Eligibility for Bankruptcy Differs from Advisability

14 Oct Eligibility for Bankruptcy Differs from Advisability

There is a lot more in the decision to file bankruptcy than just whether the individual is eligible under the means test for a particular chapter. Bankruptcy not only deals with the debtor’s assets and debts, but also possible short term increases in assets by inheritance, and the impact of the trustee’s avoiding powers.

I moderate the bankruptcy discussion board at lawyers.com and I know that some in the internet readership chafe when I am unwilling to take a couple of sentences volunteered by a poster and recommend which chapter of bankruptcy they should file. I’m sure my advice to “see an experienced bankruptcy lawyer ” is seen as simply promoting lawyers as the exclusive source of bankruptcy information.

I’ve written about the dangers of relying on lay research on law on the internet. But the point was hammered home for me this week when I looked through the 25 page questionnaire a client had filled out so that I could prepare a Chapter 7 filing. The client, bless his heart, had taken the questionnaire seriously and filled in (at least most of) the blanks.

Sitting on the page was a note about a multi thousand dollar payment to a relative made within the last year. Had a bankruptcy been filed without considering the preference, a bankruptcy trustee was certain to have sued the relative to recover the money paid by the debtor.

That’s the kind of information that posters on internet answer sites don’t provide in their two paragraph questions about whether they should file. It’s a bombshell after a case is filed to find that you’ve set up your relatives for a lawsuit.

A good bankruptcy lawyer wants an armload of information from you so he/she can determine not only whether you are eligible for bankruptcy, but whether it is a good idea looking at all of the facts.

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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