Wait! Steps To Take Before You File For Bankruptcy

4 September 2017
 Categories: , Blog


You may not realize it, but there are certain things you can (and cannot) do right before you file your chapter 7 bankruptcy. You do want to take full advantage of any perks of bankruptcy, but you also don't want to accidentally take actions that could get your case thrown out of court. To learn about some things you can do, and some you should not do, read on.

Use your credit cards, but be careful.

Be cautious not only about the use of your cards, but the reason for those charges. If you are less than 90 days away from your filing date, any use of your cards could come under scrutiny by the bankruptcy trustee and by those creditors. If you can show that your use was due to an emergency or other important need, you should be fine with using them.

For example, if your car broke down and you needed to pay to have it repaired so that you can go to your job, that is considered a legitimate use of the card. On the other hand, if you felt so stressed out by your financial situation that you needed to schedule a spa day, you may be in trouble if a creditor objects. You run the risk of having your bankruptcy case come to an end, leading to another filing in the future.

Along the same lines, using those cards to take cash advances is another no-no within the 70 day time period before your filing. In this case, it doesn't matter what reason you can give for that cash advance, since cash is more difficult to track.

Get rid of property, but be careful.

You can be accused of bankruptcy fraud if the bankruptcy court suspects that you are hiding or disposing of assets prior to a chapter 7 filing. You must remember that a chapter 7 bankruptcy is also known as a liquidation bankruptcy, meaning that assets of the filer are subject to seizure to help pay off some of the debts. You must proceed with caution when taking action to remove or adjust your property holdings. There are some property actions that you can take to prevent losses, such as using money in a bank account to purchase an asset that might be exempt from seizure, but speak with your bankruptcy attorney before you make that move and stay on the right side of the law.