The Do’s and Don’ts Of Filing Bankruptcy

Filing bankruptcy is not an easy decision, particularly when you risk losing some of your non-exempt property.  Chapter 7 bankruptcy filing means that you are asking the court to eliminate all of your debt and give you a “fresh start.” Once your Chapter 7 bankruptcy filing is submitted, the Court will appoint a Trustee to your case. The Trustee will oversee your bankruptcy case, which also includes administering your assets. Naturally, you may attempt protect all of your hard earned assets from being seized by the Trustee. Although many of these strategies may seem like a good idea at the time, it may actually adversely affect the outcome of your bankruptcy case. If you are considering a Chapter 7 bankruptcy filing, it is essential to avoid:

Immediately paying back loans to friends and family members before filing bankruptcy. Any payments to insiders, such as friends and family members are strictly forbidden by the bankruptcy code. In fact, the Trustee assigned to your bankruptcy case has the authority to seize any repayments made on loans to friends or family within a two-year period.

Attempting to sell or transfer property to friends and family members at a reduced price prior to filing bankruptcy. Another way in which many bankruptcy filers may attempt to safeguard assets is by either transferring or selling valuable property to friends or family. Any suspicion about such activity will lead to the Trustee reviewing your case. If this does occur, it is important to be as forthcoming as possible to the Trustee and your attorney. Failure to do so will result in bankruptcy fraud. As a result, both you and the third party could face criminal charges.

Hiding certain assets from your attorney and the Trustee. Perhaps the worst way in which you may attempt to safeguard your assets during your bankruptcy filing is by hiding valuable assets from your attorney and the Trustee. This can range from handing over valuable jewelry to family members or withholding information about property you own. Your Trustee will find out, and the consequences thereof will be detrimental to your bankruptcy case.

Talking to creditors. In many cases, creditors may attempt to talk you out of filing for bankruptcy by providing you with false information. Refrain from communicating with creditors. Remember that such calls are the reason that you are filing bankruptcy.