Blog sponsored by Bankrupt-Law.com



Tuesday January 24, 6:00 am ET

Justin Harelik

Dear Bankruptcy Adviser,

My husband recently left me with a large debt with our business and I have
no choice to but to file bankruptcy (on behalf of the business). He also
left me with no income. I used my retirement to set him up in business and
he has embezzled money. I do plan to file charges. I have no choice but to
use my credit cards to survive and keep my house and car as well as all
household and personal expenses while I try to find full-time employment. I
am also disabled and have no idea when or what type of work I can find or
how long it will take. Please tell me what I should NOT do with my credit
cards in the event that I am unable to work in the months ahead and have to
file personal bankruptcy. I am desperate for answers because I do not
understand the new laws concerning bankruptcy. Please respond. I want to do
the right thing. Thanks for your help.
-- Becky

Dear Becky,

Becky, if you read my other articles, you'll know that I only suggest an
attorney when it is absolutely necessary. You are in the "absolutely
necessary" category. Proceed directly to an attorney and lay out the issues:

Can I protect my house in a bankruptcy?

If I cannot, what other options exist? Sell the property? Refinance and pay
off all the debt?

Just recently, a client hired me after filing a Chapter 7 bankruptcy. This
is the type where she eliminates all her debt and gets a fresh start.
However, she didn't know that she had unexempt equity in her house. Meaning,
she could not protect her house if she filed a Chapter 7 bankruptcy because
she had too much equity in it. She thought filing bankruptcy would be "easy"
and the only cost would be her bankruptcy filing fee. Only now the trustee
wants to, and can, seize her house to pay creditor claims. One conversation
with me and she would have saved many thousands of dollars.
Your situation requires the attention and assistance of an attorney. If it
feels like you don't have the money to hire an attorney, you need to ask
yourself if you can afford the consequences of a court judgment against you:
seizure of bank accounts and a lien on your home.

Many attorneys provide free consultations. Get a referral from a friend, if
possible, because it's always good to do a little homework. Regardless, when
you meet an attorney ask him or her some questions.

Has he or she handled cases like this before?

What does he or she anticipate this will cost, and how long might it take?

The other difficult question you ask concerns credit card use prior to
filing bankruptcy. It never looks good to use a credit card within a few
months of filing bankruptcy. Even worse is if you took out cash advances,
purchased a new TV, or have simply run up a lot of debt. Recent credit
activity can raise the presumption of abuse, and creditors may challenge
your right to eliminate the debt. Under the new law, it is easier for
creditors to show this presumption of abuse. If you decide bankruptcy is
right for you after meeting with an attorney, that attorney should advise
you to stop using the cards immediately.