What Not to Do Before Filing for Bankruptcy

 Posted on December 19, 2024 in Bankruptcy

What you do shortly before filing for bankruptcy could make your case much easier or much harder. Appearances matter in a bankruptcy case, and you do not want it to look like you are abusing the bankruptcy process or attempting to avoid liquidation. It is usually best to avoid big financial moves in the months before filing for bankruptcy. You should begin speaking with a San Antonio, TX bankruptcy lawyer early on. A bankruptcy attorney can help you avoid making mistakes that could prove costly during your bankruptcy proceedings. You will need to time your bankruptcy around other financial events and may need to delay filing in some cases.

Common Mistakes Prior to Filing for Bankruptcy

A few things you generally should not do just before filing for bankruptcy include: 

• Creating more debt - It can help if you have been trying to make payments on your debts instead of going further into debt before you file for bankruptcy. It is better not to willingly take on more debt knowing that you will not be able to repay it even if you are using a Chapter 13 bankruptcy. Other than unavoidable medical debt, it is best to avoid adding to your debt right before filing for bankruptcy. 
• Selling off high-value property - It can appear very suspicious if you sell off high-value items, especially for less than they are worth, right before you file for bankruptcy. It can appear that you are trying to avoid having your property liquidated to satisfy some of your debt. However, it is also common for people to begin selling their valuables just to stay afloat when their financial situation has become unmanageable. 
• Hiding money or assets - Moving money into an offshore bank account or investing in untraceable cryptocurrency just before filing for bankruptcy is not a wise move. Some people who are getting divorced and filing for bankruptcy around the same time conceal assets hoping to hide them from their spouses in the divorce, which can cause issues in the bankruptcy as well. 
• Making luxury purchases on credit - A lot of people who are close to filing for bankruptcy believe they may as well max out their credit cards first, before they lose access to their lines of credit. Buying luxury items like designer clothes, taking a cruise, or spending a week at a spa using a credit card shortly before filing for bankruptcy can make it look as though you were taking unfair advantage of your creditors. 

If you are unsure about whether making a certain financial move before filing for bankruptcy could harm your case, you should speak to a qualified attorney.

Contact a San Antonio, TX Bankruptcy Lawyer 

Law Offices of Chance M. McGhee can begin helping you plan your bankruptcy as soon as you reach out to us. Experienced Bexar County, TX bankruptcy attorney Chance McGhee will advise you on timing your bankruptcy properly and avoiding common mistakes. Contact us at 210-342-3400 for a complimentary consultation.