What Are the Things to Prevent Before Filing a Bankruptcy?

Bankruptcy may be a confusing and frustrating process, but steering clear of a few pitfalls ahead of time will serve to guard your financial future. Most people unintentionally do things that hurt their case.

The Following Are Important Things Not to Do Before You File for Bankruptcy

1. Running Up More Debt

Securing new loans or charging credit cards to the limit before filing can amount to fraudulent conduct. Courts can challenge any significant purchases made immediately before filing, which can result in the denial of discharge.

2. Transferring or Concealing Assets

Transferring funds or assets to a friend or relative before bankruptcy can be viewed as an effort to defraud creditors. The trustee in bankruptcy can undo suspicious transactions, which can make your case more difficult.

3. Paying Certain Creditors More Than Others

Paying friends or relatives rather than sending money regularly to all your creditors can trigger a flag as preferential treatment. Bankruptcy law demands equal division of your properties, and illicit payments will be reversed by the court.

4. Money Withdrawn from Retirement Funds

Retirement savings tend to be safeguarded under bankruptcy law, thus, one may not have to borrow from them to pay debt. Money being drawn out of retirement can create more economic hardship in the future.

5. Disregarding Suits or Collection Letters

Disregarding suits or wage garnishments before filing can create unnecessary issues. Seeking the advice of a bankruptcy attorney promptly will allow you to handle legal proceedings efficiently.

6. Conclusion of Unusual or High-Value Transactions

Selling assets of value at a bargain price or withdrawing large amounts of cash may alert the authorities. The court might interpret these actions as an effort to conceal assets, which may undermine your case.

Summing Up!

Before filing for bankruptcy, it’s essential to avoid actions that could damage your case. Being truthful about your financial situation and seeking professional advice will make the bankruptcy process easier. If you’re thinking about filing for bankruptcy, seek out a legal professional to help you through the right steps.

This article was written by Alla Tenina. Alla is a top Orange County personal injury lawyer, and the founder of Tenina Law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.