid ever having to say “if only I had gone in sooner.”

Jennifer N. Weil, Esq. offers free bankruptcy consultations by telephone – please call (201) 676-0722.

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