“By failing to prepare, you are preparing to fail.” ~~ Benjamin Franklin
What Not to Do Prior to Filing Bankruptcy
Filing for bankruptcy should not be a quick or easy decision. Most of our clients seriously considered the benefits and repercussions of filing long before they even stepped into our office. It’s a slow process, one that often involves months of debt management and financial reorganization.
If you’re in the planning stages of bankruptcy, you have likely already implemented some money-saving strategies. Maybe you’ve stopped using your credit cards or you’ve cut down on unnecessary spending. These are important ‘first steps’ to improving your finances prior to filing.
However, what our clients frequently overlook, is what not to do if you’re considering filing for bankruptcy. Once you start doing your research, there are some things that are tempting to try.
One of the worst things you could do in the months and years leading up to your bankruptcy is to transfer real estate out of your name and into someone else’s. I know it seems like a loophole, but trust me, it isn’t. Trying to hide your property by transferring the title is considered filing in bad faith and there can be consequences. In addition, the Trustee is unlikely to miss such an obvious ploy.
The temptation to transfer property isn’t limited to real estate. Many people have attempted to take their names off of the title of a vehicle that they’ve paid off, in an attempt to avoid having to surrender the car through the course of the bankruptcy. Again, this is acting in bad faith and the Trustee will likely notice.
Even if you aren’t attempting to burrow through any loopholes, you should still pay careful attention to what you do with your property prior to bankruptcy. Avoid giving away items of property or even selling it below the market price for at least a year prior to filing. In addition, be cautious about property or money transfers to friends and family, as this too could be viewed as fraudulent.
Any major property transfers should be discussed with your bankruptcy attorney, just in case you’re falling foul of any laws or needlessly rising suspicion.
If you’re slowly considering bankruptcy, even if it’s just in the research stage, make sure you plan carefully. What you should not do prior to filing is just as crucial to discuss with your attorney as your financial management plans and goals.