Seven Things to Never Do Before Filing for Bankruptcy


If you intend to file bankruptcy (or you are already amidst filing), there is plenty more preparation that you have to do other than hiring an attorney and filling out some forms. What you do (and more specifically, what you don’t do) prior to officially filing is critical. Doing the wrong thing could not only result in your case being dismissed, but your facing multiple judgments and/or liens for your outstanding debts.

What Should You Not Do Before Filing for Bankruptcy?

These actions will have a severe, irreversible impact on your bankruptcy case (regardless of whether you are filing Chapter 7 or Chapter 13 bankruptcy). So, when considering bankruptcy, here are seven things to never do:

  • Provide Inaccurate or Dishonest Information – While human error exists, bankruptcy courts do not take lightly to the fact that you provided inaccurate information. More importantly, you cannot be dishonest with your disclosures. The courts demand 100 percent accuracy in regard to assets, debts, income, expenses, and financial history. Any inaccuracies or information that is perceived as dishonest could result in serious consequences.
  1. Failing to File Your Tax Returns – You are required to file all tax returns for the past two years prior to filing for bankruptcy. Failing to do so could halt your case – because those tax returns provide past earnings and asset information, and help the courts determine tax obligations.
  2. Adding on More Debt – Just because you are about to file for bankruptcy does not mean that now is the time to charge up credit cards and take out more loans. Adding more debt (especially within 90 days of filing), could result in a creditor objecting to the discharge of your debts, and the court’s approving of such requests.
  3. Relocate Assets – Your assets will be considered in bankruptcy, but if you think that relocating them will protect them from liquidation, you are putting yourself in dangerous territory. If you have sold assets for the purpose of paying of debts, this is different. But, moving assets to keep them from creditors could put you in risk of criminal penalties.
  4. Filing Pro Se – Yes, the Internet is full of DIY resources, but those are not meant for pro se (DIY) bankruptcy. Filing for bankruptcy without the assistance of an attorney almost always ends in disaster. An attorney understands the critical deadlines, paperwork required, and hearings that you must attend.
  5. Giving Relatives Money –Even if you want to help out, giving a relative a significant amount of money right before filing your bankruptcy claim could raise questions about the legitimacy of your financial hardship. The Trustee in your case may contact the relative, also, and require him or her to pay it back to the court in order to pay off creditors.
  6. Pay Creditors –You may want to do the right thing by paying down debts. But, paying off creditors could be considered preferential transfers. They could lead to lawsuits where the court’s representative sues the entity or person that you paid in order to get the money back for proper distribution. You should, however, pay all other bills (those in good standing) on time to avoid further collections.

Speak with a Bankruptcy Attorney Before Doing Anything

Every little thing that you do leading up to your filing, as well as after, can affect your case. To ensure that you do not do anything detrimental, speak with a bankruptcy attorney. The team at Hames, Anderson, Whitlow & O’Leary can assist you with your bankruptcy case. Call us today at 509-586-7797, or fill out our online contact form with your questions.

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