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Articles Posted in Myths

On April 22, a formerly wealthy South Florida doctor and his wife were each sentenced to over a year in federal prison after pleading guilty to bankruptcy fraud for concealing assets from the trustee in a Chapter 7 bankruptcy they filed back in 2008. According to a local news article, the couple’s 2008 bankruptcy filing was ultimately rejected because the bankruptcy judge found that they were being dishonest when bankruptcy officials paid a surprise home visit and witnessed the doctor’s wife try and hide an expensive Rolex watch. The couple later admitted to concealing assets, and investigators were never able to find about $120,000 in jewelry that went missing during the bankruptcy filing.

behind-bars-76714-mAuthorities Take Bankruptcy Fraud Seriously

Although the couple’s request to discharge their debts was rejected by the bankruptcy court, and their creditors were able to force the sale of nearly all of their assets, federal prosecutors felt they needed to be further punished. The prosecutors and bankruptcy trustee wanted the couple to be criminally punished for their dishonesty, and they were charged with bankruptcy fraud.

Bankruptcy fraud usually takes one of four forms. As in the Florida case, an individual can be convicted of bankruptcy fraud when they knowingly or intentionally hide assets from the trustee or court after filing for bankruptcy in order to avoid forfeiting property. Other types of bankruptcy fraud occur when an individual files false or incomplete forms, files multiple times using false information, or files multiple times in different states. Based on their attempt to conceal assets, the Florida couple pleaded guilty to bankruptcy fraud in December 2014, and they were sentenced this month.

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On television, credit cards seem so convenient and consequence-free — just use your card and get “points, “rewards” or “perks.”

But what these commercials don’t tell the consumer is that along with the perks, rewards or points system are hidden fees and high interest rates that can escalate on a sliding scale through no fault of the consumer. Built-in rate hikes can add as much as 25 percent to the purchase price without the cardholder knowing it.
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It’s lending practices like these that make credit card companies so much money. It’s why they can afford lavish marketing budgets and high-profile actors and celebrities trying to sell consumers on their cards. But it’s also why people throughout the state and nation are struggling with credit card debt. These practices have driven many to seek shelter in Louisville bankruptcy laws.

Louisville bankruptcy lawyers have helped countless consumers who are unemployed, downtrodden and looking for answers and help. Bankruptcy laws were created with the consumer in mind. They allow people to discharge mounds of debt that are hounding them and give them a brighter future without creditors calling constantly.

A recent column looks at the nine myths of credit card usage and how to bust them:

Good credit requires a credit card
A credit score isn’t built on how much a credit card is used alone. Credit histories take into consideration a lot of spending behaviors, including whether loans are repaid on time.

Credit card debt should be carried
Some people believe this and borrow well beyond their means, which can cause major problems. When fees and interest builds after falling behind on payments, people may not be able to pay it, driving down their credit score.

Paying the minimum will pay off debt
Sure, after you’ve ended up paying many times more for your purchases than the sticker price. At the rate that the interest is multiplied and carried out against consumers, it can take years and sometimes decades for everything to be paid off. Thousands of dollars in debt can turn into tens of thousands or hundreds of thousands of dollars after interest and fees are applied.

Creditors can’t repossess items bought with an unsecured card
A default on a credit card can be devastating to your credit score, whether you keep the defaulted possessions or not
Credit card accounts that are inactive should be closed
Not necessarily. If you believe you can’t resist the urge to use an active line of credit, then maybe. But if you can keep a line of credit open with a zero balance, it shows you don’t rush to use the credit you have.

It’s OK to go over the credit limit as long as it’s paid before the due date
This can hurt your credit score, cost you fees and increase that card’s interest rate.

Even if I overuse my credit card, it will die with me
Not true. Credit card companies can go after survivors and the assets you leave behind to get their money back. Your spouse, if he or she survives you and shares a credit card, will be saddled with the debt.

I wouldn’t get so many credit card offers if I couldn’t afford it
Credit card companies send out offers to just about anyone — even dead people and children. Don’t feel so special. Their plan is to get as many people signed up for their cards as possible and likely only do a cursory look at your credit score before sending you mail.

Bankruptcy is the only option if my credit card debt is massive
There are many solutions to high credit card debt, though Louisville bankruptcy may be your best option. Just beware of credit counselors and other programs that may not end up helping you in the long run.

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Transferring Property Before Filing Bankruptcy is Usually a Bad Idea

One of the many myths about bankruptcy is that a bankruptcy filing will cause one to lose all of his or her property. As a result, many individuals in Kentucky and Indiana contemplating filing bankruptcy engage in the dubious strategy of transferring some or all of their property out of their name. This is almost always a mistake and will usually make their situation worse. This blog post will explain why.

First of all, the idea that transferring assets out of one’s name before filing bankruptcy is a good idea is based on the erroneous assumption that one is not allowed to own anything when he files bankruptcy. After all, Chapter 7 bankruptcy is called “Liquidation.” Therefore, it follows that if I file bankruptcy then all of my property will be liquidated. This is not the case. The laws of every state, including Kentucky and Indiana, provide debtors with exemptions that allow them to keep a certain amount of property when they file bankruptcy. These exemptions are normally enough to cover one’s basic necessities, such as household goods, clothing, jewelry and personal effects, as well as an automobile, up to a certain dollar amount. Exemption laws in Kentucky and Indiana also allow one to protect a certain amount of equity in one’s personal residence. So in most instances there is no reason to transfer assets out of one’s name because the assets are exempt and therefore not subject to liquidation.

THINGS NOT TO DO BEFORE BANKRUPTCY
by Tracy Hirsch

Below is a list of common mistakes that clients make before filing bankruptcy. These mistakes can have a detrimental affect on a consumer’s ability to obtain relief under the bankruptcy code. If you are anticipating filing a bankruptcy petition, please review the list carefully and as always, if you are unsure as to whether an action will affect your bankruptcy filing, seek the advice of a professional.

1. Do not transfer property out of your name. Oftentimes an individual who is contemplating filing bankruptcy fears that they will lose assets to the bankruptcy estate. More often than not, this is not the case. In fact, transferring an asset out of your name before the filing of a bankruptcy can actually cause you to lose an asset that would have otherwise been protected. This type of transfer can be construed as fraud, allowing the trustee to take the property from the individual it was transferred to and sell it for the benefit of your creditors.

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