Can I plan out my bankruptcy?

Can I plan out my bankruptcy?

If you are going to file a bankruptcy in Kansas then the most important thing you can do is plan out your case. Your bankruptcy attorney should sit down with you and discuss all of your options between chapter 7 and chapter 13 cases but they should also explain to you if you are in need of some planning to make the case run smoothly or to protect your assets. I once heard a judge say they had never seen too much planning before a bankruptcy and I think your attorney has a duty to advise you to plan out the case.

It is entirely possible that if you file a bankruptcy too quickly you can miss out on the chance to protect some assets that would otherwise be seized. An example is if you have a non-exempt or unprotected piece of property and you want to preserve the value of that item. You cannot just keep the item but you might be able to convert it into an exempt item.

If you have two cars that are paid for and they are worth $8,000 apiece only one of them is protected by law. The vehicle exemption in Kansas protects up to $20,000 in the value you have in a vehicle that is your daily driver. You could sell both of them before filing a bankruptcy and buy a single vehicle worth $16,000 and exempt that vehicle. This is allowable.

If you are about the receive a tax refund the bankruptcy trustee may have a substantial claim to it. You might want to wait to receive those funds and then spend them down before you file the bankruptcy case. In many households the tax refund is used for clothing, vehicle repairs, household maintenance and all manner of expenses that require some lump sums of cash. If you plan things out with your attorney you can use the refund before filing to cover basic items that will be protected by law from the bankruptcy trustee.

You might also have made payments on debts that you do not want to be unwound by the bankruptcy trustee. If you paid a doctor on an outstanding bill in the 85 days before meeting with your attorney all you have to do is wait 6 more days to be beyond the timeline for the bankruptcy trustee to recover those funds. If you paid a relative on a debt you owed them within the last year and you want to make sure the trustee cannot recover the money paid to them then you need to wait until one year has gone by in most cases. You can plan this out with your attorney.

What about transferring property to other people? You may think that by giving property to your friends in anticipation of the bankruptcy you are going to prevent the trustee from potentially seizing it but that is not the case. The trustee can unwind gifts or transfers without sufficient value give in return for up to two years under bankruptcy law and up to four years under Kansas law. There might be other ways to plan the case out to keep those items but the transfer of them is almost always a mistake.

In most bankruptcy cases in Kansas you must be concerned about how much money you have in your bank account and how much cash you have on hand at the time the case is filed. If you are getting paid on a Friday and your money will be deposited in your bank account then you really want to file the case the day beforehand if possible to avoid having money on hand.

There is nothing wrong with converting non-exempt assets to exempt assets. Money in your bank account is not going to be exempt in most cases but food in your cupboard and new tires on your vehicle will be just fine.

If you want to know more about the ins and outs of planning for a chapter 7 bankruptcy or a chapter 13 bankruptcy please contact us today. One of our bankruptcy attorneys will be happy to sit down with you and go over things. We provide free bankruptcy consultations. Please reach out to us today and we can help you get back on track.