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Declaring Bankruptcy? Don't Do These Four Things Prior To Filing

12 June 2019

Cassandra Stone

Have you found yourself in a financial situation where the only solution is to file bankruptcy? If so, the legal process starts before you file the necessary paperwork. Here are some things that you should avoid doing before you file in court.

1.  Don't Charge Expensive Items

One of the nice things about bankruptcy is that it will wipe out all of your unsecured credit card debt. However, it will only wipe out the debts that you had before you decided to file for bankruptcy.

You cannot start charging stuff to a credit card with the intentions of having the debt discharged later on. The courts may decide that recent charges were made with the intent of not paying them back, which will force you to pay back those debts.

Consider any recent purchases within the past couple months prior to filing as debts that you are responsible for. They will be too recent to argue that you made the purchase with the intent of paying it off.

2.  Don't Take A Cash Advance

Much like the rules regarding recent credit card purchases, there are also rules that apply for cash advances. While you may be in a tough financial situation that has lead to needing a cash advance, realize that any recent cash advance may need to be repaid.

The courts do not care what the cash advance was used for, since they'll look at the date it was requested and how close it is to the bankruptcy filing.

3.  Don't Pay Back Creditors

Have that one creditor that you like and are worried about not getting paid? That will be completely out of your control once you decide to file for bankruptcy. Any recent debt repayments could be considered preferential treatment, and the payment will be clawed back so that it can be fairly distributed to other creditors.

4.  Don't Transfer Property

Worried about losing your house or car? You may have come up with the great idea to transfer the proper into someone else's name. Unfortunately, any recent property transfers will be scrutinized very closely.

It is likely that the court will not allow property transfers to take place, even if they are sold to another person. An attempt to sell a property below the going market price could be identified as a form of fraud.

Work closely with a bankruptcy lawyer service to make sure you do not make any of these mistakes.

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