September 13, 2016

3 Things You Should NOT Do Before Filing For Bankruptcy

Bankruptcy involves many different rules, procedures, and requirements throughout the process. You must be careful to meet all of the requirements and follow the rules in order to ensure you are granted a discharge by the bankruptcy court at the end of your case.

Having the guidance of a skilled bankruptcy attorney is critical to make sure you meet all criteria and preserve your eligibility for a discharge.

While there are obviously steps you need to take during your bankruptcy case, there are also things you should avoid doing prior to filing for bankruptcy.

Do NOT go on a spending spree.

If you suddenly max out all of your credit card accounts because you know that your balances will be discharged in your bankruptcy. Bankruptcy courts view such practices as fraudulent and it can affect your eligibility for a discharge of those balances.

If you must make a large purchase, try not to use credit if possible or document your need for the purchase well so you can justify it if necessary.

Do NOT close your accounts.

If you are struggling to pay your bills, you may be tempted to cash out your retirement account. However, those assets are better protected in bankruptcy when they are in your account, as there are exemptions for a higher amount of retirement savings than for cash.

You may also try to protect your assets by closing your savings or investment accounts, but this is generally not wise, as the court may be suspicious that you are trying to hide assets. Before you cash out any accounts, you should always discuss the implications with your bankruptcy attorney.

Do NOT try to get rid of your property.

Many people who need money may try to sell their possessions or property for extra cash. In addition, if you are considering filing for Chapter 7 bankruptcy, you may be aware that the court may seize your property and you may want to give it away or sell it to friends or family members.

This is another situation in which the court may suspect bankruptcy fraud and asset hiding, so you should not transfer your property just before a bankruptcy.

Call 610-255-7500 today for a free consultation.

An experienced bankruptcy attorney can advise you on what to do and not to do both before and during your bankruptcy case. If you want to learn more about bankruptcy in New Jersey, Maryland, or Pennsylvania, call the Law Office of Michael Alan Siddons today.