Things You Don’t Want to Do Before Filing for Bankruptcy

July 11, 2022 By: Carrie Weir

Actions that Could Jeopardize Your Right to Protection in Bankruptcy

You’ve run into some financial challenges—maybe your job was affected by COVID or you’ve racked up significant medical bills due to an injury or illness. You’ve tried to remedy the situation, but you can see no way forward other than through a personal bankruptcy filing. Don’t be ashamed—that’s exactly what the bankruptcy laws are there for—to help you get a fresh start. It’s important, though, that you not do anything to potentially compromise a Chapter 7 or Chapter 13 bankruptcy filing.

Things That Can Have a Negative Impact on Your Bankruptcy Filing

Here are the most important things to avoid in the days, weeks and months before a bankruptcy filing:

• Don’t misrepresent your financial situation—You may want to discharge debts in Chapter 7. Because you must submit to the “means test” to qualify for a Chapter 7 filing, you may be inclined to lie about your financial condition, omitting reference to assets or inflating your obligations. Don’t do it…the bankruptcy trustee will eventually have access to all your financial records, so you won’t get away with it and you may actually have your petition rejected or dismissed.
• Don’t transfer property to friends or family members—The bankruptcy trustee will also discover if you have transferred any property. Money and property that are transferred for less than fair market value may have to be returned.
• Don’t incur any new debt, including credit card debt—As a general rule, most credit care debt incurred within 90 days of bankruptcy won’t be dischargeable. The likely result? You’ll still owe the credit card debt, even when your bankruptcy filing is complete.
• Don’t borrow money from your retirement—Retirement assets are protected from bankruptcy. However, if you take money out of your retirement, it’s no longer protected and will become a part of your bankruptcy estate, available to pay off creditors.

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.