After making the decision to file for bankruptcy, you must be careful about the actions you take. Once you file, a bankruptcy trustee will look at your financial transactions for several months. If you have made certain financial moves, your filing could be dismissed. To prevent this, here are some things you should not do before you file for bankruptcy:
Pay Off a Debt to a Relative or Friend
It might seem like a nice gesture to pay back a debt owed to a friend or family member, but it could lead to embarrassment for you. In the eyes of the bankruptcy court, your debts to friends and family are viewed the same as debts to a mortgage lender, credit card company, or other business. By making the payment just to your relative or friend, you are showing favoritism and that is a no-no.
If the bankruptcy trustee learns of the payment, he or she could require that the payment is returned. The funds would then be distributed among your creditors equally. Since the trustee would be using the court's permission to ask for the return of the funds, your relative or friend would have no choice but to return it.
To avoid this embarrassing scenario, wait to pay your debt. Depending on the type of bankruptcy you are filing, you might be able to include the debt in your filing and repay it through a repayment plan.
Accept Future Payments
One of the misconceptions that people have the process of filing for bankruptcy is that the court only looks back into your finances. However, the court can consider your present and future circumstances. Until your bankruptcy is completed by the court, all your assets are considered part of the bankruptcy estate.
Future payments, such as a settlement or inheritance, could be considered when totaling your assets. There is a possibility that those funds could be seized by the trustee and distributed to your creditors.
To prevent this, some people choose to delay their filing. If you decide to go this route, you need to be aware that there is a look back period for filings. If you accept a payment and then file before that period is up, the bankruptcy trustee could still consider those assets.
There are other financial moves you should not make before you file for bankruptcy. Work with lawyer like David S. Riehl, Attorney At Law to identify any financial decisions you make that could have an adverse effect on your filing.Share
6 October 2017