Planning ahead if you are considering bankruptcy is a wise idea. It's important to understand what actions to avoid in the months or even years before you file for bankruptcy -- running afoul of the bankruptcy laws can jeopardize your discharge and even land you in jail.
In addition, careful consideration of your property and available exemptions can help you keep more property. And timing your filing correctly could also prevent the trustee from taking back money you recently paid to relatives or business associates.
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits
Your creditors should stop deducting automatic payments from your bank accounts when you file for bankruptcy, but it doesn’t always work as smoothly as you’d expect. You’ll also want to prepare for bankruptcy by ensuring you have a checking account or another bank account that will remain open after bankruptcy. And take steps to avoid a set off that occurs when your bank withdraws funds from your bank account to set off a balance owed to your bank on other debts. Your utility provider could use your existing utility deposit to set off a past due utility bill, as well, so be ready to fund a utility deposit.
What Not to Do Before Bankruptcy
Here are some things to avoid before you file for Chapter 7 or Chapter 13 bankruptcy.
It's never a good idea to hide assets in bankruptcy. Here's why.
Payments Made to Creditors Before Bankruptcy: Can the Trustee Get the Money Back?
An avoidable preference is a payment you make to a creditor prior to bankruptcy that the trustee can get back. Learn more.
Selling Property Before Filing for Bankruptcy
Selling or transferring nonexempt property before you file for bankruptcy can be a risky proposition. Here's why.
Recent Luxury Debts and Cash Advances: Can You Get Rid of Them in Bankruptcy?
If you file for bankruptcy, you might not be able to get rid of recent cash advances or credit card charges for luxury items.
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