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 You can imagine that troubled minds often consider even more
troublesome actions. Here are a few questions we are frequently
asked. Without being exhaustive, these are examples of where to be careful.
- Should I put it in my wife's name?
- Should I pay back mom or dad so that I no longer have the money on hand?
- Can I give my guns to my son?
- Should I draw out my IRA and spend it before we file?
- Which is better, bankruptcy or consumer credit counseling for the next 60
months?
- HIGHRATE Credit Card will settle for 20 cents on the dollar. Should I just
settle that one?
Bankruptcy awards the honest debtor with excellent protection and the relief
for a fresh start. It has some built in protections against
dishonesty, and can be cruel to the not well intentioned or perhaps even just
uniformed, debtor.
- Do not make any gifts while you are insolvent and considering
bankruptcy. The subject of the transfer can be recovered for a bankruptcy estate.
- Do not pay a relative more than $600 on an antecedent debt within a calendar year, or an unrelated part, within 90 days. To do so creates a
recoverable preference.
- A transfer to a wife or any other party without consideration is a gift,
and recoverable by a bankruptcy estate.
- Most retirement vehicles are protected by exemption laws, and are best left
where they are.
- Consumer Credit Counseling is a really necessary service available from for-profit and not-for-profit organizations. It has its place. Many
clients are referred to this office from CCC organizations. The entire
time a debtor is under the supervision of a credit counseling service, and is
struggling to pay back unsecured debt, the credit reporting agencies show
very negative standing. It is often better and quicker to reestablish
credit after a bankruptcy than after years of credit counseling.
- There is a trap in settling credit card debt that many people get caught
in. Generally speaking, if the card debt was incurred by the individual
who settles the claim for 20 cents on the dollar, the borrower has had 80
cents on the dollar canceled or forgiven. The Internal Revenue Code
treats cancelled debt as ordinary income. Pay 20 cents, and then owe 28 more
cents in taxes on the balance. Canceling credit companies are required
by law to report cancelled debt on income reporting form 1099 at year end.
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