3 Things To Avoid Before Filing A Chapter 7 Bankruptcy Case
Posted on: 21 September 2020
Share
Using the Chapter 7 branch of bankruptcy law can provide immense relief to people with large debt loads. If this is the branch you want to use, you must find out if you qualify. If so, you might need to follow the instructions of your attorney by doing specific things. You might also need to avoid doing certain things, and here are three things you should avoid before filing.
Giving Away Money and Assets
One of the downsides of filing for Chapter 7 is the potential risk of losing assets. Your bankruptcy attorney will explain this risk to you during your visits and tell you not to give away your things. Many people try to avoid losing assets by giving them away before filing their cases. While this might seem like a logical solution to prevent losing things, but it is illegal. If you get caught doing this, the bankruptcy court might dismiss your case and file criminal charges against you. You cannot give things to your friends to avoid losing them.
Filing a Lawsuit
The second thing to avoid before Chapter 7 is filing a lawsuit against someone. While you might have the right to file a lawsuit against another party, you could lose the settlement money you receive if you win the case. When you use Chapter 7, you must reveal any lawsuits you are involved in when filing. The trustee will monitor these cases, and if you win, the court has the right to seize the money you received. If you want to avoid losing your lawsuit settlement, you should wait to file it until later, or you should consider waiting to file for bankruptcy.
Using Your Credit Cards
The other vital thing to avoid is using your credit cards. You might assume that it would be smart to use them now to buy things you need. After all, your Chapter 7 case will forgive your credit card balances. The downside is that when a person uses their credit cards before filing, it can appear as fraud. People will do this to buy luxury items before filing, hoping they will not have to repay these balances. They do this to get free things. You cannot do this, though. If you do, the trustee will likely catch it and could dismiss your case.
If you have questions about things to avoid or things to do when filing for Chapter 7, talk to your bankruptcy attorney.