Before You Declare Bankruptcy
Once the big decision is made, you should take care with your financial affairs in the time leading up to your eventual filing. There are some big no no's that could end up causing your case to be dismissed, leaving you unable to get the debt relief you so desperately need. Read on to learn more about what you should not be doing before you declare chapter 7 bankruptcy.
Taking full advantage of those credit cards.
Many people make the mistake of thinking that they can freely use their credit cards to buy anything at all and just declare bankruptcy to get rid of that debt. You should understand that the bankruptcy laws place strict limits on the amount you can charge on your cards in the 90-day period prior to your filing. So, in the 3 months before you file, don't use your card for anything that you don't need. If you can show that your use of the card was for something you really needed, you should be off the hook. For example, if you needed to have your car repaired so that you could get to work, that would be OK. If you charged a spa vacation, that would not be OK. If you needed to replace your washing machine, you should be good to go; if you thought you needed a very large flat screen TV, not so much.
Another area that raises the attention of the bankruptcy courts is getting cash advances from those credit cards. Just as with using the cards for purchases, you cannot take more than $675.00, in total, from any credit card in the 70-day time period before you declare bankruptcy.
Many people put off bankruptcy for far too long because of the fear of losing property. You are right to be concerned, since the bankruptcy trustee does have the right to seize property to help pay off some of your debts. You should know, however, that you cannot simply sell property for a below-market price or give it away to your brother-in-law to keep it from seizure. Instead, speak with a bankruptcy attorney to get more information about using your state's exemptions to hold on to your home, vehicles, and more.
Another problematic situation can occur when you owe money to certain people or creditors and you are reluctant to add them to your bankruptcy petition. You should know that you cannot pay off certain debts right before you declare bankruptcy. The bankruptcy trustee will be the one to decide who gets paid and how much, and they have the power to "take back" any amounts you paid over $600.00 in the 90-day period before you declare.
Be sure to speak to a bankruptcy attorney and get more information about things not to do before you file for your chapter 7 bankruptcy.