Bankruptcy pitfalls
Mistakes that can hurt your case before it's filed
Most of these come from good intentions. People try to protect family or pay what they can. Talk to us before you move money, sell anything, or pay anyone back.
Paying back family first
Repaying a relative or close friend in the year before you file can be undone. The trustee can sue them to recover that money for your other creditors.
Putting property in someone else's name
Signing a car, house, or bank account over to a relative before filing looks like hiding assets. The trustee can reverse the transfer, and it can cost you your discharge.
Cashing out your retirement
Your 401(k), IRA, and pension are almost always protected in bankruptcy. Draining them to pay credit cards spends money you would have kept, and adds taxes and penalties.
Running up credit cards
Luxury purchases and cash advances made shortly before filing can be ruled non-dischargeable. Once you're thinking about bankruptcy, stop using the cards.
Leaving debts off your paperwork
You have to list every creditor, including ones you plan to keep paying, like a car loan or money owed to a friend. A creditor you leave off may still be able to collect.
Waiting until the night before
Calling the day before a sheriff's sale or garnishment hearing narrows your options. Call as soon as court papers arrive.
Spending a large tax refund
A refund you're owed when you file can become part of the case. We plan the timing of your filing around it with you.
Filing on your own
The court lets you file without a lawyer. Most people who do run into trouble with exemptions, the means test, or the trustee's requests. If your case is dismissed and you refile within a year, the automatic stay may only last 30 days.
Already done one of these?
Tell us at your consultation. Many of these problems can be worked through if we know about them before your case is filed.
Ask before you act
A free consultation now costs you nothing. Undoing a transfer later can cost a lot.