Yes, there are many things you can and should do to plan ahead if you intend to file for bankruptcy in Connecticut. There are also a number of things you should not do if you are planning to file for bankruptcy.
For this reason, if you are in any way considering a bankruptcy filing in Connecticut or anywhere else, it is extremely important to start talking with a bankruptcy lawyer first.
For example, some people try to protect assets such as their car by “selling” it to their friend for $1. This doesn’t work and often results in losing the asset anyway.
Additionally, sometimes debtors borrow money from friends and family to pay off credit card debts prior to a bankruptcy filing and then, if they receive a tax refund, use that money to pay back their friends and family. This type of transaction can actually result in both payments being un-done. Plus, if you know you’re going to file for bankruptcy, then it’s not in your interest to pay off your credit cards ahead of time since much of that debt will vanish after you get your discharge.
Many people don’t realize that you can reorganize your assets in advance to get the maximum benefit of the exemptions afforded under the bankruptcy laws. For example, say you have $6,000 in cash and a car that still is not paid off. The exemptions only allow you to protect $2,500 in cash. However, they also allow you to protect $2,500 in a car and up to $1,000 in furniture for your home. So, e.g., you can purchase a used car for $2,500 and $1,000 in furniture. Before planning, you would keep $2,500 and the Chapter 7 trustee would get $3,500 to use to pay off creditors. But after planning, the trustee would not be able to recover anything from you.
Bear in mind, of course, that you are not permitted to defraud creditors. To make sure you walk that line properly and get the maximum benefit of the bankruptcy laws in Connecticut, the best approach is to talk to an experienced bankruptcy lawyer.
For a free initial consultation and to get all of your questions answered, please contact me to set up a meeting or a phone call.
Eugene S. Melchionne, Esq.
27 First Ave.
Waterbury, CT 06710