Bankruptcy Planning – What You Should Know About Transfers
Posted: Wednesday, November 25, 2009
by Dave Clark
Bankruptcy Strategies U.S.
Most people shudder at the thought of filing bankruptcy. An emotional response is natural, yet it also may cause unnecessary delay. Over a short time, procrastination limits options, wastes payments, and causes asset loss. You could easily prevent these poor results by reviewing your options early using a common sense approach.
The best plans exploit the advantages of numerous financial tactics before filing and may avoid filing bankruptcy altogether. If filing later becomes necessary, a well thought out plan also maintains all Chapter 7 and Chapter 13 rights and maximizes benefits. Timing is the key to success.
The term bankruptcy planning is relative. From the perspective of debtors, a well thought out plan treads a fine line between permissible and prohibited transfers. Creditors frequently disagree. They allege violations and seek asset seizures. In most cases, the timing of a transfer determines if it complies with the law. The way transfers are completed also determine if they are allowed. The best strategies begin more than a year in advance. Exemptions are used creatively, and priority debts are minimized or paid completely. General unsecured debts are compromised, settled or ignored. Net worth improves dramatically.
Qualifying for a Chapter 7 discharge is harder today than during any time in the history of our nation. The most difficult hurdle is contained in the means test. The means test became law in 2005 at the insistence of major financial institutions. Oddly, this new law became effective just as the reckless and abusive lending practices of financial institutions created the worst economic downturn in 80 years. Many people do not believe in coincidence. In this case, when the real estate bubble broke and homeowners suffered, Chapter 7 was no longer available for many people.
The means test is calculated over the last six full months before filing bankruptcy. It measures the difference in income and specifically allowed expenses. In simple terms, if you earned too much, you cannot file Chapter 7. You also have a wide range of options to influence test results. With six months to plan, most people who file Chapter 13 could qualify for Chapter 7, if only making a few small lifestyle changes.
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Top-level comments on this article: (2 total)I think you have written some good info here but planning to fail? I am glad that by the grace of God we are debt free and hope we can stay that way - even with it looking like my hubby's job of 14 years is playing out. I just notices that you ride your bicycle in the Rockey Mountains - my hubby is out hiking right now and I would be but cooking is calling me - best get to the kitchen! Marijo (Mary Jo is the pronunciation)Thanks for you kind thoughts. An old saw once said to a hammer, "Prepare for the worst and expect the best." Adding valuable options guarantees you will always be lucky despite the odds. I love my 10 year old bicycle. The gears are still smooth and they carry me up steep grades. I hope you and your family have a great day.I hear you and that's how I feel about our 10 year old truck and the 6 year old one (Toyotas just do not quit!)
Hi Dave. Thank you for sharing this to us. There is a lot of information here. Well done. ~Nenita~Thanks Nenita, you are the cool and smart chic I wish I met 20 years ago.Thanks for the kind words, and for the compliment.
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