If you are considering filing for bankruptcy, it is important not to make innocent or accidental errors that could negatively impact your bankruptcy case. Avoiding the common mistakes can preempt creditor and trustee challenges and help ensure that your bankruptcy process proceeds smoothly.
The most important step to take to ensure you don’t make any mistakes is to immediately consult with an experienced Central Valley bankruptcy attorney as soon as you decide that filing Chapter 7 bankruptcy is inevitable given your financial situation.
Mistakes to Avoid Before Filing Bankruptcy
Bankruptcy courts will investigate all past transactions you made within a specific time frame before you file Chapter 7 bankruptcy. This “look back” period is generally one to two years before filing, but can extend to as long as ten years.
You can avoid most common mistakes simply by delaying the filing of your bankruptcy until these periods have expired. However, because this is not always the case, it is important to talk with an experienced bankruptcy attorney to avoid potential allegations of bankruptcy fraud.
Below are some common mistakes you should avoid before filing Chapter 7 bankruptcy:
- Avoid transferring assets. Despite what many think, moving assets out of your name will not protect you from the reach of bankruptcy court. In fact, these transfers could even lead a bankruptcy court to find that you have committed bankruptcy fraud, even if the transfer was innocent.
- Avoid favoring creditors. These types of payments to “favored creditors” are called preferential transfers and may trigger a “clawback” lawsuit, wherein a bankruptcy court trustee sues the person to get the money back in the court’s reach.
- Avoid making large or extra credit card purchases.It is best to avoid making credit card purchases, unless it is for the necessities of life, such as gas, housing, or food.
- Avoid depositing unusual amounts in your bank account. It is best to avoid depositing any money which is not considered salary or payment to you into your bank account.
This is not an exhaustive list of things you should avoid if you are planning to or in the process of filing Chapter 7 bankruptcy. Your Central Valley bankruptcy attorney can better advise you of all the mistakes you should avoid.
Call an Experienced Central Valley Bankruptcy Attorney
If you are considering Chapter 7 bankruptcy, it is in your best interest to consult with an experienced bankruptcy attorney to help you learn your legal rights and options, especially with respect to Chapter 7 bankruptcy.
For more information or to schedule a complimentary consultation with Central Valley bankruptcy attorney Gurjit Srai, please call 209-323-5558, or complete our online form.