What Not to Do When Filing for Chapter 7 Bankruptcy

What Not to Do When Filing for Chapter 7 Bankruptcy

November 22, 2019

We all make mistakes, and sometimes filing for Chapter 7 bankruptcy is the best way to cut your losses and start rebuilding your finances. It’s important to avoid making any further mistakes, however, which is why you should consult with a bankruptcy attorney in Montgomery County, TX. A good attorney will help you make sense of the process and ensure that you don’t do anything illegal or that will jeopardize your case.

Here is what you absolutely should not do if you’ve filed or are about to file for Chapter 7 bankruptcy:

  • Transfer money or property: Maybe you’re just trying to protect your hard-earned nest egg by transferring it over to a relative, but courts do not look kindly upon this—in fact, they may determine that you’ve committed fraud. Plus, the bankruptcy court will still be able to go after the funds or assets to pay off your debts. Avoid changing the name on a title, depositing money in someone else’s account and taking your name off deeds or other ownership paperwork. If you have questions, consult a trusted bankruptcy attorney.
  • Use credit cards: Try to eliminate your credit card usage completely, unless you know beyond a shadow of a doubt that you’ll be able to make that payment in full by the due date.
  • Pay your creditors: It seems counterintuitive, but paying your creditors can actually hurt your case. Even though you want to do the right thing and pay them off, especially if it’s a debt you incurred to help someone else, it is prohibited. By all means, make regular payments, but don’t entirely satisfy a debt. These “preferential transfers” can lead to your bankruptcy trustee suing the company to get the money you paid back, resulting in a significantly bigger mess.
  • Accept large sums of money: Maybe your great aunt Florence wants to give you your inheritance early to help make this mess go away. It’s commendable, but the trustee can take it to pay your unsecured creditors. The same goes for future bonuses at work or any other unusual compensation that you might receive, as it will almost certainly go to repaying your debts. Similarly, you should absolutely not deposit money into your bank account that isn’t part of your normal salary. If it’s in your account, it’s considered yours, even if you deposited it as a favor to others. That extends to those with small businesses: be sure to keep your business and personal transactions separate.

Filing for Chapter 7 bankruptcy in Montgomery County, TX

When you’re faced with significant financial challenges, there’s no shame in asking for help, and filing for Chapter 7 bankruptcy can be the first step in rebuilding your future. James R. Jones, Attorney at Law specializes in Chapter 7 bankruptcy. We represent individuals and businesses seeking to release themselves from credit card debt, unsecured loans and other financial burdens. Call us today for more bankruptcy filing tips in Montgomery County, TX that will help you get the fresh start you need

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