While considering bankruptcy, you have probably seen a lot of lists of things to do before filing bankruptcy. Did you know there are things that you should not do before filing? There are a few things not to do that could not only hurt your chances of qualifying but could also result in criminal charges.

First, to avoid huge red flags in court, consider if you have done any of these things:

Signing Property Over to Someone Else

Selling or gifting property to a relative could be seen as fraud even if your intentions are unrelated to your bankruptcy and a coincidence. By doing this, it gives a message to the courts that you are trying to stop your assets from being seized and used to pay back your debts. You will need to wait if you have sold or moved property to a new owner until it is no longer recent.


Charging New Debt in the Past 3 Months

If you show up to your hearing with new debt the judge will accuse you of racking up debt with the intention of not paying it back because you knew you would file for bankruptcy. If you find yourself relying on credit cards to stay afloat, you should likely wait until your able to stop use on those cards. This is not only true for opening new lines of credit but for also using any existing accounts.


Procrastinating or Not Filing Your Taxes

Your tax return is used during your bankruptcy process to determine your income and other assets. There are minimal circumstances where a hearing will happen without your taxes. If you have been procrastinating on doing your taxes this will cause problems. If you have not done your taxes, you will need to do so before filing for bankruptcy in California.


Paying Creditors or Private Lenders Off

Paying off a creditor, a personal loan, paying back a family or friend and then filing for bankruptcy could be seen as a negative thing. At the hearing this could be interpreted as preferential treatment.

You could also be demonstrating that you do have the ability to pay back your debts. It is interesting because many would not believe it could be held against them. In certain scenarios, these payments could be reversed and revoked.


Not Working with a Bankruptcy Lawyer

A bankruptcy trustee will be digging through your assets and looking for anything they can seize or freeze to cover the costs of your debt. They could also set up payment arrangements that just may not work for you. The court ensures that the debtors get as much as they can get paid back. Working with a bankruptcy lawyer with Moreno & Associates, you get a representative who is on your side and will work on protecting your assets. Call us to learn more.