Bankruptcy is a complex area of law. It is a powerful tool that can help you get out of debt and back on your feet. However, there are a few “bankruptcy don’ts” to be aware of before filing. There are also a few “bankruptcy do’s” to be aware of – read our article Before Bankruptcy “To-Do’s” for more info.
Before Bankruptcy Do Not Pay Off One Creditor Over Another
What does this mean? Paying off one creditor over another means selectively paying back a debt owed to one creditor instead of paying back another creditor. In bankruptcy this is called “preferential treatment,” and it is not allowed.
Why would someone do this? Some people filing for bankruptcy have certain debts they would prefer to pay back, or certain creditors they do not want to list in their bankruptcy petition. For example, a person may want to pay back debt owed to friends or family before filing for bankruptcy. Do not do this! It may cause serious problems in your bankruptcy.
To better understand preferential treatment, read out article Preferential Treatment of Creditors Explained.
Before Bankruptcy Do Not Incur New Debt
In general, racking up new debt right before filing for bankruptcy is a huge no-no. Doing this can seriously harm your bankruptcy case. Incurring debt with the intent to erase it in bankruptcy may constitute bankruptcy fraud! Debt incurred as a result of fraud is nondischargeable.
Under the Bankruptcy Code exceptions to discharge, consumer debts aggregating more than $675 to one creditor, for luxury goods or services (not necessary living expenses) made within 90-days of filing for bankruptcy are presumed nondischargeable. 11 U.S.C. §523(a)(2)(c).
Before Bankruptcy Do Not Give Inaccurate or Incomplete Information To Your Bankruptcy Attorney
Bankruptcy petitions are filed under penalty of perjury. It is critical that you be truthful and honest in your petition. You are required to disclose all of your assets, debts, income, expenses, and any recent transfers of property or large payments to one creditor.
If you purposely give false or incomplete information in your bankruptcy petition, it may amount to bankruptcy fraud. The Consequences of Bankruptcy Fraud are steep. Also, The Bankruptcy Problem We Cannot Help You Solve Is the One You Hide. Make sure you are honest, accurate, and thorough with your attorney and in your bankruptcy paperwork.
Meet with Us for a Free Consultation
To learn more about the do’s and don’ts of bankruptcy, and to have your questions about bankruptcy in Georgia answered, come meet with us for a free consultation. We proudly serve the people of Savannah, Chatham County, Effingham County, Bulloch County, Bryan County, Liberty County, and Long County.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.