Things you should not do before filing bankruptcy
On Behalf of O’Brien Law Firm, LLC
Posted on: October 27, 2018
Credit card debt leads to numerous people filing for bankruptcy every year. Mississippi has one of the highest bankruptcy rates in the United States, with roughly 361 people out of every 100,000 having to file for bankruptcy every year.
Filing for bankruptcy can be a viable option for many people to get their lives in order. However, there are actions many take directly before filing that significantly jeopardize the process. Therefore, before applying for bankruptcy, you should make sure you have not recently done the following.
Running up credit card debt even more
When some people decide they will file for bankruptcy, they figure they have nothing left to lose. They make a ton of purchases on their credit cards because they assume the courts will instantly forgive the debt. Most of the time, any credit card purchases made within 90 days of filing will not qualify for forgiveness. The court may then require you to pay off a significant portion of the debt even after the bankruptcy is over.
Transferring property to friends and family
Bankruptcy may require you to relinquish certain assets. In an attempt to avoid this, some people transfer certain items over to friends and family members so the court does not find them. This is illegal. It can derail the bankruptcy process, so make sure to be completely transparent with all the assets and debts you own.
Taking money out of your retirement accounts
Some try to take money out of their 401(k)s or other retirement accounts to either pay off creditors or stash some of it away. The bankruptcy code states you cannot pay off a creditor because it shows you favor one over another. If the plan is to hide the funds, then it is an unfounded fear. Bankruptcy does not impact retirement accounts, so you do not have to worry about losing those funds.