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3 Things Not To Do Before Filing Bankruptcy

While bankruptcy seems like a drastic step to many people, it is, in reality, a powerful tool that can help wipe your financial slate clean and be a stepping stone to a better future. Depending on your exact circumstances, you can file for Chapter 7 or Chapter 13 bankruptcy as an individual. With both types, however, there are rather strict rules that you must follow – even before you officially file. This blog will explore three actions not to take before your bankruptcy case kicks into gear. 

1. Do not transfer any assets or property to anyone within six months of filing. 

If you choose to file for Chapter 7 bankruptcy, certain items of yours may be eligible to be taken away in order to satisfy your outstanding debts. Many people are afraid of their house or car being taken by creditors during bankruptcy, so they try to hand the ownership to a friend or family member. Doing so right before a bankruptcy filing is considered fraudulent and could open you up to penalties.

2. Do not rack up any new debt with your credit card just before filing. 

Using your credit card to pay for necessities like food and medical care is a different story, but a flurry of credit card purchases shortly before a bankruptcy filing is a red flag. Creditors could claim that the purchasers were in bad faith and that you had no intention of ever paying down the money you owe. As a result, you may not be able to discharge those debts when your bankruptcy case is complete.

3. Don’t pay back some creditors while ignoring others. 

This is usually a harmless mistake, but an error nonetheless. Some people thinking about filing for bankruptcy will attempt to pay back at least some of their creditors due to, if nothing else, a sense of obligation. You might feel more pressure to pay back a family member or friend who recently loaned you money, but you should not make what may be seen as “preferential” transfers of money. If you do, your loved one might be sued and have to give back the funds. Preferential transfers primarily have to do with unsecured debts and not secured debts like car notes or mortgage loans. 


Many people do not realize the restrictions that bankruptcy filers must adhere to – even before they file. This blog covers only some of these restrictions; if you are even thinking about filing for bankruptcy, talk to an attorney first so you know your options and obligations. Our firm stands ready to help you in this situation; call us today at 330-664-9919. 

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