Preparing for Your Bankruptcy Filing
If you choose to file Chapter 7 or Chapter 13 bankruptcy, the court will pay close attention to everything you did before filing. It is important to take the right steps and avoid mistakes.
At the Tucson law firm of Trezza & Associates, we advise clients on what they should and should not do before filing bankruptcy. Contact us for a free consultation with experienced Arizona attorney Stephen Trezza, and visit our documents page for more detailed information.
What Not to Do Before Filing Bankruptcy
The bankruptcy court has procedures to prevent you from doing an end-run around the process. You should not take any of the following actions, which are essentially red flags:
- Incurring more credit card debt or borrowing money
- Loaning or giving money to friends or family members
- Giving or selling property to others without consulting a lawyer
- Opening a joint bank account with anyone other than your spouse
- Transferring money from someone else's bank account to yours.
- Transferring title on automobiles
You should also not forget to disclose all of your debts — including student loans and payday loans — as well as any money you expect to inherit in the next eight months or receive as the result of a lawsuit, and any property you have transferred to a trust in the last 10 years.
What to Do Before Filing Bankruptcy
On the day you file bankruptcy, all of your property that is not exempt can be seized by the trustee and used to partially repay your creditors. Since you are only allowed to keep $150 in cash or bank accounts ($300 if you are married), it is important to spend down any savings you may have.
Savings must be used to meet legitimate expenses, and you should keep the receipts for any purchases over $100 you make while preparing for your bankruptcy filing.
It is also important to plan the bulk of filing around the receipt of commissions and tax refunds which are usually non-exempt and seizable by the trustee.
If you are planning to keep your home or car, you need to get current with your mortgage and auto loans before filing bankruptcy and stay current throughout the process.
Don't hesitate to contact us to learn more about what to do while preparing to file bankruptcy.
