Preparing For Bankruptcy: What Not To Do, Part Two

Preparing For Bankruptcy: What Not To Do, Part One

Individuals expecting to file bankruptcy may anticipate that soon their problems repaying debts will be solved and financial stability will be achieved. However, some prospective filers, with full knowledge that they will be filing a Chapter 7 or Chapter 13 bankruptcy case in the not too distant future, engage, whether innocently or accidentally, in some prohibited conduct that may interfere with receiving a bankruptcy discharge. The following is a continuation of our blog containing some tips on what NOT to do prior to filing a bankruptcy case.

Do not use credit cards

Debtors should stop using credit cards and limit themselves to cash transactions. If this is not possible, credit cards should only be used for necessities like food, gas, and clothing.

*Do not make out-of-the-ordinary deposits into any bank accounts

Prospective filers should carefully refrain from depositing any money, which would not be considered employment income into any bank accounts. Anyone operating a small business should avoid conducting any business transactions through their personal bank accounts.

*Don’t file any lawsuits

Legal claims held by debtors are assets that can be taken as property of a debtor’s bankruptcy estate. Anyone with a valid, pending legal claim should consult with an experienced bankruptcy attorney prior to filing a bankruptcy case.

*Avoid receiving income other than employment income during your bankruptcy case

Any money that is not yet in a debtor’s actual possession, but which a debtor expects to receive in the future, is part of a debtor’s bankruptcy estate. Examples include inheritances, employment bonuses, and tax refunds. A Chapter 7 bankruptcy trustee may take these funds to repay unsecured creditors. Any prospective filer anticipating or expecting to receive any future payments or funds should consult with a qualified bankruptcy attorney.

Many of the mistakes mentioned in these blogs may be remedied by the simple and patient act of the debtor waiting to file bankruptcy. The eligibility process for all bankruptcy filings includes “look back” periods for many of these transfers. Thus, the bankruptcy trustee and court scrutinize certain types of transactions within a certain time period prior to filing. Delaying the filing of a bankruptcy case until an event no longer occurs within a certain time frame may be very helpful to prospective debtors.

The Morrison Law Group strives for complete client satisfaction with the services that we provide over the course of a bankruptcy case, as well as the ongoing services that we provide post-bankruptcy. Not all Utah Bankruptcy attorneys can make this statement, but the Morrison Law Group is not like other Utah bankruptcy law firms. We can help if you just need to talk about your Chapter 7 or Chapter 13 bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.

Preparing For Bankruptcy: What Not To Do, Part One

Theron Morrison

Theron Morrison

Utah’s top bankruptcy and consumer protection attorney.