Chapter 7 bankruptcy discharges most types of unsecured debt and gives the filer an opportunity to start over on sounder financial footing. In the weeks and months leading up to filing, though, there are some missteps you should avoid to ensure your claim makes it smoothly through the legal system. Here’s a closer look at what to steer clear of.

What Not to Do Before Filing Chapter 7 Bankruptcy

1. Run Up Debts

The bankruptcy courts are going to look closely at all debts, especially those racked up during the 90 days prior to filing. Any high-dollar purchases that were not for basic necessities like food, shelter, and clothing will invite scrutiny.

It’s entirely possible that the courts will determine these debts ineligible for discharge, which will end up leaving you on the hook for payment even after the case is settled. For best results, only pay with debit cards linked to bank accounts and avoid credit cards before your filing.

2. Transfer Assets

Never try to hide your assets from the bankruptcy court. This is considered fraud and perjury, and it could get the whole claim thrown out or, in extreme cases, result in criminal charges.

Don't transfer money or ownership of assets, including real estate and vehicles, to someone else. Include every asset owned under your name when completing the required inventory in the paperwork, and never doctor documents to make it seem as if assets are less valuable than they really are.

3. Repay Creditors

Pay bills for all the necessities you can throughout bankruptcy, but avoid paying back any creditors in full from 90 days prior to filing to one year after discharge. This includes personal loans from family members or friends. Selectively repaying creditors is called a preferential transfer, which is strictly prohibited. The court can take legal action against the person or business you paid in order to get the money back.

An attorney will make sure you’re aware of all laws and regulations throughout the bankruptcy process. Lein Law Offices has been serving the Hayward and Winter, WI, areas for over 25 years and will help you reclaim your financial future. They offer representation in bankruptcies, personal and work injuries, estate planning, and other legal matters. Call (715) 634-4273 to arrange a free consultation or learn more about their services online.