Help Your Future Self And Avoid Doing These 4 Things Before Filing For Bankruptcy

Whether you already know for sure you are going to meet with a lawyer to file for bankruptcy or even if you are simply considering it, there are many things you should avoid doing to keep your future self out of hot water. As with most legal matters, bankruptcy law is complicated and there are many rules you may not be aware of that you could inadvertently violate and make your case more challenging. To this end, avoid doing these four things if you are considering filing for bankruptcy:

Don't Take On Any More Consumer Debt

When you file for bankruptcy, the court looks back at your financial history in the months leading up to the filing date. For this reason, you should not take on any new consumer debt or it can look like a fraud.

For example, if you go out and purchase a high-end laptop from Dell right before filing, then it looks like you were trying to obtain a new laptop without ultimately having to pay for it. Other than unavoidable medical debt, don't charge anything or take out any new loans prior to filing bankruptcy.

Don't Refinance Your House

If you want to try and pay off your debts and are considering tapping into your home's equity, you should reconsider. Since much of the equity in your home is likely protected from the court, taking the cash to pay debt isn't advised. If your consumer debt ends up being discharged, then money from your home equity would still be yours instead of going to your creditors.

Don't Withdraw Money from Your Retirement Account

Many people who run into financial problems will raid their retirement account in an effort to dig themselves out of the hole of debt. However, doing this before filing bankruptcy isn't ever advised. In many cases, retirement accounts can be protected from the bankruptcy court, and if you take the money to pay debts you are short-changing your future self when you reach retirement age.

Don't Give Away Anything of Value

Finally, when you file for bankruptcy, included in the filing papers will be a declaration from you that you have not given away any antiques, valuable items, or money to any of your friends and relatives during a certain period before filing your case. You will have to testify to your answers under oath, so you need to be able to honestly answer that you did not give away or transfer anything of value to keep it out of the hands of the bankruptcy court.

Contact a chapter 7 bankruptcy lawyer for more help.