Asaph Abrams Attorney at law

San Diego Bankruptcy

San Diego bankruptcy attorney

Specific actions prior to filing for bankruptcy may jeopardize your case.  Below are a few of the common mistakes.  If you’ve been intending to take any sudden action with your money, please give us a call at 858-344-0500 for free fact-based advice. 

Even if you’ve been well-intentioned, such moves can be considered fraud.

  1.   The bankruptcy trustee and Bankruptcy Court will scrutinize the debtor’s actions prior to bankruptcy, especially with regard to transactions during the 90 days prior to bankruptcy filing.  However, there is no limit how far back your actions can be examined.

•  It is important not to buy what you have no intention of paying for (in other words, it's important that you do not incur further debt) in anticipation of filing for bankruptcy.

•  You cannot show favoritism by paying one creditor to the detriment of other creditors before filing for bankruptcy.

•  You cannot unload property or transfer it for nominal consideration so as to diminish your assets prior to filing for bankruptcy.

Certain actions are red flags that create automatic presumption of fraud that disallows bankruptcy discharge or show unfair preference:

  1.   Cash advances over $875 within 70 days of filing for bankruptcy

  2.   Incurring over $600 in debt to a single creditor for luxury purchases within 90 days of filing for bankruptcy

  1. Paying/transferring an aggregate of money/property worth more than $600 to a single creditor within 90 days of filing for bankruptcy, or within one year of filing for bankruptcy if the recipient was family, a friend, your corporation or a business partner.  Regular secured payments aren’t a problem.  The main concern is with preferential debt payments to “insiders,” or non-arm’s length creditors. Suppose that within the year before filing for bankruptcy, you paid your mom back $10,000 on a debt, but paid nothing on credit cards.  The bankruptcy trustee can demand and then sue your mom to return those funds, so they can be distributed on a pro-rata basis among all your creditors.*

•  If the transfer is done in the ordinary course of business, it’s considered favoritism if over $5475

*My wife insists on including this additional frivolous analogy:

You can’t pay back loans to friends close to the time of filing for bankruptcy.  Suppose you owe your best bud, Bert $10,000.  You pay him back on Monday, then file for bankruptcy on Tuesday.  Well, once discovered, the attorney heading your case for the Bankruptcy Court (the bankruptcy trustee) can take back the dough from Bert.  After all, you also owe 3000 bucks to Bert’s roommate, Ernie.  The bankruptcy trustee will break the $10K and spread it out to Bert, Ernie, Cookie Monster and all your other creditors. 

There’s no arguing that you’d rather help Bert out, but in the objectively fair eyes of the bankruptcy trustee, Cookie Monster needs the dough too (to make more cookies). 

What you canNOT do before you file for bankruptcy

San Diego bankruptcy lawyer
San Diego bankruptcy attorney

To discuss your particular situation, please call (858) 344-0500 to schedule your free consultation.