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Considering bankruptcy? Know these do’s and don’ts before you file

On Behalf of | Jan 2, 2020 | Bankruptcy |

Even just thinking about bankruptcy can be overwhelming. Financial worries are stressful enough, and thinking about all the things that have to be done just adds to the worry and fear. As bankruptcy attorneys, we see this every day.

It’s important to know that you don’t have to face this alone. We have helped countless clients get meaningful debt relief and can offer you some of our do’s and don’ts to ensure that you are prepared should you choose to file bankruptcy.


  1. Stop using your credit cards. You should stop using your credit cards for non-essentials when you start thinking about bankruptcy. “Essentials” means things like food, clothing and housing. The court will see other items as non-essential “luxury” items and may penalize you by either making you repay those debts, in whole or in part. You can continue to use any debit card, that draws from your bank account.
  2. Continue making payments on any asset you want to keep. If your case is prepared correctly, and assuming you do not have an excessive amount of “equity”, bankruptcy will allow you to keep your important assets, like your car and your home. Part of properly preparing for your filing is to continue making payments on assets you would like to keep. This will not only help your case but will also keep your assets from being repossessed by your creditors or taken by the bankruptcy court.
  3. Consider waiting to file. The bankruptcy court uses a lookback period, wherein it reviews your finances for a certain period, when considering your case. Sometimes, if you’ve already done things that could put a hiccup in your plan to file (like excessive spending on luxury items or transferring assets to friends/family to protect them), waiting out the period could be the right choice. However, this is a decision to make with your attorney. No matter what you do, if the bankruptcy court believes you to be filing in bad faith, it can hurt your case and take away your chance for a fresh start.


  1. Try to reorganize your assets yourself. Giving away money or property to friends or family in hopes that this will protect it from being discovered by bankruptcy court will be discovered and considered filing in bad faith by the bankruptcy court. Part of filing for bankruptcy is reorganizing your finances, but it is best done with the help of your lawyer, who has the experience to know what will work and what will only backfire. We have more than 35 years of experience in bankruptcy law; If you are concerned about losing certain assets, like your family home, we can advise on available options for avoiding same.
  2. Do any financial favors for friends or family. You need to focus on your own finances, which means you cannot do favors like depositing a friend’s paycheck into your account and cashing it out for them. Doing things like this can concern the bankruptcy court. In reviewing your finances in the lookback period, the court is searching for any abnormality. You must maintain your ordinary financial schedule: receiving and cashing only your own normal paycheck. You must be able to adequately and properly explain any of your financial dealings if called into question by the court.

Talk with a lawyer for specific information

Of course, every situation is different. Wondering whether an influx of money from an inheritance will stop you from filing, or whether the court will be concerned by the fact that you received a pay increase, or even a large tax refund during the lookback period? Contact us by calling 732-860-7620 or click on our contact form. You can speak with an experienced bankruptcy attorney at no cost and no obligation and get the peace of mind you need to resolve your financial difficulties, get a fresh start and move on.