Mistakes To Avoid When Filing Chapter 7

When you are filing for bankruptcy, there are many mistakes you could potentially make that might backfire without you realizing it. For example, you might make decisions with your money that can be seen as a sign that you're trying to hide your assets. For this reason, it's important to involve bankruptcy services as soon as possible.

Transferring Assets to Someone Else

If you give your car or boat to someone else, they may be forced to sell it and give the money to your creditors to help pay off your debts.

Continuing to Pay Your Debts

If you will be discharging your debt, there is no reason to continue making payments. Some of your assets might be liquidated, but you will be able to keep other assets. You might think that a payment history will help your credit score. However, if you attempt to obtain a loan after filing for bankruptcy, the payments you make will have a negligible impact on your credit score.

Having more money in your bank account can be more beneficial than having a better credit score. Over time, the effects of bankruptcy on your credit score will be much lower. In some ways, your bankruptcy will even improve your credit score.

Transferring Debt to Another Credit Card

To make sure that you make all your payments, you might attempt to move debt from one credit card to another. However, if you file for bankruptcy, new debts you obtain might not be discharged even if it is simply a debt being moved to another account. You will instead want to avoid using credit until your bankruptcy is complete.

Moving Money to Someone Else's Bank Account

When you are earning money, the trustee will want to see where it is going. If you move the money you are earning into another account, this might be considered a fraudulent transfer. The owner of the other bank account might be forced to transfer the money back to your account or pay the money to your creditors. However, this isn't a problem with joint bank accounts.

If you are not sure what to do with the money, a bankruptcy attorney might be able to recommend options. For example, you might be considering paying off a loan from a relative but you may want to wait until the bankruptcy is over. Otherwise, the relative might be forced to pay the money back.