3 Things You Shouldn't Do Before Filing For Bankruptcy

Financial trouble can be stressful for anyone. Sometimes your financial burdens can become so great, the only viable option to escape the weight of these burdens is filing for bankruptcy.

Bankruptcy can be a useful tool when approached with the right attitude.

There are some things that you should never do before filing for bankruptcy if you want to streamline the process. Work with an experienced attorney to learn more about preparing for filing bankruptcy.

1. Don't Transfer Assets

You may be tempted to transfer some of your assets to a family member or friend before you file for bankruptcy in an attempt to avoid losing these assets.

It's important that you avoid making any major transfers as you prepare to file your bankruptcy petition. The court will inevitably uncover any asset transfers, and you could face serious consequences for attempting to hide these assets.

The best way to preserve your assets is to work with an attorney to mark some of your assets as exempt.

2. Don't Pay Only Select Creditors

If you are planning to make payments to creditors prior to filing your bankruptcy petition, it's essential that you pay all of your creditors.

Don't make the mistake of paying large sums to certain creditors while completely ignoring others.

Bankruptcy judges refer to these types of payments as preferential transfers. A preferential transfer could negatively affect the outcome of your bankruptcy case.

Make sure that you check with your attorney before making any payments to creditors so that your payments won't get in the way of your bankruptcy case in the future.

3. Don't Charge Large Purchases

Some people are tempted to charge expensive purchases to their credit cards prior to filing for bankruptcy. Knowing that your credit card debt will be discharged via bankruptcy makes it easy to believe that you can buy anything you want prior to filing.

Unfortunately, this kind of irresponsible spending can spell trouble. The court will be able to identify large purchases made with a credit card that you do not have any intention to pay for. You could be found guilty of bankruptcy fraud or have your case dismissed as a result of extreme credit card spending.

The best way to avoid any issues is to check with your bankruptcy lawyer before charging any purchase to your credit card. Your attorney can determine if the purchase will compromise your bankruptcy case.