what-not-to-do-before-bankruptcyWhile most of our potential clients ask about what’s involved in a bankruptcy case, and what they need to do when they are filing, many forget to ask what NOT to do… And the things you shouldn’t do before filing are just as important as what comes afterward.

In fact, there are several things you could do before your bankruptcy case that could cause major complications – and could possibly even cause your case to be denied!

As we always say, the most important thing to do when considering bankruptcy is to meet with an experienced bankruptcy lawyer. The advice and guidance you will receive are vital to avoiding bumps in the road during your case.

So, for anyone out there who is considering bankruptcy and has not talked to an experienced attorney yet, here are the five most important things you should avoid doing before you file for bankruptcy:

1. Do not max our your credit cards (or get new ones)

This seems like common sense, but you would be surprised at how many people rush out and run up thousands of dollars of additional debt once they know they are going to file for bankruptcy. Filing for bankruptcy is not a free pass to buy a bunch of stuff and not pay for it. Doing this is fraud – plain and simple. It is highly likely that any large charges that occur right before your bankruptcy case is filed will result in objections from creditors. If your creditors see enough large charges, they will likely claim that you committed fraud – and that is definitely a road you do not want to head down.

2. Do not pay off certain creditors

Do not make the mistake of choosing a few creditors to pay off before your case. When you do this, you are creating preferential payments. The trustee of your bankruptcy case will likely sue the paid-off creditor to collect the money that you paid, so the money can be pro-rated to all of your creditors.

3. Do not ignore debt collection attempts

Sure, the constant calls and letters can be incredibly annoying and stressful, but you should not flat out ignore the collection attempts. Filing for bankruptcy will stop those collection attempts immediately – but in most cases, if you ignore collection attempts for an extended period of time, the creditors will file lawsuits to try to get their money. These suits could cause complications when you are trying to recover after your bankruptcy case is completed.

4. Do not transfer assets to friends or family

Some people think that selling assets to get cash is better than liquidation – but that is also fraud. Others think that transferring property to friends or family members is a better way to protect the property from liquidation. Guess what? That’s fraud too.

5. Do not pay family members

Just like we mentioned in tip number 2, you cannot play favorites when you are paying off your debts. This is especially true if you are ignoring other creditors to pay off family debts. Your trustee has the right to sue your family member to get the payment back for redistribution – and no one wants that.

Again – if you are considering bankruptcy, your best course of action is to talk to an experience bankruptcy attorney to sort out your options. Rubin & Associates offers free consultations, so there is zero cost or obligation if you call us for a consultation. We’re available Monday through Friday at 214-760-7777.