Specific actions prior to filing for bankruptcy may jeopardize your case.  Below are a few of the common mistakes.  If you’ve been intending to take any sudden action with your money, please give us a call at 858-344-0500 for free fact-based advice. 

Even if the bankruptcy debtor has been well-intentioned, certain actions may be considered fraud.

1. •  Prior to filing bankruptcy, it is important to never borrow what you have no intention to repay (in other words, it's important that you do not incur further debt) in anticipation of filing for bankruptcy.
   

•  You cannot unload property or transfer it for nominal consideration prior to filing bankruptcy.

•  You should not show favoritism by paying a “preferred” creditor (like family) to the detriment of other creditors before filing for bankruptcy.

Certain actions create a presumption of fraudulent incurrence of debt.  For example, but not limited to:

1. •  Cash advances totaling over $875 within 70 days of filing for bankruptcy
   

2. •  Incurring over $600 in debt to a single creditor for non-necessities within 90 days of filing for bankruptcy
   

3. • Waiting out 90 days does not negate earlier history.  There’s simply a greater burden of proof for objections to older transactions.  
   

Preferential Treatment can be Bad.

With regard to pre-bankruptcy debt payments to arm’s length creditors, the 90 days prior to filing constitute a period subject to preferences.  E.g., if you pay off your $20,000 debt to Amex in January, pay nothing on your $20K debt to Discover, and file bankruptcy in March, then that $20,000 may be reclaimed, then divvied fairly among your creditors.  Shrug.  But, this scenario certainly maters with family and other “insiders;” and for insiders, the preference period dates back a whole year, not just 90 days.

Example: you owe $30K to your beloved brother, Bert.  You have two other creditors and owe em $30K a piece, too. In January, you repay Bert in full; the others get nothing.  In December you file chapter-7 bankruptcy… and Surprise! Your trustee says she wants Bert’s 30.  She’ll leave Bert 10, 10 will to creditor, Ernie, and the leftover dough will go to creditor, Cookie Monster (less costs).  No blame for favoring Bert, but the trustee has to figure Cookie Monster needs the dough too.  How else is he going to make cookies? 

The above is far from an exhaustive list.  Red flags are aplenty.  Fortunately, we know where to look in that Bankruptcy Pandora Box.

The point to… pointing out pitfalls, Dear Reader, is that it’s important to take stock today; unnecessary delay can increase the chance you’ll hit a bankruptcy minefield.  The more time goes by, the more chances one has to… shoot oneself in the feet.

We have seen too many people come to us, when they’ve already made poor decisions that compromise the powerful debt relief available in bankruptcy. 

We have seen too many people come to us, when they’ve already lost money to collections---money that could have been saved through a timely bankruptcy filing.  Dawdle not! 

Bankruptcy is basically an all-too-common state of insolvency, when liabilities exceed assets.  Essentially, if your debt is burdensome, then you are bankrupt now.  Filing a voluntary bankruptcy petition (what we refer to colloquially as “declaring bankruptcy”) when it’s merited is a matter of doing something about the problem; bankruptcy is a proactive, responsible answer. And timely exploring your bankruptcy options now is a matter of avoiding greater loss later. 

What you canNOT do before you file for bankruptcy

General Bankruptcy Questions

Chapter 7 Bankruptcy

Chapter 13 Bankruptcy

What NOT to do

Why do I need an attorney to file?

Rates and Payment Methods