Successfully completing a bankruptcy means being prepared in many different ways and accomplishing a variety of checklist goals before the official filing even occurs. Among all of the things you must be careful to do, there are a few things you must be careful not to do. Some transactions and behaviors can be seen as suspicious by the bankruptcy court, and if you get on their wrong side, your bankruptcy chances are as good as sunk; plus, some of them can constitute illegal fraud.
Review this list of things you should not do before filing for bankruptcy:
- Asset transfers: Moving money or property to other owners should protect them from bankruptcy, right? Wrong. The court will trace your transfers, undo them, and could penalize you for it. Do not do anything that could be seen as fraudulently trying to hide assets, which includes removing your name from joint accounts or transferring property titles to relatives.
- Pay off creditors: While a big part of bankruptcy is finding a way to payback creditors, don’t do this on your own accord – let the bankruptcy court decide who gets what amount of money and why. If you decide to 100% pay your debt to your credit card, for example, and then file for bankruptcy, it can be seen as a preferential transfer.
- Overuse credit cards: When bankruptcy is looming on the horizon, it is not the time to go “all in” and start using credit cards excessively in hopes that all of the debt will be eliminated soon enough anyway. Not only can this seriously harm your credit score, but recently incurred debt might be maintained by the bankruptcy court and you’ll need to pay it back.
- Big deposits: You are entitled to deposit and keep regular salaries or payments before and while you file for bankruptcy, but anything larger than that will raise eyebrows. Be mindful of accepting monetary gifts during this time.
- File plaintiff lawsuits: If someone hits you with your car and you file a personal injury lawsuit while you are also preparing to file for bankruptcy, any settlement you get from that case could fall into your bankruptcy estate and go to creditors instead of you. If at all possible, hold off lawsuits until everything is sorted elsewhere.
Not only are there exceptions and minute details to these five aforementioned behaviors, but there are many, many more unlisted. The safest decision may be to work directly with a Baltimore bankruptcy attorney from Belsky, Weinberg & Horowitz LLC. We can guide you through the process, from the very beginning to the finalization of your bankruptcy estate, and help you avoid any legal pitfalls. We can also help you prepare for a more comfortable and financially successful life after bankruptcy.
Contact our firm today. The sooner you start preparing for bankruptcy, the better.