What You Should Avoid Before Filing Bankruptcy
Once you have made the decision to file bankruptcy, you may feel relief in the understanding that you can make a fresh start. You know that the collection calls will stop and that the stress will be reduced after you begin the process. Too often, however, people who are preparing to file for bankruptcy make mistakes that can lead to their bankruptcy being dismissed. Even worse, some of these errors can lead to fraud charges if the court suspects you were attempting to hide assets.
Paying Some Creditors and Not Others
When you began to suffer from credit problems, there may have been one or two creditors who attempted to work with you in order to help you get your head above water. You may have a close relationship with a particular bank or loan agency and you don’t want them to lose money because of your mistakes.
You may think it would be an expression of goodwill to pay those creditors while ignoring those who were less-than-friendly when you began struggling can actually cause you problems during your bankruptcy proceedings.
These may be viewed as preferential transfers and the trustee can demand that the payments be returned to the bankruptcy estate, causing the creditor even more problems than if they had simply written the account off as part of your bankruptcy plan.
Adding to Credit Card Debt
Once you have made the decision to file bankruptcy, you should stop using credit cards completely. However, if you routinely used credit cards for regular expenses, such as groceries or gasoline, the trustee may allow those types of charges on cards even if you are including them in the bankruptcy.
Expensive items or anything expenditures on credit that are unusual are not permitted and could put your bankruptcy at risk. In most states, charges of more than $650 within 90 days of a bankruptcy filing are not permitted.
If you have a business dispute to resolve or if you feel that someone owes you money, do not file a lawsuit to recover that money before you file for bankruptcy. If the suit is settled prior to your bankruptcy discharge, any money you receive must be included as part of the bankruptcy estate.
The same is true regarding business partnerships. Do not enter into a business partnership or conclude any business transactions until your bankruptcy proceedings are complete. This includes bonuses you may receive from work, an inheritance or a tax refund. If you are expecting any of these additional forms of income, it may be necessary to delay your bankruptcy filing.
Bankruptcy laws differ by state which is why it is critical to talk to a bankruptcy attorney before deciding to file. An attorney can review your situation and provide you with the advice you need so that your filing goes smoothly and without any question of impropriety. Call us today or complete our contact form to learn if bankruptcy is right for you and what steps you should take to prepare for filing.