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Four Things Not to Do Before You File for Bankruptcy

In an earlier blog post, we discussed the steps you should take before you file for bankruptcy. If you are at the point where your personal debt has become so unmanageable that you are considering bankruptcy, there are ways that you can either seriously hurt or help your financial situation before you file your bankruptcy with the court. Some of these things you can do are specific to your situation and can be explained to you in detail by a financial advisor or an experienced bankruptcy attorney. For most people, avoiding the following actions in the weeks, months, and days leading up to filing for bankruptcy can make the process much easier.

Do Not Move Your Assets

Your assets, which can include physical possessions like cars and recreational items, and your financial assets, like your bank accounts and investments, are used to determine your net worth. When you file for bankruptcy, the court assesses your net worth and your disposable income level to determine a realistic debt repayment plan for you. Moving your assets in an attempt to “protect” them from the court can result in your discharge being revoked.

Sports Authority Will File for Bankruptcy in Near Future

A recent report from Bloomberg News states that Sports Authority, Inc., once the largest sporting goods store in the United States of America, is currently in the process of discussing Chapter 11 bankruptcy with its lenders, including TPG Capital Management LP. This is because the company is currently facing a debt payment due on February 15th.

In our capitalist economy, brands and stores rise and diminish with the interests of the public. Recently, our blog discussed famed surfwear brand Quiksilver's bankruptcy, which happened because of the company's sagging sales after the market moved away from surf and skate apparel and toward fast fashion. Sports Authority is similarly facing pressure from competitors like Dick's Sporting Goods and Lululemon, an activewear retailer best known for its sheer fabrics and yoga pants. Chapter 11 bankruptcy presents an opportunity for struggling companies to reorganize and become profitable once again. In its negotiations, Sports Authority has said that it plans to close more than 200 of its 450 current locations. It currently has approximately $643 million in debt.

Pressure from Online Retailers

Quiksilver Approved to Leave Chapter 11 Protection

Surfwear brand Quiksilver, Inc., which owns apparel brands Roxy and DC shoes, was granted permission to exit Chapter 11 bankruptcy in late January 2016. The California-based apparel and retail company filed for Chapter 11 bankruptcy in 2015 after years of slumping sales, largely due to the rise of fast fashion brands like H&M and a decreased interest in the surf and skate lifestyle.

In a Chapter 11 bankruptcy, a company restructures to repay its debts and allow it to recover. For Quiksilver, this meant selling lower-performing labels and focusing on its core three brands, Quiksilver, Roxy, and DC. It has now reached an agreement by which its senior creditor, Oaktree Capital Management LP, has paid $14 million in cash and a percentage of equity in the company to become its largest shareholder.

Time will tell whether the company will recover from its economic difficulties and thrive. Only the American Quiksilver brand filed for bankruptcy – this filing does not affect Quiksilver's European or Asian brands.
Leaving Bankruptcy Protection

Four Ways Bankruptcy Can Follow You for Years

Filing for bankruptcy could be one of the best decisions you ever make, but it is a decision that has consequences and should not be taken lightly. In fact, bankruptcy might not be the right choice for you, depending on your circumstances. Before making any drastic decisions about how to manage your debt, consult with an experienced bankruptcy attorney.
Keep these long-term consequences in mind as you learn more about the topic.

Bankruptcy Stays on Your Credit Report for Years

When you file for bankruptcy, that bankruptcy stays on your credit report for up to 10 years. This is visible to any party that pulls your credit report, such as a bank or other lending institution when you decide to purchase a home, car, or take out another type of loan.
This does not mean that you cannot get a new loan or open a new credit card. In fact, doing these things can actually help you repair your credit by giving you the opportunity to build positive credit.

Considering Bankruptcy? Know How it Can Affect Your Divorce Settlement

Bankruptcy and divorce can easily become intertwined. For some individuals, going through the divorce process is so costly that they need to file for bankruptcy afterward to get a handle on their debt. For others, debt and money problems during a marriage are what drives their spouses away, causing them to seek divorces. If you are currently going through a divorce and considering filing for bankruptcy, or you have previously been divorced and are unable to meet your debts, know how one of these issues can affect the other. Speak with an experienced bankruptcy attorney before making your decision.

Bankruptcy Does Not Eliminate Spousal Maintenance and Child Support Debts

This is perhaps the most important thing to keep in mind when simultaneously facing divorce and bankruptcy. Bankruptcy exists to make your debts more manageable, either through the liquidation and sale of your nonexempt assets or through a structured repayment plan. But because your former spouse and child rely on you for these support payments, spousal support and child support debts cannot be eliminated with bankruptcy.

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