When filing Chapter 7 bankruptcy, you should avoid a few things to ensure the smoothest process possible. Bankruptcy is a legal decision a person makes when it becomes apparent that a debt situation is looking unrecoverable. It’s often one of the most challenging financial decisions in a person’s life; therefore, if you’re facing bankruptcy, you should stay away from particular transactions when you file. Below we state the transactions to beware of and some behaviors that will save you from jeopardizing your bankruptcy case.
Don’t Pay Creditors
For many, the primary reason to file for bankruptcy is because of debts that cannot be repaid. It is good to maintain regular payments on your bills, but avoid paying your creditors in large sums or making any unusual payments. Though this may seem honorable, it is contrary to the reason for filing.
Friends and families are also legally considered creditors if you owe them money. Do not suddenly clear your debt by paying off those close to you first, as this may lead to a lawsuit. Preferential transfer refers to one creditor benefiting unfairly over others. If you pay an unusual amount to one creditor while denying another, the court may sue the creditor who got paid and order the funds to be taken away from him or her.
Don’t Make Any Unusual Transactions
Avoid making purchases that are outside your routine or immediate needs. Common transactions to be mindful of include:
- Depositing money in your account that is not your salary or payment to you
- Transferring sums of money to relatives
- Attempting to remove your name from joint accounts, business ventures, or deeding real estate property in your name over to another person
It is important to remember that having assets when filing bankruptcy doesn’t mean that you will lose them, so it is not imperative to hide them.
Don’t File if You’re About to Receive A Large Sum
If you can resolve your debts without filing bankruptcy, do it. Any pending finances not yet in your possession are part of your bankruptcy estate. Agreeing to a promotion, settling a legal claim, and accepting an inheritance are all good reasons to avoid filing as a court representative may seize this money to pay your debts. Having the court distribute your funds may be unfavorable if you could reach more favorable terms with your creditors, provided you have some cash on hand.
Seek Legal Help Before Filing Bankruptcy
Bankruptcy can be increasingly difficult when you file at the wrong time. Deciding to seek legal counsel can save you from setback and losses you may encounter down the road. To know how best to approach bankruptcy, contact a Louisiana bankruptcy attorney. E. Orum Young has lawyers who dedicate themselves to helping clients resolve their financial struggles. Our lawyers have over 35 years of experience conducting the most bankruptcies in Northeast Louisiana and have experience with over 20,000 cases. Contact us today at 318-450-3192 for a free evaluation.