Filing for bankruptcy is like a trip back in time and a crime scene investigation rolled into one. This means that your actions prior to filing bankruptcy can have huge consequences, even if you had the best of intentions.
Here are five bankruptcy don’ts that you need to know before you file.
- Don’t run up balances. Just because your debt is likely to be erased doesn’t mean that all debt is equal. Each creditor will get a chance to go over all the charges on your account after receiving the notice of your bankruptcy. If they believe you ran up your balance, they can challenge your request to have the debt discharged. This means you could walk out of bankruptcy still owing them money.
- Don’t pay family debts. You know you are going to file bankruptcy, so you pay back mom, dad, or uncle that $5,000 you owe them before you file. If you pay back loans to friends or relatives within one year of filing bankruptcy, it may be considered a preferential transfer that can be undone in bankruptcy. The bankruptcy trustee may sue your friend or relative to get back the money that you paid.
- Don’t gamble. Gambling with your own money can have a negative impact on your filing. Gambling losses 12 months prior to filing bankruptcy have to be disclosed in your paperwork.
- Don’t give away money or stuff. If you have an asset, like a car, jewelry, or family heirloom that is worth a lot of money, you can’t simply give it away to protect it in bankruptcy. It’s illegal to hide or protect assets this way, and rest assured the court will find it. A bankruptcy attorney can help you legally protect an asset that would be at risk in bankruptcy.
- Don’t wait. Bankruptcy takes time to do right. If you are filing bankruptcy to try and keep your home, your income, or some remaining assets, give yourself and your attorney time to do it right or your case could be dismissed.
Please keep in mind that every case is different, so if you are thinking of filing bankruptcy, and would like to schedule a free consultation, please contact our office by completing the form on this website or calling us at (954) 932-5377.