There are some things you should never do before filing for Chapter 7 bankruptcy. Making these mistakes could negatively affect your case, even if you do them several months before filing.
Many people find that consulting a bankruptcy attorney can help clear up any doubts. Some choose to file on their own. Either way, take care to avoid the following activities.
Do not pay any creditors in full just before filing. Pay the monthly minimum or the amount that you usually pay. Paying any companies or creditors excessive amounts can appear fraudulent. A court may find it suspicious that you attempted to pay a particular company and not another. Under U.S. bankruptcy laws, it may appear to be a fraudulent transfer.
Do not use any credit cards unless it is absolutely necessary to make ends meet. Use your debit card for payments.
Do not make any unusual deposits into your account, even if you are doing something simple like temporarily holding money for a friend. If you own a small business, do not do any business-related activities through your personal accounts. Transferring assets or money to a friend’s or family member’s account could appear suspicious to the court. Other examples of potential fraud are removing your name from a joint bank account or removing your name from the title of a child or spouse’s vehicle. Even if you legitimately plan on transferring the title, do not do so just before filing bankruptcy.
This information is intended to provide clarity about Chapter 7 bankruptcy but should not be interpreted as legal advice.