How To File Bankruptcy And Keep From Going To Jail

How To File Bankruptcy And Keep From Going To Jail

Does anyone ever go to jail for filing bankruptcy? As long as you tell the truth in court and on your bankruptcy petition, the answer is no. People don’t go to jail for filing bankruptcy.

However, could filing bankruptcy lead someone into a sticky situation that could potentially land them in jail? The answer to this question is yes. There are steps and ways we can help you to file bankruptcy and keep from going to jail.

For example, let’s say you have a nice car that is financed with a national lender. In your Chapter 7 bankruptcy case, the plan is to surrender the vehicle to the creditor because the monthly payment is just too high. Without speaking to your bankruptcy attorney, you decide to take the car to the dealer and leave it where you purchased it.  After you pull up, some nice guy walks up to you and you explain the situation. He instructs you to leave the keys in the car and he will take care of everything.

You have a friend pick you up from the car lot and you are on your merry way.

The nightmare hits you

About 3 months later, the national car lender sends you a letter stating that their repossession agent has been unable to locate the vehicle. In the letter, they inform you that if you don’t produce the vehicle, they intend to swear out a warrant for your arrest. You assume that everything is OK because you know that your creditors cannot harass you after you file bankruptcy. Without calling your bankruptcy attorney, you assume there is no problem.  A few weeks later, a police officer greets you at work and places you under arrest for theft of said vehicle.

After the police conduct an investigation, the employees from the dealer claim to have never seen you at the car lot and that you never dropped off any vehicle at their place of business.  You give a description of the person who told you “leave the keys in the car.”  To your dismay, the manager tells the police officer that no one of that description has ever worked at his dealership.

Lessons to be learned from this hypothetical nightmare

  1. The national lender has no relationship to the place where you purchased the car.  The national lender has contractual rights to the car after the bankruptcy case.  The dealer is a separate entity.  Dropping the car off at the dealer does not mean that you are safe on base.
  2.   In this hypothetical, you should have obtained some type of written receipt that the dealer was accepting custody of the car on behalf of the national lender.
  3.   Call your bankruptcy attorney and make sure the national lender is agreeable to allowing you to drop the vehicle off at a local dealer.
  4. Don’t hesitate to call your bankruptcy attorney with questions about your case.

As a general rule, I think it is best for clients who intend to surrender an automobile to a creditor to allow the creditor to send their authorized repossession representative to directly pick up the vehicle from you.  Why get a middle man involved?  Again, I think it is good policy to get something in writing.

Other Posts You Might Be Interested in Reading

1. What is Chapter 13?

2. What is Chapter 7?

3. How much does it cost to file?

4.  Stop Garnishment

5.  Stop Foreclosure

6.  Secrets from the debt collector’s playbook

 

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