Filing for bankruptcy can be complex, and many people make mistakes before they even begin the process. As a result, they lose money, mishandle their assets, and hurt their credit scores. Fortunately, by learning about what to avoid before filing and working with a reliable attorney, you can protect your finances. Here’s what you need to know. 

3 Mistakes to Avoid Prior to Bankruptcy 

1. Handing Assets to Friends & Family 

The courts will see this as dishonest and a major red flag. Whether you give a car, jewelry, a TV, or property to a family member, you’ll likely lose it once you file for bankruptcy. Instead, you’ll need to list out each of the assets you own. If you haven’t paid off a car yet, for example, it’ll need to be noted as a liability. Additionally, hiding an asset before filing is considered bankruptcy fraud. In some cases, this could lead to prosecution and a criminal investigation. 

2. Getting More Credit Card Debt

This mentality will quickly catch up with you. If a creditor receives a bankruptcy notification and then determines that you ran up a credit card bill before filing, they can prevent your debt from being eliminated. Even after the bankruptcy is done, you could still end up owning the creditor money. In general, any credit purchases that occur within 90 days of filing won’t be included in your debts. In other words, you’ll still owe that money, even if your bankruptcy is successful. Instead, avoid using your card altogether if you know you’re going to file. 

3. Draining Your Retirement Account

In most cases, you can protect retirement funds when you file for bankruptcy. As a result, you don’t want to take money out of them to pay off debts that will be eliminated. Instead, speak to your attorney about covering your bills. They will give you advice on how to do so without decreasing your nest egg or hurting your financial future. Having enough money for retirement is crucial to enjoying your life, covering your medical and living expenses in old age, and avoiding being a burden on your children. 

When you need a bankruptcy attorney you can trust, contact Anderson Law Firm. Serving Guilford County, NC, they have worked with clients for over 20 years. They’re passionate about what they do and care for each of the people they help. They’ll work to understand your situation and provide the best advice and options to protect your finances and future. Call (336) 431-7336 to set up a consultation, or head to the firm’s website to learn more. 

The information contained in this site is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved.  We are a Debt Relief Agency.  We help people file for Bankruptcy Relief under the Bankruptcy Code.