What NOT to do before filing for bankruptcy

The Bankruptcy Code is a powerful tool that can give many hard-working people the debt relief that they need. However, many times people take certain actions before filing bankruptcy that is not in their best interests or worse, exposes them to allegations of bankruptcy fraud. Before you take any actions regarding your debts or assets, you should speak with an experienced bankruptcy attorney. At Caval Law Office, P.C., we help people obtain debt relief. We are centrally located in Twin Falls, Idaho. Get in touch with us to set up free consultation to review your particular situation.

4 Things to Avoid Doing Before Filing Bankruptcy

Do not max out your credit cards

Credit card debt is unsecured debt that is completely dischargeable in bankruptcy. However, that does not mean that you should max out your credit cards in anticipation of filing bankruptcy. Doing so could cause the creditor to try and hold you responsible for the debt despite your discharge by initiating a lawsuit within your bankruptcy case.

Avoid cash advances

Be very careful about taking cash advances if you are about to file for bankruptcy relief. Cash advances from a lender totaling $925 within 70 days of filing are presumed to be nondischargeable. Congress thought that too many people were taking out cash advances right before filing and that those advances should not be eliminated. A creditor still has to initiate a lawsuit (adversary proceeding) to hold you responsible for the debt, but it becomes a lot easier for the creditor to win. You should avoid cash advances prior to filing, but if you’ve inadvertently done it you need to tell your bankruptcy attorney about it to make sure your petition isn’t filed too soon.

Do not transfer or quitclaim property

Some people transfer a vehicle or other personal property to family members before they file a bankruptcy petition. This does not protect the asset from the reach of the bankruptcy trustee. The bankruptcy code gives the trustee a few powerful tools to recover those assets. By getting rid of assets before filing you risk a creditor or the trustee raising concerns about bankruptcy fraud.

Do not rely on a petition preparer or a debt resolution agency

Many people and businesses promise debt relief to people in financial difficulty. The problem is that the rules governing bankruptcy change all the time and many areas are unsettled. Petition preparers and debtor resolutions agencies cannot represent you in court so you should be weary of the advice they give you. They do not lose anything by giving you advice, but if they are wrong, it could cost you your discharge. For that reason, you should speak to a bankruptcy attorney.

Protect yourself

The best thing you can do for yourself if you are considering bankruptcy is to consult with a bankruptcy attorney. At Caval Law Office we can help guide you through the rules and help you take advantage of the bankruptcy laws. We can help you figure out what you should or should not do as you consider bankruptcy.

If bankruptcy is the right choice for you, Caval Law Office can help you file for relief under the right chapter and help get you on the path to financial peace of mind.