The process of filing for bankruptcy can be incredibly complicated, as there are a number of important considerations that must be made. However, you may assume that the process begins when you officially submit the paperwork. Unfortunately, this is far from the truth, as the bankruptcy court can examine your finances as far back as one year prior to filing. As such, if you are considering this process, you’ll want to keep reading. The following blog explores what you should avoid doing before you file and the importance of connecting with an Orange County consumer bankruptcy lawyer to help you during this process.
What Should I Avoid Doing Before Filing for Bankruptcy?
If you want to file for bankruptcy, it’s important to understand that while there are things you can do to help prepare for your case, there are also things you should avoid doing.
One of the most common mistakes people make is making large purchases before filing for bankruptcy. When you file, all purchases for the past 90 days will be scrutinized. Generally, you should avoid making any purchases that do not reflect basic necessities, like food, clothing, and utilities. If there are any luxury purchases, like designer goods or expensive trips, it can be a sign of fraud. As such, if you were planning on getting the debt discharged during bankruptcy, or it was just unfortunate timing, you could face fraud charges. It’s important to understand that the creditor doesn’t have to prove you intended to commit fraud, as this is considered “presumptive fraud.” As such, the debt may not be discharged, and you risk having your case dismissed.
You should also refrain from attempting to conceal or hide assets. You may want to transfer certain property to a friend or family member to keep it safe from bankruptcy, but doing so is illegal. While you may need to sell assets to pay rent or afford groceries, you should keep a paper trail to provide to your trustee, as they will inquire about any recent transactions to ensure you are not trying to commit fraud.
Finally, you should avoid paying off certain creditors. When you make payments before bankruptcy, they can be considered “preferential transfers.” For example, if you borrowed money from a family member and repaid them before filing, the transaction can be undone in court. As such, your family member may be sued to return the funds so they may be distributed to all creditors.
What Should I Do if I’ve Made an Error?
If you’ve made any of the aforementioned errors prior to filing for bankruptcy, understanding your legal options is critical. Generally, the most important thing you can do is contact an experienced bankruptcy attorney as soon as possible to discuss your legal options. They can assist you in determining the best course of action based on your circumstances.
Have you considered filing for bankruptcy? If so, the team at the Law Offices of Michael D. Pinsky, P.C., can help. We understand that this process can be overwhelming, which is why we will do everything possible to assist you through these difficult times. When you need guidance, contact our team to learn how we can represent you.
