If you are planning to file for chapter 7 bankruptcy, it is important to understand the look back period.
What is the Bankruptcy Look-Back Period?
As part of the Chapter 7 means test, individuals filing for bankruptcy will provide information dating back 6 months from the time of filing to determine if they qualify for chapter 7 or 13 bankruptcy.
A look back may find evidence of avoidable preferences which wrongly prioritize the payment of one debt over another – a look back period could encompass 90 days to a year. An example may include paying off a loan in full to a family member while making minimum payments on a credit card. Both the lender (family member) and the credit card company have equal rights to payments, so if a trustee discovers payments that do not meet the bankruptcy court rules they may claw back the money so that it can be fairly distributed among creditors in a bankruptcy.
The trustee will also be on the lookout for potentially fraudulent transactions in a look back period of two to three years which may include racking up debt or taking out large sums of money preceding the bankruptcy. Purchasing goods in hopes of not having to pay creditors back in a bankruptcy or transferring large amounts of money to a friend for safe keeping during the bankruptcy process often violate bankruptcy rules.
Contact an Experienced Chapter 7 & 13 Bankruptcy Attorney
If you are considering bankruptcy as a solution to a difficult financial situation, it is important to seek the help of an experienced bankruptcy attorney who can advise you on the process so that you can avoid mistakes that could derail your bankruptcy plans. To schedule your free consultation, contact Charles E. Covey for immediate advise at 309-674-8125.