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CAN YOU AVOID YOUR CREDITORS AND NOT FILE BANKRUPTCY? PART I

All too frequently clients have said the following words, "Filing bankruptcy is the last thing I thought I would ever do", when the filing of a bankruptcy should have been thought of sooner. No one plans to file bankruptcy when they take out debts. The overwhelming majority of Americans voluntarily pay their debts. Credit card companies and other lenders count on this fact. Clients sometimes engage in strategies that may backfire in order to avoid filing bankruptcy.

The following strategy was engaged in by a client of another lawyer whose bank accounts had been garnished by creditors. In order to avoid further garnishments, the client decided to deposit the money from his paychecks into his mother's bank account to shield it from the garnishing creditors. This arrangement continued for over a year. He would later file bankruptcy and say that his mother paid his bills at his direction. He would state that at no time would his mother use his money for her purposes. He was in charge of the account. She was merely a delivery person acting upon his instructions. He had to, after all, take care of his family making sure his family would eat. It was his money.

These statements were made in defense of his decision. Two unintended consequences occurred as a result of this strategy. The first was that his mother was sued for all the deposits that he had made into his mother's account prior to his filing bankruptcy by the chapter 7 Trustee. Indignantly, he would ask why his mother should be sued as she did nothing wrong and gained no benefit. The bankruptcy code states, however, that if you give your money to someone and receive nothing in exchange for its receipt that would be a fraudulent conveyance. A defense that she was merely the conduit for the money like a postman delivering a payment check was disregarded as, unlike a postman, the paychecks were deposited into her account where she had full control and ownership. Hence, the client's money was given to his mother for free regardless of the fact that she would later pay his bills. The second unintended consequence could have been the denial of the discharge (forgiveness) of the client's debts. The hiding of one's assets prior to filing bankruptcy which includes their income is grounds for the denial of a discharge in bankruptcy.

A thorough interview by the attorney who the client employed to represent him in the chapter 7 case should have revealed the above problems caused both to the client's mother and to the client by the filing of the bankruptcy. Many attorneys are either too young or inexperienced or lack the knowledge to uncover the problems discussed above. Many attorneys will not devote the time to the interviews necessary to uncover these problems. Some lawyers will allow paralegals to do the interviews without the knowledge to uncover the problems. The bankruptcy lawyer's diagnosis is as critical to a case as a doctor's diagnosis of a patient. It is not a matter of just filling out forms. There are consequences.

At the law firm of Charles Schneider, P.C., we care about the unintended consequences to mom and other persons who may be impacted by the client's bankruptcy. We have both the knowledge and experience to advise the client about unintended consequences to both the client and others whom the client may care about. We devote the time and attention to detail to have a successful bankruptcy and can devise legal strategies to avoid unintended consequences. Mr. Schneider has been recognized as a Michigan "Super Lawyer" in the area of consumer bankruptcy law by Thomson Reuter, he has been rated as a 10.0 "Superb" by AVVO.com and he has been rated as "AV" or "Pre-eminent" by Martindale-Hubbell. He has authored the chapter in the Michigan ICLE (Institute of Continuing Legal Education) book on representing debtors in chapter 7 cases which is endorsed by the State Bar of Michigan and by every Michigan law school. He has been certified in consumer bankruptcy for twenty years by the American Board of Certification and has been practicing law for thirty-seven years. He has filed over 11,000 successful cases. A preliminary diagnosis of possible problems by filing bankruptcy occurs with a free initial consultation at the office of Charles Schneider, P.C.

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    Posted by MaryDecember 11, 2015

    "I am overwhelmed by your response to my call, even 10 years after my bankruptcy was discharged. You have more knowledge and expertise than I could have imagined. Because of you, my fears have been put to rest. For that, I'm so very grateful. Thank you many times over. "

  • rating

    Posted by ClientOctober 26, 2010

    "... I was extremely impressed with Charles' understanding of the bankruptcy laws to the extent that I felt certain that my best interests were always at the forefront. "

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    Posted by MarleneJanuary 8, 2014

    He helped me thru my 1st bankruptcy and now the second. I had no idea what to expect , but they kept me informed and answered all my questions. Mr. Schneider is the most experienced and knowledgeable lawyer I have ever met. If you have to file call this attorney first!

  • Avvo Rating 10.0 superb | Top Attorney Bankruptcy
  • Rated By Super Lawyers Charles J. Schneider | visit superlawyers.com | super lawyers 2011-2015
  • Avvo Ratting 10.0 superb Top attorney chapter 7
  • Avvo clients' choice 2014 | chapter 7
  • ICLE CONTRIBUTOR
  • American board of certification | certified consumer bankruptcy specialist
  • AV lexisNexis Martindale-Hubbell Peer Review Rated for ethical standards and legal ability
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