Once you’ve decided to file, stop using your credit cards. Some people think they might as well “max them out” since the debt will be wiped out anyway. But that’s not how it works. Charges made immediately before filing, especially for luxury items, can be perceived as fraudulent. The court may decide not to discharge those debts.
You may want to pay back a friend or family member before filing your taxes. That’s understandable, but it’s not allowed. The bankruptcy court doesn’t want you to favor one creditor over another. These payments can be seen as “preferential transfers.” The court might even require the person to return the money.
Some people worry about losing property and try to transfer it to someone else before filing. This includes giving away cars, houses, or cash. But the court looks at your financial activity in the months leading up to your bankruptcy. If it finds you’ve moved assets to avoid listing them, it could be considered fraud.
Waiting too long to file can exacerbate the situation. If you’re draining your savings, borrowing against retirement, or falling behind on essentials like rent or utilities, it’s time to get help. The sooner you act, the more options you have.
Your retirement savings are usually protected in bankruptcy. That means you don’t have to spend them to pay off debt. Taking money out early can trigger taxes and penalties—and once it’s gone, you may not get it back.
Bankruptcy may seem like just paperwork, but it’s more than that. Filing on your own can lead to missed deadlines, incorrect forms, or losing property you could have kept. A bankruptcy attorney can help you avoid these issues and guide you through the process.
Some people believe they can file under Chapter 7 regardless of their circumstances. However, if you earn too much, you may not qualify. You’ll need to take a “means test” that looks at your income and expenses. An attorney can help you figure out which chapter you qualify for.
You might think putting a car or house in someone else’s name will protect it. But this could cause problems. The court may reverse the transfer or accuse you of hiding assets. It’s better to be honest about what you own and let your attorney help you protect it legally.
Some people forget to list a debt or think they can choose which debts to include. But if you don’t list something, it may not be discharged. Even debts you’re embarrassed about—like payday loans or medical bills—should be included.
Filing for bankruptcy is a serious matter, but it doesn’t have to be overwhelming. Avoiding these common mistakes can help your case go smoothly and protect you from delays or denials.
If you’re considering bankruptcy, reach out to The Law Offices of Robert M. Geller to learn how to move forward with clarity and confidence.
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