Common Mistakes

Retirement Accounts

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 could potentially 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.

Home Equity

Much like your retirement accounts, raiding the equity in your home to service your debts can be problematic. Utah allows debtors to retain $30,000, for individual filers, and $60,000, for joint filers, 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 filing bankruptcy. 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 if you decide to later file bankruptcy.

Ignoring Your Problems

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 require your relative or business partner to repay those funds to the bankruptcy estate, including any monies paid to them within the last 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.