5 Things to Avoid Before You File Bankruptcy

5 Things to Avoid Before You File Bankruptcy. If you are reading this article it means either you are about to file bankruptcy or you might to that sometime in near future but remember that being insolvent isn’t that bad, after all. Just be thankful you’re not one of your creditors.

Bankruptcy may seem daunting, but all those steps taken to avoid it, may not be as sensible as they seem. Although bankruptcy is not all fun and games, but if it is your only option, then you’ll have to swallow your pride, and for the sake of yourself and your family, consult a lawyer.

At least you should know what cards you can play. When there is no other way out, you have to stop trying and file for insolvency. 5 things to avoid before you file bankruptcy:

Talk To Your Lawyer

Avoid saving up on your money by not hiring a lawyer. The opportunity cost of getting all that advice and support is far higher than the cost of the fees. Secondly, never lie to your attorney.

You do not have Pinocchio’s nose, so he would not know; but it will harm you in the long run. By lying, you’re only impairing him from helping you stay afloat.

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Do Not Pay Your Debt

If you have already decided to file bankruptcy, no need to pay those debts now. According to Wisebread, bankruptcy rules forbid sending more than $600 in “preferential payments” to any one creditor in the three months before you file bankruptcy.

Those debts have a good chance of being waived, so paying your debts now is like flushing good money down the drain. Rather save it up for some rainy day.

Retirement Accounts

Refrain from putting your retirement fund through jeopardy. We’ve already established that paying your debts if you plan to file for bankruptcy is the wrong thing to do. Also, even if your debts aren’t waived off, the court can and will not use those retirement accounts to reimburse the creditors.

If you take this money out of the account, this safeguard will dissolve. This money will then be used to pay off your debtors. Hence, be very, very careful when handling money before you file for insolvency.

Hide that credit card!

If you make purchases with your credit card of up and about $500, with in three months of filing for bankruptcy, you’ll have to provide your rationale of using the card to the court. You have to prove that you used it for bare necessities.

This will also happen if you withdraw around $750 within 70 days of filing for bankruptcy. All in all, DO NOT use the card for unnecessary stuff.

Now that you are going to file for bankruptcy, you have to take care that each and every single item you buy is only bought because it is a ‘need’ not a ‘want’. If the court knows that you bought commodities that were not necessary, that will leave you responsible for that part of debt.

Keep Possessing Your Possessions

When it comes to selling assets, be very careful. Within in four years of filing, if you have sold your property to an unknown party, no problem.

However, if you have sold your property or assets to a friend or a family member, the court can and will suspect that you are trying to conceal your assets from the court, so that your court doesn’t take those assets and use them to pay back your creditors.

The court won’t do a reverse transfer, however it will get distrustful of your activity.

There are many other things that you should avoid when filing for bankruptcy, however these five are the major ones. We hope that this article would help you to go through your bankruptcy phase smoothly even though it can be a bumpy ride.

Have you filed for bankruptcy? What was the process like? Please share your views with us.