When Bankruptcy is Not a Good Idea

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When Bankruptcy is Not a Good Idea


Sometimes Bankruptcy is not a good idea. Bankruptcy might not be for you if you fit one or more of the following situations. The law is complicated, so be sure to call and talk to us about your situation.


Non-Exempt Property

In rare cases, a client may own more property than can be exempted. In such a case the client may have to surrender (or give up) this non-exempt property to the trustee. This may be the case if you own a very expense car that is paid for; you own real estate (i.e., land and/or buildings) other than your home; you own an expensive home that is paid for; or you have lots of money in the bank.  If you have non-exempt property, consider chapter 13.


High Income

People whose income is too high might not be allowed to file chapter 7. If your income is above the state median income, you must pass the means test  in order to get a chapter 7 discharge. Fortunately, most bankruptcy filers are not subject to the means test because their income is below the state median income. And, even if your income exceeds the state median income and you fail the means test, you probably can file a chapter 13 bankruptcy.


Payments to Insiders

If you made payments totaling $600 or more over the last year on a debt owed to a family member, friend or relative, the trustee may require that person to give the money back. The trustee is concerned that you might favor these people over your other creditors.


Fraudulent Transfers

If you transferred valuable property to a third party, within the last four years, without receiving equal value in return, the trustee may be able to recover the property from the recipient.