Preventative Measures for Your Pre-Bankruptcy Life Skip to main content

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Preventative Measures for Your Pre-Bankruptcy Life


When you’re drowning in debt, and dodging your creditors, you may feel stuck—forced to eliminate your financial trappings as soon as possible and by any means necessary. But, in the process of dispensing with debt through the benefits of bankruptcy, it’s vital that you deal with that debt deliberately and follow certain rules pre-filing in order to assure that your financial future is as fruitful as possible.

Remember, making poor decisions before bankruptcy may prevent you from getting debt relief. As such, it’s always best to avoid the following pre-bankruptcy:

Transferring assets to someone else.
When you’re filing for bankruptcy, you may feel inclined to transfer assets, either to make yourself look like a better (more desperate) candidate with fewer assets or to try to hold onto property that might otherwise be placed in what’s called the “bankruptcy estate.” The short answer is: don’t. Doing so raises red flags to the bankruptcy court, especially if these transfers occur immediately prior to your filing and can lead to dismissal of your case of worse. And, chances are, all that "stuff" you're trying to unload is probably protected by your state's exemption laws anyway. It's key to talk to an experienced bankruptcy attorney about this situation.

Getting large cash advances from your credit card.
Any efforts to max out your credit cards prior to your bankruptcy filing, including an attempt to take out a large cash advance, is never a good idea when you want to begin (and end) your bankruptcy on a good, clean slate. Instead of having that debt swiftly discharged by the bankruptcy court, it might actually trigger charges of fraud—the last thing you want when tying to get back on a better financial track. The best rule of thumb when contemplating a bankruptcy solution is to leave your credit cards alone- why risk losing the benefit of your discharge?

Paying Off Debts to Friends and Family
In the midst of tough financial times, you might feel inclined to pay back any money owed to friends, family or business partners prior to your bankruptcy filing. After all, these are the people you see everyday and not the nameless, faceless entities like the credit card companies, banks and mortgage lenders that are constantly calling and harassing you. But paying back your “preferred” lenders is not only something bankruptcy courts can frown upon, but, in the process, the court may force that person or persons to refund the money you gave them just so that your creditors can divvy up their fair share. Save yourself that time and humiliation and save that money for the broader bankruptcy estate.

Making luxury buys.
For those considering bankruptcy or already in the throes of a filing, the last thing you may be thinking about is buying the latest gadget, or an expensive watch, or a new wardrobe. But, as the past trends have shown, Americans can have a short memory when it comes to remembering that tough financial times can be just around the corner. If you’re entering bankruptcy however, it is essential to remain mindful that rebuilding your finances should be your primary concern. When in doubt, ask yourself: is that new luxury widget worth the cost of days, months, and years of financial worry? Yep, we didn’t think so.

As a result of the nuances and intricacies of bankruptcy law, it is essential to begin the bankruptcy process with an experienced bankruptcy attorney that knows the ins and outs of the bankruptcy process and can assist you throughout your case. If you live in North Carolina, contact the Law Offices of John T. Orcutt TODAY for a totally FREE debt consultation. Just call toll free to +1-919-646-2654, or make your appointment online at Simply click on the yellow “FREE Consultation Now” button.

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