Three Shocking Things You Should Never Do if You’re Considering Bankruptcy
Are you thinking of filing bankruptcy?
If so, you’re not alone. Statistics show that the average year sees about 1.5 million people filing for bankruptcy — most of the time with the help of a law firm. More than half of these bankruptcies come as a result of medical debt.
But no matter what your reasons are for considering this form of discharging your debts, it’s essential to be as educated as possible on the subject. Because while bankruptcy can indeed help you start anew with your finances, there are lesser-known consequences to filing that many people don’t know. Here’s a look at three of the things people considering bankruptcy should never do:
Transfer money or property
In Chapter 7 filings, one’s debt is forgiven entirely — yet the individual may be required to surrender assets or property during the proceedings to satisfy debtors. Because of this, many think it’s smart to transfer their money or property to friends or relatives before beginning the filing process in order to hold on to their assets. However, doing so often isn’t an effective way to safeguard your assets. The courts may even consider your actions to be fraudulent, jeopardizing your filing entirely.
Paying off debts to specific creditors
It may also seem like a good idea to repay your debts to certain creditors before beginning your filing. Yet doing so can also damage your case, because this is considered to be something called a preferential transfer. While it’s not illegal, your bankruptcy trustee can sue to get that money back so it can be equally distributed among all your creditors, causing your filing to be delayed significantly.
Depositing extra money into your bank
If you’re planning on filing bankruptcy, the only money going into your bank account should be coming from your sources of income. Checks that you receive as gifts or payment from other individuals shouldn’t be deposited until after your debt is discharged. Why? During proceedings, such non-income-related deposits can easily cause confusion or give the impression of fraud to those handling your case. It’s best to avoid this for the sake of expediency.
Have more questions about what it takes to file personal bankruptcy? Get in touch with us by contacting us by phone, email or leaving a comment below.