What To Avoid Before Filing Bankruptcy

bankruptcy petitionThere are many things that need to be done in order to successfully prepare for a bankruptcy filing. However, there are also a few things that should be avoided prior to filing to prevent any delays or unnecessary complications in the case.

Debts

While repaying debts is your responsibility, making significant payments prior to filing for bankruptcy could work against you. Your debts are a big factor in determining your eligibility to file in the first place. It is not recommended that you purposely miss payments or default on your debt accounts, but try not to make any large payments either. Payments over $600 may be viewed as suspicious by the bankruptcy court and warrant a closer look into your eligibility status. Continue to pay as you have been and keep a stable payment history within the months leading up to your bankruptcy filing.  It is also important that you do not accumulate more debt prior to filing. Debts accumulated within the 90 days prior to filing that exceed $750 may not be eligible for a debt discharge and could cause delays in your case.

Assets

Many people fear losing their assets in bankruptcy. While this is a legitimate concern in some cases, it is by far the standard rule for most filers. In efforts to protect one’s assets, there have been instances in which people sold or transferred their assets to another person before filing. This action is a big problem and often raises the concerns of the court, leading to suspicions of fraud. It is best to avoid transferring or giving away assets to friends or family altogether, and to be mindful of the rules regarding selling assets. Although not recommended, if you have to sell an asset prior to filing for bankruptcy, you must (a) obtain fair market value for the item and (b) claim the income from the sale in your bankruptcy petition. The money made from the sale of assets should not be used to pay debts, given to another person or hidden from the court.

 

 

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