filing for bankruptcyThere are plenty of tips on what should be done during bankruptcy, but it can be just important to know what you shouldn’t do during this time. In fact, the wrong actions can lead to an unsuccessful case. Simply understanding which actions should not be taken, as many of them are not intuitive, can lead to an easier process filing whether you are looking for a Chapter 7 or a Chapter 13 bankruptcy case.

Pay Off Bills

It may seem counterintuitive, but paying off specific creditors could work against you when filing for bankruptcy. It follows a lot of logic that paying off some debts would increase your chances of a successful bankruptcy claim, but an unusual payment to a creditor in order to fully pay a debt is called a preferential transferred. This means the creditor was given preference over other creditors and could substantially damage your claim.

Bank Deposits

Unless it is your normal income, or other income you get on the side, depositing money into your bank account could work against you. Money for a holiday, from a friend, or money you are holding onto for someone else should not go into your account. A well-meaning friend or family member putting money into your account to help you through financial strife could wind up looking like a case of fraud.

Lawsuits

If you were considering filing a lawsuit, especially one that could have a financial payout, it is in your best interest to wait. As soon as bankruptcy is filed, every asset of the claimant including current and future payments are transferred to the bankruptcy court. This means you won’t receive any of the payment award, even if your legal case has yet to be resolved or the payment amount has not been determined. In fact, legal claims that haven’t been filed in court yet are still transferred. Depending on which state you live in, the amount that can be taken varies, but it stays a good rule of thumb to wait it out.

One proactive action you can take is finding the right lawyer. Whether you have other lawsuits you are worried about filing in addition to bankruptcy or are unsure of what you are allowed to pay, good legal counsel is priceless. Contact us at Reinherz Law today to find out how our team can help.

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