Pre-Bankruptcy Planning

DON'TS in preparing to file a Chapter 7

The following is a compilation of pre-bankruptcy planning advice as provided by the collective wisdom, experience and knowledge of the outstanding members of the National Association of Consumer Bankruptcy Attorneys.

• Don't leave out Safety Deposit Boxes (and their contents), Bank, Checking, Savings, Brokerage, or Credit Union accounts.
• Don't file if your income is greater than your expenses unless you know your income is going to drop severely in the very near term for good cause.
• Don't use your credit cards for anything in the 90 days before filing; those charges are no longer subject to discharge in a bankruptcy.
• Don't take Credit Card Cash Advances, check-into-cash or payday loans in the 90 days before filing; those charges are no longer subject to discharge in a bankruptcy.
• Don't use convenience checks; those are treated just like Credit Card Cash Advances.
• Don't do balance transfers.
• Don't pay money to Family.
• Don't pay money to Friends.
• Don't tell a creditor that you intend to pay.
• Don't leave assets off of your paperwork; hiding assets, no matter how small or valueless, may be deemed a fraud on the court.
• Don't file if you are about to receive a tax refund or inheritance. Discuss the timing with your attorney.
• Don't fail to tell your attorney about your small business, sole proprietorship, partnership, LLC, LLP, LC, corporation, or hobby.
• Don't purchase a home, refinance your home or take on a second mortgage or home equity line of credit shortly before filing bankruptcy without consulting your attorney.
• Don't give or gift property to anyone.
• Don't pay more than $600 on any past due bill.
• Don't transfer property to anyone.
• Don't cash out retirement plans or 401(k)s.
• Don't gamble.
• Don't hide debts; the law requires you to list every debt you have; you cannot pick and choose which debts to file bankruptcy on.
• Don't put your money in your kids' bank accounts.
• Don't omit or 'save' a credit card for after your bankruptcy.
• Don't fail to list debt to family or other "insiders."
• Don't write bad checks.
• Don't borrow money.
• Don't forget to tell your attorney about liens you may have on your home or unpaid judgments so they can be avoided.
• Don't make major financial decisions without talking to your attorney.
• Don't get married before filing if your spouse-to-be has a high income.
• Don't misrepresent facts to your attorney.
• Don't fail to appear at State court hearings, trial or proceedings; coordinate with your attorney.
• Don't hide from your attorney. Keep them up-to date with your address, phone number and email address.

Information provided by Derrick B. Hager - Attorney at Law