Staying Out of Trouble When You File for Bankruptcy

January 12, 2022 By: Carrie Weir

Things You Don’t Want to Do before You File for Protection

When you’re struggling to meet your financial obligations, bankruptcy can be a godsend. With a Chapter 7 filing, you can permanently discharge certain debts, and, in Texas, you can usually keep most or all of your property. Even if you don’t qualify for relief under Chapter 7, you can reorganize your debts through Chapter 13 and get the benefit of the automatic stay, so that you don’t have to worry about your creditors continually pestering you to collect on a debt.

But you need to be careful before you file for bankruptcy protection. There are certain things you simply don’t want to do; otherwise, you could be potentially guilty of bankruptcy fraud, and may have your bankruptcy dismissed:

• Don’t do anything to misrepresent, conceal or falsify your true financial condition—When you file, you must submit complete and accurate information about your financial situation, including all debts, assets, income, and expenses. If you knowingly fail to disclose relevant information, you can be guilty of perjury, with potential criminal penalties that include substantial fines and even prison time. These are potentially serious crimes, typically investigated by the FBI. It’s not worth the risk.
• Don’t pay off favored creditors to the exclusion of others—When you file for protection, the bankruptcy court will look back 90 days (as long as a year for certain “insiders”) and may require any creditors paid off during those periods to return the money they received.
• Don’t move or dispose of assets, except at “fair market value”—If you transfer assets in an attempt to protect them from the bankruptcy court, so that you can reclaim them later, you may encounter problems. Any transaction to dispose of assets must be in an “arms-length” transaction, where you have a willing buyer and willing seller exchanging goods or property at fair market value.

Contact an Experienced Rockwall, TX Bankruptcy Attorney

At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County and the surrounding counties.