6 Big Mistakes to Avoid Before Filing Bankruptcy - From Flexer Law

Tips from bankruptcy professionals on how you can PROTECT your assets
and AVOID legal complications if you’re considering bankruptcy!
6 BIG MISTAKES TO AVOID
BEFORE FILING BANKRUPTCY
PROVIDED BY FLEXER LAW | MIDDLE TENNESSEE BANKRUPTCY ATTORNEYS

FLEXER LAW | 615-255-2893 | FLEXERLAW.COM
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6 BIG MISTAKES
TO AVOID
BEFORE FILING
BANKRUPTCY
SO YOU’RE THINKING ABOUT BANKRUPTCY.
You’re not alone. Thousands of Middle Tennesseans file for
bankruptcy protection every year. The Bankruptcy Law was made
to protect honest consumers like you when you fall on hard times.
However, the law can be complicated. We put this book together
to help you watch out for some all-too common mistakes that
people make right before filing for bankruptcy. You can save
money, time, legal fees, and even personal relationships by
reading what’s inside this book.
This report is not to be taken as legal advice, nor does it constitute
an attorney-client relationship. However, if you would like legal
advice, you can call our office any time to speak with one of our
attorneys. We’re here to help you - it’s our job!
______________________________________________________________
Flexer Law is a debt relief agency.
We help people file for bankruptcy under the Bankruptcy Code.
IN THIS
REPORT:
-Avoiding getting in
trouble for fraudulent
conveyances and
transfers
-Know what you can
and cannot keep when
filing bankruptcy
(It’s more than you
may think!)
-How to spend your
tax refund if you’re
anticipating
bankruptcy
-Know which debts
you can and cannot
discharge before you
file
-Find out which type of
bankruptcy you qualify
for and how to use it to
your advantage
-Time is money: Know
when to get help!

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AVOID MISTAKE #1:
FRAUDULENT
CONVEYANCES AND
PREFERENCES
BE CAREFUL WHO YOU GIVE MONEY TO!
By Michelle Spezia
Individuals and business owners not familiar with the bankruptcy process often believe
that the bankruptcy court will sell everything they own, which is called “liquidation.” In some
cases, liquidation is part of the bankruptcy. However, there are options for keeping property
and still receiving the benefits of a bankruptcy. Always consult a bankruptcy professional
about your options by disclosing everything you own. What you own cannot be protected if
your attorney is kept unaware of your property!
Sometimes, individuals or businesses who have been hounded by creditors believe the
only way they can protect their house or their car is to legally remove their name by
quitclaiming a deed or transferring a title to a family member or friend. This type of transfer is
considered a fraudulent conveyance, because it was made with the intent of hiding
belongings or assets from creditors. The transfer shows an intent to hinder, delay, or defraud
creditors, and can be undone by a bankruptcy trustee.
Fraudulent conveyance is a civil cause of action that can be brought against the
individual or business by a creditor or the trustee. Once the transfer is undone, the property
can be sold for fair market value and funds distributed to creditors.

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Additionally, transfers made without an actual intent to hide assets can still be undone
by a fraudulent conveyance action. For example, if Jay sells his car valued at $4,000.00 to his
friend Daniel for $500.00, the trustee can undo this transfer and attempt to sell the car for what
it is worth. Jay’s friend Daniel received the benefit of the car’s value instead of the creditors
that Jay owes. Jay did not intend to hide his car from creditors; however, he did not receive
fair market value for the sale of his car and the transfer benefited his friend. In this situation,
Daniel is considered an insider because he is Jay’s friend. A family member who received this
type of benefit would also be considered an insider. These types of conveyances can be
undone and must be disclosed on your petition for bankruptcy if they occur within two years of
filing a bankruptcy.
The trustee looks at money transfers as well. Often, individuals attempt to pay off or
pay down one particular creditor over another before filing. The trustee looks at any payments
individuals made to creditors over $600.00 within three months prior to filing a bankruptcy.
The trustee can get back these funds and redistribute them equally to all creditors. Typically,
this action does not affect the individual directly. Normally this would involve payments to
unsecured creditors rather than payments you’ve made on your car or home.
Conversely, if an individual pays a family member or friend within one year of filing the
bankruptcy, the trustee can get these funds back, which can harm relationships. Paying a
family member or friend before filing a bankruptcy is called an insider preference, because an
individual is preferring his family or friends over credit cards or hospital bills. For instance,
Beth loaned her sister Dana $3,000.00. Dana was able to pay Beth the full loan amount six
months prior to filing her bankruptcy. The bankruptcy trustee in Dana’s case will be able to get
the $3,000.00 back from Beth (and/or obtain a judgment against Beth to recover those funds),
and will distribute the funds equally to all of Dana’s other creditors.
Ultimately, if an individual or business is insolvent (it has more liabilities than assets), it
is always in your best interest to discuss your options with a bankruptcy professional before
selling or transferring property or assets. Often, assets can be protected in the bankruptcy and
an attorney can assist you with the best avenue to protect or sell your property. There are
always exceptions and options available, which is why you should speak with an attorney. You
can have relief from creditors without losing everything you have worked hard to acquire.

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AVOID MISTAKE #2:
KNOW WHAT YOU CAN
AND CANNOT KEEP
ARE YOUR ASSETS AT RISK?
By Lori Lott Szathmary
New clients often come into the office with the misguided belief that filing for bankruptcy
is going to cause them to lose their house, their car, or other personal property that they would
like to keep. Lots of people are scared away from even discussing the idea of bankruptcy
because of this fear. Those that do opt to file the case may fear losing their stuff so much that
they may fail to mention all their assets to their attorney.
Don’t fall into the trap of believing that you must continue to suffer through your financial
crisis because you don’t want to lose your property. Bankruptcy is designed to allow you to
keep a certain amount of personal property. Most of the time, you can keep everything you
own (including your house and car), provided that you have disclosed all of your assets to the
court.
Don’t fall into the trap of
believing that you must
continue to suffer through
your financial crisis
so that you don’t lose
your property!

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WHAT DOES THE BANKRUPTCY ESTATE INCLUDE?
Filing for bankruptcy creates what is called a “bankruptcy estate.” Your bankruptcy
estate is comprised of everything that you own at the time you file bankruptcy, whether the
asset is tangible or intangible. When you file for bankruptcy, regardless of whether it is
Chapter 7 or Chapter 13, you must prepare schedules where you list things you own such an
real property, vehicles, cash, bank accounts, furniture, household goods, retirement accounts,
and so on. These items would be considered tangible.
Going further, you must even list claims that you might have against someone at the
time that you file for bankruptcy. For example, if you have been injured in a car accident prior
to filing bankruptcy but have not yet determined whether you should sue the party who caused
your injury, you would still be required to list the potential lawsuit as an asset you own. This
would be considered an intangible asset. Any asset or property that you inherit within 180
days of filing the case is also part of your bankruptcy estate. Failure to list an item that you own
could cause you to lose your interest in that asset. It is very important that you make certain to
list every asset that you have an interest in.
TANGIBLE ASSETS INTANGIBLE ASSETS
May include:
-Real estate
-Vehicles
-Cash & Bank Accounts
-Furniture & Household Goods
-Retirement accounts
And more
May include:
-Potential lawsuits you may have
against someone else
-Any asset you inherit within 180
days of filing bankruptcy
-Copyrights and patents
SO WHAT CAN I KEEP?
Everyone is entitled to certain “exemptions” to protect their personal property. The laws
of the state where you have been living for the last two and a half years prior to filing your
bankruptcy are the laws that will apply for purposes of claiming exemptions. If you have lived in
more than one state, your attorney will need to discuss with you which state’s exemptions will
apply (or whether federal exemptions apply) and what that might mean to your case. Keep in

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mind that if your property is subject to a lien from a creditor, such as a mortgage, then you only
need enough exemption to protect your “equity” in the property which is the amount left over
after the amount of the mortgage or lien is deducted from the property’s value.
WHAT YOU CAN EXEMPT FROM YOUR BANKRUPTCY ESTATE IN TENNESSEE
Tennessee law allows you to protect $5,000 of equity in your real property if you are
single ($25,000 if you are a single parent), or $7,500 of equity in real property if you are
married ($50,000 if you are married with children). Different exemptions apply if you are over
the age of 62. Furthermore, Tennessee allows you to protect up to $10,000 of personal
property (items such as furniture, money in bank accounts, equity in vehicles, jewelry, etc.).
Also, your retirement accounts can typically be protected 100%. There are numerous
exemptions under Tennessee law that allow you to keep your property.
Most of the time, bankruptcy cases are considered “no asset cases” because all of your
assets can be exempted. It always helps to consult with a knowledgeable attorney who can
give you your options about keeping your property when filing bankruptcy but still getting the
relief from your creditors that bankruptcy provides.
Knowing what you can exempt from
your bankruptcy can be tricky.
Remember these 2 things:
1) always disclose everything you own in
your Bankruptcy petition, and
2) talk to an experienced attorney about
the best way to protect your belongings
BEFORE you file for bankruptcy!

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AVOID MISTAKE #3:
KNOW WHAT TO DO WITH
YOUR BIG TAX REFUND
BEFORE BANKRUPTCY
IF YOU GET A BIG TAX REFUND BEFORE FILING
BANKRUPTCY, THAT’S OK – READ ON TO KNOW
HOW TO SPEND IT!
By Dan Castagna
Many of my clients wind up getting large tax refunds after they file their taxes. These
refunds can add up to thousands of dollars. Someone who is contemplating filing bankruptcy
may be under the misimpression that they cannot keep their tax refund because it may be too
much. It is often the case that people in debt normally turn to their friends and family in times
of their financial distress. As a result, many people feel a moral obligation to repay a family
member who has helped them in the past.
Without consulting an attorney, they make the mistake of giving their tax refund away to
family members or friends to whom they owe money. People who are planning to file
bankruptcy do not realize that, by repaying that gift from a family member or friend with their
tax refund, there may be some negative consequences.
1) Repaying friends or family with tax refunds may prevent the individual from receiving a
discharge in a Chapter 7, or
2) Repaying friends or family may pull the family member or friend who received money
from the bankrupt individual into some sort of potential lawsuit inside the bankruptcy.

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Obviously, those are not positive outcomes for your finances or for your relationships with
your friends or family, which is why you must be very careful spending your tax refunds.
When a person files for bankruptcy relief, they are allowed certain exemptions. An
exemption basically indicates the type and amount of property that your creditors (and the
bankruptcy estate) cannot take from you. In essence, it is the property that you get to keep or
the amount of equity you get to keep in your property. The types of exemptions you are
allowed to claim vary depending on where you lived prior to filing for bankruptcy protection.
As a general rule, if you have lived in Tennessee for the past two years you would be
entitled to claim Tennessee state exemptions. Under Tennessee law, an individual is entitled
to claim an exemption of $10,000.00 in personal property. This type of property includes your
tax refund! This means that a married couple can claim up to $20,000.00 in exemptions for
their personal property - which includes a tax refund. Thus, many times, you are able to
protect, or shield your tax refund from the bankruptcy Trustee and are allowed to keep it.
Once the exemption is allowed and the case proceeds to a certain point, you can than do
whatever you choose with that tax refund and the bankruptcy has no effect on it.
The problem many people face is giving friends or family members a portion of their
tax refund before filing bankruptcy. The bankruptcy petition states that you must disclose
any payments you make to a creditor that in the aggregate total more than $600.00 in the 90
days prior to filing for bankruptcy protection. Thus, if you owe a family member or friend
If you pay back a friend or family
member with your tax refund
right before filing bankruptcy, a
bankruptcy Trustee may deem
that payment a “preferential
payment” and could even sue
your friend or family member for
return of those payments!

9
If you are expecting a large tax refund and
are considering bankruptcy in the near
future, call an attorney for advice before
transferring any portion of your tax refund!
money and pay them back with your tax refund before you file bankruptcy, you must list this
transfer on your petition. If these payments are deemed to be “preferential payments” by the
Trustee then the Trustee can sue your family member or friend for a return of those payments.
The petition also requires someone who files bankruptcy to list gifts given to family
members if the aggregate of the gift is more than $200.00 within a year of filing. In addition,
the petition also requires you to list all property that you transferred within two years of filing
the bankruptcy. Thus, if you gift your tax refund (or a portion of your refund) to a member of
your family or transfer your refund to a friend or family member, the transfer can be set aside
by the Trustee and your family member or friend could be required to turn the money over to
the Trustee because it may be deemed a preferential transfer or a fraudulent conveyance. If it
is not turned over to the Trustee, your family member or friend could be sued by the Trustee
and forced to defend a lawsuit.
It is imperative that you speak with a competent attorney before transferring any portion
of your tax refund. There are many pitfalls that may be preventable with the right legal advice
prior to filing. Many times, the simplest solution is to just hang onto your tax refund until after
you file your bankruptcy case. If you are thinking of filing bankruptcy, before you do anything
with your tax refund, consult an attorney to avoid any pitfalls.

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AVOID MISTAKE #4:
KNOW WHICH DEBTS CAN
BE DISCHARGED
CAN YOU GET RID OF STUDENT LOANS?
By Rodney Caldwell
Filing a bankruptcy normally takes away the stress and anxiety associated with being in
debt; however, a bankruptcy discharge does
not take away your responsibility to repay all
the debt you have listed in your bankruptcy
petition. This article will give you a brief
overview of one of the most common debts
which you will normally still owe if you file for
bankruptcy relief: Student Loans.
Student Loans are typically the most
common type of debt which are not subject
to being discharged. A bankruptcy discharge is a court order that prohibits creditors from
personally collecting on the debts listed on your bankruptcy petition. The Bankruptcy Code
defines student loans as:
An educational benefit, overpayment or loan made, insured or guaranteed by a
governmental unit, or made or funded in whole or part by a governmental unit
or nonprofit institution, or an obligation to repay funds received as an educational
benefit, scholarship, or stipend, or any other educational loan that is a qualified loan,
as defined in section 221(d)(1) of the Internal Revenue Code of 1986.
Therefore, Congress has stated any loan used solely as an educational loan, whether
from the government, a nonprofit institution, or a private lender will not be discharged if you file
a bankruptcy. This exception to discharge has one caveat which allows the debt to be
discharged if a person who filed for bankruptcy relief can show that the repayment of the

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student loan debt is an undue hardship. You should consult with an experienced bankruptcy
attorney to see if you could potentially meet the qualifications to have the debt discharged
because the student loan repayment creates an undue hardship.
In extremely rare occasions, student loans can be discharged with a showing of undue
hardship. In order to obtain a hardship discharge of the loan, the debtor must file a lawsuit and
prove that there is no way that they will ever be able to repay the loan. Hardship discharges
are ordinarily granted only in cases of extreme disability, wherein earning potential is
completely diminished.
Congress has also carved out exceptions to other debts which cannot be discharged in
a bankruptcy. It is important to know that certain types of debts are considered
nondischargeable (you will still owe them after your discharge in Bankruptcy).
Even if you cannot discharge the debts listed above with Chapter 7, you may consider a
Chapter 13 to repay those nondischargeable debts, in part or in full, at a rate you can afford.
(For more on Chapter 13, visit www.flexerlaw.com/chapter13). Or, you may still wish to file a
Chapter 7 to get rid of your other debt so you can focus on paying the nondischargeable items
like student loans.
Make sure you fully disclose all of your debts and the circumstances surrounding
incurring your debts when you consult with your bankruptcy attorney to ensure that you are
fully informed on what you can discharge when you file for bankruptcy relief.
DEBTS THAT MAY NOT BE ABLE TO BE DISCHARGED (WIPED OUT)
IN A CHAPTER 7 MAY INCLUDE:
• Student loans
• Certain tax debt (ask your attorney – some older tax debt may actually be
dischargeable)
• Alimony and child support
• Civil and criminal fines payable to a governmental unit
• Debts brought about as a result of driving a vehicle under the influence of alcohol or
drugs
• Debts which are related to fraud, false representation, or willful and malicious injury to
another person or property

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AVOID MISTAKE #5:
UNDERSTAND WHICH
CHAPTER YOU QUALIFY
FOR – AND WHEN!
IF YOU FILED BANKRUPTCY IN THE PAST,
YOU CAN FILE AGAIN!
By Bryan Penland
You may have filed for bankruptcy in the past and find yourself in a situation where you
may need to file again. Is this possible? The short answer is: YES! In most instances, a
person can file another bankruptcy case even if they have filed before.
Why would someone need to file again? There can be many reasons, including:
medical issues that result in new and overwhelming debts or reduced household income due
to loss of employment or separation from a spouse. Filing for bankruptcy again is sometimes
necessary to provide protection from overwhelming and burdensome debts.
The automatic stay is an injunction (a court order) that prevents creditors from
continuing to collect on a debt through means such as foreclosure, repossession,
garnishments of wages, and lawsuits to collect a debt. The automatic stay is usually available
to prevent these collection activities, even if the person has filed before. There are some
instances where a repeat bankruptcy filer would not have the automatic stay to protect them,
but the majority of repeat filers would be able to stop collection activity by re-filing for
bankruptcy relief.
In some circumstances, a person who files another bankruptcy within a short period of
time cannot receive a discharge in that follow up case. To receive a discharge of a debt in

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bankruptcy means to extinguish the legal liability to pay that debt. Some debts such as
student loans, child support or alimony, criminal fines and certain tax debts cannot be
discharged in any bankruptcy, whether it is your first or fifth bankruptcy filing.
Why would you want to file for bankruptcy if you cannot discharge your debts? Isn’t that
the point of bankruptcy? Sometimes it makes sense to file again even if you won’t receive a
discharge in the case, especially if, by filing, you can keep your house safe from foreclosure,
avoid repossession of your car, or stop a garnishment. Chapter 13 can provide a 5-year safe
haven to keep your property, like a house or a car, while you make your payments through the
Chapter 13 program, even though a discharge of your debts is not available.
The decision to file another bankruptcy, especially within a short period of time from a
prior filing, is a serious decision that requires careful analysis and sound advice from a
competent bankruptcy attorney. Our offices have 7 consumer bankruptcy attorneys in 3 offices
in Middle Tennessee that are up to the task. Contact us now if you have any questions about
filing bankruptcy again.
If you have filed bankruptcy in the past, you can file another
case! Don’t make the mistake of thinking that you don’t qualify
again. Check with a bankruptcy attorney to know the options
that are available to you to keep your creditors at bay!

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AVOID MISTAKE #6:
DON’T WAIT TOO LONG
TO TAKE ACTION!
TALK TO AN ATTORNEY TO DISCUSS YOUR
OPTIONS - YOU DON’T HAVE TO DO THIS ALONE!
By Chad MacIsaac
On average, people take several months to decide whether or not to file for bankruptcy.
During this time, they are still juggling their bills. Unfortunately, when stressed out due to
looming financial problems, people make mistakes. They think that if they can just take care of
some of the smaller credit cards, then they will be able to manage their house and car
payments. In order to do this, they make the credit card payments instead of making the
house or car payment. Do not do this!
Many people try to manage their debts by taking a line of credit or second mortgage or
by emptying a retirement account to pay off credit cards or loans. It is generally a bad idea to
turn unsecured debt into secured debt. Further, this may only be a temporary fix and you
could end up having to file for bankruptcy later anyway. Stop robbing Peter to pay Paul.
You should speak with an attorney so that you can make an informed decision on which
route is best for you. The consultation is free.
If you are facing a possible foreclosure, repossession and/or lawsuit, then you should
talk to one of our bankruptcy attorneys right away. The longer you wait, the greater the chance
that you could lose money or other assets due to either paying the wrong creditors or due to
garnishments, foreclosures or repossessions. It is important to not wait until you have
judgments pending against you. As soon as you are threatened, you should contact us for
help.

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If you wait until the last minute, then it may be too late to stop a foreclosure,
repossession or judgment from being entered. Once a foreclosure sale occurs, it cannot be
undone in a bankruptcy. Once there is a judgment entered, it is on your credit record. A
judgment could also attach to your assets and could remain attached even after a bankruptcy.
Talk with an attorney before you sign up for debt management and other credit repair
companies. You need to understand how these companies work in order to protect yourself
and not make a bad situation worse. Do not file a bankruptcy on your own or with the help of a
friend. The bankruptcy code is complex and the slightest mistake could get your case
dismissed. Also, you want to make sure that bankruptcy is the right choice. We can help and
offer a free consultation.
Ignoring the issue can cost you time and money.
Seek legal help as soon as you know there is a problem!

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HOW DO I AVOID MAKING
THESE MISTAKES?
In this report, we’ve given you some valuable tips to avoid losing money, time, and even
relationships as you prepare to file for bankruptcy. If you still have questions or want us to look
at your financial situation in detail, please give us a call.
We have seven attorneys on staff dedicated to helping people navigate the bankruptcy
process. The first consultation is always free of charge. We know that filing for bankruptcy is
a big decision, and we want you to be well equipped with the knowledge and legal advice you
need before you make that decision.
Call us at 615-255-2893 or email freeinfo@flexerlaw.com to get more information. We’d love
to hear from you and see how we can help you.
Sincerely,
-James Flexer
James Flexer
Owner, Flexer Law
3 Locations in Middle Tennessee to Serve You:
NASHVILLE MURFREESBORO COLUMBIA
Easy access to I-65 & I-40 with free parking:
1900 Church Street, Suite B
Nashville, TN 37203
615-255-2893
On the Square in Murfreesboro:
105 N. Maple St., Suite B
Murfreesboro, TN 37130
615-896-4811
On the Square in Columbia:
13 Public Square
Columbia, TN 38401
931-375-0006
Online at flexerlaw.com

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ABOUT THE ATTORNEYS:
James Flexer started his firm in 1981 in downtown Nashville. The company has
now grown to 9 attorneys in 3 offices in Middle Tennessee. James is a Nashville
native and is always happy to share tidbits of local trivia – just ask him!
Dan Castagna is the managing bankruptcy attorney in the Nashville office and
has been practicing bankruptcy law since 2003. Dan graduated from Vanderbilt
University, but is originally from Queens, New York and has the accent to prove it.
Bryan Penland is the managing bankruptcy attorney in the Columbia office and
has been practicing bankruptcy law since 2006. Bryan played baseball in college
and now enjoys coaching his son’s travel baseball team.
Lori Lott Szathmary has been practicing bankruptcy law since 2009 and appears
on behalf of our Chapter 13 clients at their Meetings of Creditors. Lori spends her
free time chasing her 100 lb dog and her 10 month old baby girl around the house.
Rodney Caldwell started his law career with the Metropolitan Public Defender’s
office but has been practicing bankruptcy law since 2010. Rodney is not afraid to
stand up to creditors but he will admit he is terrified of spiders. You’ll recognize
Rodney at court because he is always sporting a bow tie!
Michelle Spezia has been practicing bankruptcy law since 2008. In addition to
consumer bankruptcies, she also specializes in filing Chapter 7 bankruptcies for
small businesses. Michelle is a classically-trained pianist and has been playing
since the age of four.
Chad MacIsaac has been practicing bankruptcy law since 2006 and manages the
Murfreesboro office. Chad is originally from California but now calls Middle
Tennessee home, where he plays in an adult soccer league.

6 Big Mistakes to Avoid Before Filing Bankruptcy - From Flexer Law

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6 Big Mistakes to Avoid Before Filing Bankruptcy - From Flexer Law