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Do not do this before filing bankruptcy

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Do not do this before filing bankruptcy!

This is Reason “D” for filing bankruptcy.There are many traps and pitfalls when preparing to file bankruptcy.  It’s one of the reasons we strongly urge people not to file bankruptcy without an attorney.

Below are the Five Big Bankruptcy Mistakes to avoid. Always remember that the actions you take before filing bankruptcy can affect your ability to get a fresh start. Avoid these mistakes and you should have a  successfully bankruptcy.

  1. RUNNING UP YOUR CREDIT CARD.  (Do not  Do This Before Filing Bankruptcy!) 

Don’t use your credit card if you are thinking about filing bankruptcy. Charging luxury goods and services over $600.00 within 90 days of filing is presumed fraudulent and you may end up paying these charges back. Cash advances over $875.00 within 70 days of filing are also presumed fraudulent and may survive your bankruptcy. Dont jeopardize your “fresh start’’ by running up your credit cards.

     2.  REPAYING FAMILY MEMBERS OR FRIENDS: (Do not Do This Before Filing Bankruptcy!)

You cannot treat your family members or friends any better than your other creditors. You cannot repay your family members or friends instead of paying your other creditors. A bankruptcy trustee may be able to take back any money repaid to a family member or friend within one year of filing bankruptcy.

3.  LIQUIDATING YOUR RETIREMENT ACCOUNT: (Do not Do This Before Filing Bankruptcy!)

Retirement accounts are generally protected in bankruptcy. You can eliminate your debts AND still keep whatever you have in a retirement account. Many individuals drain their retirement accounts in a futile attempt to pay down credit card debt.

4.  TRANSFERRING PROPERTY OUT OF YOUR NAME: (Do not Do This Before Filing Bankruptcy!)

A bankruptcy trustee can undo a transfer of property that previously belonged to you. If you make a transfer within four years of the filing of the bankruptcy with the intent to hinder, delay or defraud a creditor, or if you simply did not receive a fair price, this property can be brought back into your bankruptcy estate.

5.   GETTING AN HOME EQUITY LOAN OR 401K LOAN TO PAY DEBT: (Do not Do This Before Filing Bankruptcy!)

Don’t take a loan against your real estate or retirement account in an effort to pay your debts. You can often file bankruptcy and not lose these valuable assets. If you take out a home equity loan to pay credit card debt, you may be putting your house at risk. If you take out a loan against your 401k to pay credit card debt, that is money you would not have had to pay back and it would still be available for your retirement.

Please visit our website for more information about us and bankruptcy. You may also view our video with Bankruptcy Information.

Call us today at (713) 974-1151 to schedule a no-obligation consultation or feel free to email us at consumerlaw@busby-lee.com.


Bankruptcy Attorneys around the nation are taking part in this Bankruptcy Alphabet. See what other excellent attorneys are saying about the letter “D” in their blog posts.

  • Debt Buyer    Pittsburgh Bankruptcy Attorney Shawn N. Wright
  • Debt Relief Agency    Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
  • Debtor    New York Bankruptcy Lawyer, Jay S. Fleischman
  • Debtor    Taylor Michigan Bankruptcy Lawyer, Christopher McAvoy
  • Debtor    Allen Park Michigan Bankruptcy Lawyer Christopher McAvoy
  • Declaring Bankruptcy    Wisconsin Bankruptcy Lawyer, Bret Nason
  • Deciding    Columbus, Ohio Bankruptcy Lawyer, Athena Inembolidis
  • Deconsolidate    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
  • Discharge    Northern California Bankruptcy Lawyer, Cathy Moran
  • discharge    Los Angeles Bankruptcy Attorney, Mark J. Markus
  • Discharge    Kona Bankruptcy Attorney, Stuart Ing
  • Discharge    Daniel J. Winter, Chicago Bankruptcy Attorney
  • Discharge    Los Angeles Bankruptcy Law Monitor, Christine A. Wilton
  • Discharge    Birmingham Bankruptcy Attorney, Elizabeth Johnson
  • Discharge    St. Louis, Missouri Bankruptcy Attorney, Nancy Stokley Martin
  • Dischargeable Debt    Chicago Bankruptcy Attorney, Kyle A. Lindsey
  • Disclose    Marin County Bankruptcy Attorney, Catherine Eranthe
  • Disclosures    Colorado Springs Bankruptcy Attorney Bob Doig
  • Do’s and Don’ts    San Francisco Bankruptcy Attorney, Jeena Cho
  • Do’s and Don’ts    Livonia Michigan Bankruptcy Attorney, Peter Behrmann
  • Documents    Philadelphia Bankruptcy Lawyer, Kim Coleman
  • Domestic Support     Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
  • Domicile    Miami Bankruptcy Attorney, Dorota Trzeciecka
  • DUI, DWI, OVI    Cleveland Area Bankruptcy Lawyer Bill Balena
  • Debt Settlement    Vermont-New Hampshire Bankruptcy Lawyer, Michelle Kainen