Filing for bankruptcy is complicated and sometimes scary. It requires a fair amount of legal knowledge and usually the help of an experienced bankruptcy attorney. But there are some easy steps you can follow yourself as you dive into the process that doesn’t require the help of an attorney or other legal professional. There’s a lot you should do, but do you know all the things you shouldn’t be doing as you prepare to file for bankruptcy?
There is a lot you need to make sure you do and don’t do as you begin the process of filing for bankruptcy.
It’s a tricky process and anything you do with your financials is going to be put under scrutiny as you work through plans for repayment and life after bankruptcy. It’s in your best interest to follow the advice of your legal professional and the courts as you work through the process and work towards being debt free.
Below are five things to not do while you’re thinking about filing for bankruptcy.
Don’t Transfer Money
It’s very tempting to send money or property into someone else’s case before you file for bankruptcy but doing so will be considered theft by the courts. Many people do this—changing the name on bank accounts or car titles, depositing funds into someone else’s bank account, putting property in someone else’s name—as a way to protect these assets from any repayment or liquidation process. But that’s illegal and can cost you dearly.
Don’t Pay Your Creditors
This one probably seems counterintuitive. The whole point of declaring bankruptcy is to ensure that your debts are paid. However, if you begin to pay more than necessary to certain creditors during this time it may be deemed “preferential transfers” and can lead to problems, including claw back lawsuits where that creditor may be sued to get the money returned.
Don’t Use Your Credit Cards
Don’t incur more credit and debt while you’re trying to pay off existing debt. While it may be a tempting way to continue to spend money while you’re in the middle of handling debt, it will only cause more problems as you continue to rack up debt. Credit cards aren’t free money, it’s just delayed money.
Don’t Deposit Non-Salary Money
The only money going into your bank account should be salaries or other forms of payment. Don’t hold money for friends or be a part of a three-way trade of money. Anything that goes into your account can be considered assets available for liquidation during the bankruptcy process, it doesn’t matter who gave it to you and why. So refrain from holding money for people during the process.
Don’t Wait to File
You may have decided you’re going to file for bankruptcy but don’t plan on doing it right away. Waiting to file can be costly. Not only do you run the risk of incurring scrutiny from the courts if you shuffled money or assets away, you’re also just incurring more debt while you wait to file. It can be a costly mistake.
Can future money be used during bankruptcy?
In short, yes. Payments you expect to get but do not yet have in your possession can be seized as part of the bankruptcy process. So, if you have a bonus coming, it will likely go towards bankruptcy repayment.
What about payouts from lawsuits?
These count too. That’s why you should think twice before suing anyone unnecessarily during your bankruptcy period. Any payout is considered an asset which can be seized.
Talk to an attorney about your options during bankruptcy and don’t make costly mistakes that could hurt you in the future. One thing you should do right away is talk to a personal bankruptcy attorney and know your options.
At Hines Law, serving the greater Boston area, we acknowledge that personal bankruptcy situations are complicated, confusing, and many times difficult to embrace. The results of these circumstances can have a lifelong effect on you and your loved ones if you don’t get proper legal advice and help.
Our bankruptcy attorneys specialize in Chapter 7 and Chapter 13 filing. Deciding which is the right choice for you depends on your debts, assets, and your income. Hines Law is a full-service bankruptcy firm located throughout Massachusetts that can help guide you through the process so that you avoid problems and benefit the full protection you deserve. Call today for a Free Case Evaluation!