Borrowing against or cashing in your
retirement accounts to try to solve your debt problems is usually
not a good idea. In Utah, debtors are allowed to keep most retirement
accounts during a bankruptcy. Moving funds from these accounts can
make them vulnerable to your creditors and may damage your financial
future. Before removing any funds from a retirement account, you should
speak with a bankruptcy attorney. An attorney can help you determine
if, in your circumstances, these funds may be used to avoid bankruptcy
or if moving them would be a costly mistake.
Much like your retirement accounts,
raiding the equity in your home to service your debts can be a costly
mistake. Utah allows debtors to retain $20,000 or $40,000 in equity
in their home when they file a bankruptcy. Borrowing this equity can
make it more difficult to stay in your home if you eventually need
to file a bankruptcy. Speak with an attorney to determine if the equity
in your house is sufficient to avoid bankruptcy or if it should remain
in your home.
Incurring Additional Debt
Do not go into additional debt if you
are seriously considering bankruptcy as an option. Borrowing when
you know you cannot repay is considered fraudulent. If you find yourself
considering payday loans or high interest title loans, it is probably
time to speak with a bankruptcy attorney about your options. It is
not very likely that a high interest loan is going to help you and
these types of loans can cause problems even if you later file bankruptcy.
When debts begin to pile up, there
is a temptation to bury your head in the sand and hope the problem
goes away. Waiting to deal with your problems can cause you irreversible
financial harm and, in the case of a missed supplemental hearing,
may result in a criminal warrant. In addition, you are not helping
yourself by dodging people trying to serve you with papers. Creditors
only need to attempt to serve you. The only thing you have accomplished
by not receiving service is that you will not know what court proceedings
have been filed against you.
Paying Back Relatives or Business Partners
Do not repay a relative, friend, or
business partner before filing bankruptcy. The bankruptcy court can
make your relative or business partner repay to your bankruptcy estate
anything you have paid them for up to a year. If you have any question
on whether or not to pay a creditor, contact a bankruptcy lawyer.
Trying to Beat the System
Do not transfer any assets out of your name prior to filing bankruptcy
without consulting an attorney. Unless the transfer is in the ordinary
course of business and for fair market value, you run the risk of
the transfer being found fraudulent. Do not keep any information
from your attorney. Federal bankruptcy crimes are committed by people
trying to keep the court from knowing about debts, assets or transfers
and can result in a loss of a discharge and, in some case, fines
and prison time.
