7 Things You Should Avoid Before Filing a Bankruptcy in Philadelphia

If you know you’re getting ready to file for bankruptcy there are some actions you should avoid. Some of them can hurt your case, or at least raise questions about your motivations and intentions.

Taking any of these actions can also reduce the number and type of exemptions you’re entitled to, which means you could lose property you otherwise would have been permitted to keep during the bankruptcy process.

Avoid making big financial decisions.

Now is not the time to sell your house or your car. It’s certainly not the time to buy a house or a car. You don’t want to cash out your retirement funds either. Don’t make any other major purchase. If you know you’re going to file for bankruptcy, just stop.

Your creditors will be bound by an automatic stay, which means they won’t be able to act against you. You should consider yourself bound against acting too drastically. Put your financial life on full hold. Pay your basic bills as best you can, keep buying groceries, but don’t deviate from your normal activities.

Stop running up debt.

Maxing out credit cards directly before a bankruptcy, for example, tends to make the court wonder whether you’re trying to take advantage of the process. Think of it this way—it could look a lot like you are trying to get a bunch of new stuff for “free” by using the bankruptcy court to wipe out your debt; a fraudulent act you don’t want to be accused of.

This goes for any kind of loan you might take out, including payday loans, car title loans, loans from family and friends, and more.

Avoid transferring balances.

You don’t want to give the impression you’re favoring one creditor over the other. This can create major problems and prolong your bankruptcy case. The trustee can often recover the amount you gave to creditor A and use it to redistribute to all the other creditors.

Avoid negotiating with or paying creditors.

Again, you want to avoid giving the impression you’re favoring one creditor over another. This is true even if you’re settling the debt for less than the full amount.

This is especially true if you’re paying family members and friends back at the expense of your “formal” creditors. Family and friend debts need to be treated like any other debt during your bankruptcy case. They should be included in the bankruptcy and handled like any other debt.

Resist the urge to transfer property.

Debtors sometimes panic and start racing to put property in other people’s names prior to the bankruptcy, thinking this is what will save it. Rest assured the court will not be fooled if you put your home into Aunt Matilde’s name while continuing to live in it.

Again, the attempt makes you look like you’re trying to defraud the court. It’s also vastly unnecessary. Most of the property you’re feeling the urge to start moving around is property that would have been exempt anyway.

Hold off on marriages, divorces, and separations.

You can file for bankruptcy without including your spouse in the case. But starting your life off as newlyweds with the stress of a bankruptcy is rarely healthy for the marriage.

As for separation and divorce, the court will be trying to divide both your assets and your debts. Tying yourself up in a bankruptcy case at the same time only complicates matters. Tackle one case at a time.

Don’t try to go it alone.

Some people try to engage in DIY bankruptcy cases, but this is a terrible idea. A bankruptcy is a serious legal matter. Every case is different and there are pitfalls. Failing to involve a lawyer could mean facing some serious problems down the road.

Fortunately, we make it easy to get the legal counsel you need. We offer free initial consultations and fair, reasonable payment plans to each of our bankruptcy clients. Contact our offices today to learn more. Here’s to the fresh start ahead.



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