What NOT to Do Before You File!

Filing for bankruptcy is an important decision that should never be taken lightly, but it can be a very positive step for individuals who find themselves literally overwhelmed by debt!  A Chapter 7 or Chapter 13 bankruptcy will provide you with a fresh financial start, while still allowing you to keep some portion of your assets to help you begin again.

The process of filing for bankruptcy is complicated and extremely detailed, however, it is important that you consult with your attorney at every step of the process, particularly before you take any actions regarding your finances in the months before you file!

As you begin the process of filing for bankruptcy, here are some crucial reminders about what you should not do for 90 days before you file:

• Do not withhold information or falsify facts!  Remember that your attorney is your advocate, and always be open and honest.  Tell your attorney the truth.

• Once you decide to file, put your credit cards away!  Do not run up any more charges on any credit card prior to filing for bankruptcy, it could be viewed as acquiring debt without the intention of re-paying it.

• Don’t touch your retirement account!  Retirement accounts are generally exempt in a bankruptcy, whether it’s a Chapter 7 or a Chapter 13; do not withdraw your retirement funds early.

• Don’t use your home’s Equity Line of Credit!  If you have an equity line of credit on your home – do not use it to pay off debt.  It may be exempt from your bankruptcy, but if you use it – you will lose it.

• If you owe money to family members – do not repay them!  In the eyes of the law, your relatives have the same status as other creditors; if you pay them back, that amount may be taken and distributed to other creditors.  In fact, there is a one year look back period on payments to relatives and only a 90 day look back period on non-relative or friend creditors.

• Do not transfer property you own out of your name!  If you sell or transfer property to a friend or relative, that sale or transfer can be undone, and viewed as an intent to defraud.