Things to Avoid Before You File Bankruptcy

Most of the information you find concerning bankruptcy is going to involve what you can file on and what you can expect during and after the process. What you may not know is that the things you do right before you file are also important and can cause problems that may interfere with the successful discharge of your bankruptcy. For the most part, it is all about timing. You should discuss some of the following situations and decisions with your lawyer so that you don’t end up causing problems for yourself during your bankruptcy proceedings.

Opening New Accounts

Before the bankruptcy courts evolved, people would try to get as much as they could out of their financial status. Even when they intended to file bankruptcy, they would open new accounts just to benefit from the funds or material goods they received from these accounts. The problem was that they opened these accounts with no intention of ever paying them off and then included them in their bankruptcy.

This practice, however, constitutes fraud in the eyes of the bankruptcy courts today. Not only can these types of accounts prevent you from a successful discharge, but they can also cause the courts to file fraud charges against you. If you plan to file bankruptcy, avoid opening any kind of new accounts until you speak with your attorney, even if you plan to pay them off. You can read more about Chapter 7 bankruptcy here.

Paying Off Accounts

It sounds odd to say that you should not try to pay off accounts before you file bankruptcy, but it is a good idea to refrain from doing so unless your lawyer advises you otherwise. It’s not that the courts don’t appreciate your efforts; however, the creditors you did not pay off won’t appreciate it. To the courts, it could appear as favoritism. You may be asked why you paid off one account instead of the other. The courts may even determine that you planned out your bankruptcy instead of arriving at the decision after the financial burden became too much to handle.

Although you can open new accounts and pay off old ones before you come to the decision to file bankruptcy, the courts have a timeline you need to follow. Our lawyers can advise you on the best practices to ensure a successful discharge of your debt. As always, being transparent with your lawyer is a must for a successful attorney-client relationship.

Seeking Help

You can make your own financial decisions, but if you plan to file bankruptcy, it’s best to consult your attorney regarding your accounts. To receive answers to debt management and bankruptcy questions from our lawyers, call 1800 Debt-Relief.



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