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Will Your Behavior During Bankruptcy Be Perceived As Manipulation?

Posted By admin || 23-Nov-2010

Will Your Behavior During Bankruptcy Be Perceived As Manipulation?

One of the things we like to remind debtors of is that they must avoid the perception that they are attempting to manipulate the bankruptcy system.

Below are a few behaviors that every debtor should avoid if they don't want to be accused of manipulating the bankruptcy system and faced with a dismissal of their case:

  1. Quitting a job right before filing bankruptcy, leaving you with little or no income. The bankruptcy courts have been known to dismiss bankruptcy cases where it appeared that the debtor was intentionally trying to artificially suppress their income so that they could avoid repaying creditors in Chapter 13 bankruptcy .
  2. Filing and then voluntarily dismissing a bankruptcy case multiple times over the course of a relatively short period as a collections delay tactic.  If a debtor is seen as using the bankruptcy system as a way to delay the collection of a debt the bankruptcy court may decide to disallow the debtor access to the automatic stay. Debtors filing for bankruptcy should take care to make sure that they in fact want to go forward with the case so that they do not need to later voluntarily dismiss it and run the risk of raising the red flags of the bankruptcy court.
  3. Selling or giving away assets in the months prior to filing bankruptcy.  This is something we warn against often; but it's important to mention again because the tactic is very common.  If the bankruptcy court sees that a debtor has transferred assets in the months prior to filing bankruptcy, the debtor could face the dismissal of their case and charge of bankruptcy fraud .  Also, those who received the assets will be required to return the assets to the bankruptcy estate.
Categories: Bankruptcy Fraud
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