A chapter 7 bankruptcy can be an opportunity to reclaim your life from debt, but it’s also an intimidating process for many. Even before filing for bankruptcy, simple mistakes can make some debts ineligible for discharge or might cause you to give up assets you could have kept. If you’re planning on filing for bankruptcy protection, here are a few financial missteps to avoid.

What Not to Do Before Filing for Bankruptcy

1. Draining Your Retirement Savings

Many borrowers only consider chapter 7 bankruptcy after spending everything they have, including their retirement accounts. However, retirement savings are usually protected from seizure, so you’ll likely be able to keep your nest egg even after liquidating your debts. Before cashing out your 401(k) to pay down debts, speak to a bankruptcy attorney with the expertise to ensure you’re in the best position possible after liquidation.

2. Take Out New Debt

Before discharging your petition, the trustee of the court will review your finances, including your purchase history for the previous two or three months. Buying luxury items on credit within 70 to 90 days of filing for bankruptcy is considered intentional fraud, so the court may refuse to discharge the debt.

3. Transfer Assets

Once you’ve decided to file for chapter 7 bankruptcy, you might be tempted to give cars or other valuable items to someone else for safekeeping. The trustee will review all of your asset transfers prior to filing, and they’ll actually have the authority to take back those belongings as part of the bankruptcy estate. Hiding assets is also considered fraud, which could result in your entire case being dismissed.

If you’re struggling with debts you can’t pay, trust the legal team at Pearce Law Firm to help you get the second chance you deserve. With over 15 years of experience, they offer personal attention and detailed insight to borrowers throughout Foley, AL. To discuss your debt relief options and schedule a consultation, visit their website or call their offices at (251) 971-2676.