Avoid these mistakes before filing bankruptcy

On Behalf of | Jun 27, 2023 | Bankruptcy |

Once you have made the decision to file for bankruptcy, you might feel a huge sense of relief. You can now make a fresh start and move forward with a clean slate.

Preparing for your bankruptcy involves many different steps, such as reviewing your credit reports and getting accurate information on your total debt. You will also review your debt to determine if it qualifies for bankruptcy, since some debt, such as student loans, typically does not.

However, there are some things you should avoid as you prepare for filing bankruptcy. Most of these things involve what you purchase and what you spend your money on.

Do not accrue new debt

You should not take out any new loans, apply for any new credit cards or accumulate any new debt before filing.

If the new debt qualifies for discharge in your bankruptcy and you could open yourself up to fraud charges if it appears you purposely took out debt with no intention of paying it back.

Do not make large purchases

Additionally, do not make any major purchases before you file. The bankruptcy court could end up ordering that the assets be sold to pay off your creditors after you file.

Finally, avoid transferring the title of any assets you own to someone else. These are also activities that could be viewed as suspicious.

Do not lie about your financial position

Stick to your financial routine before filing for bankruptcy to avoid any appearance of fraud. On the day you file, the court will examine your financial situation and ask you questions about it.

Be honest. Most importantly, do not hide or lie about your financial picture, especially any assets you own. There are ways of uncovering this information and you are likely to get caught in your lies, jeopardizing your bankruptcy filing.

Knowing how a bankruptcy court will view your financial decisions can be tricky. It helps to have advice from a professional who can evaluate your entire situation.