Things NOT to do Before Filing Bankruptcy

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If you are contemplating filing for bankruptcy, there are a few “No-No’s” to avoid. One of the biggest mistakes to avoid is using your retirement funds to pay your debts only to turn around and file for bankruptcy anyway. Generally, retirement funds are exempt from creditors, meaning they are protected. You want to avoid throwing good money after bad.

Secondly, do not apply for new credit if you know you have no intention of repaying the debt. This is particularly true with online, fast-cash loans, where they request an ACH to auto-debit your checking account for the payments. ACH, or electronic funds transfers, are difficult to revoke, and any auto-debits taken after you file your bankruptcy are difficult to recover, particularly from high interest, online lenders.

Repaying or favoring certain creditors over others will backfire. For instance, say you promised your doctor you would repay your bill so you can continue treatment. That payment could be considered a “preference”, and the Trustee can recover that money from your doctor, then disburse that money to all your creditors on a pro rata, or even, basis. This same concept is true for repaying family members or friends. You cannot repay Mom before you repay your credit cards.

Finally, do not transfer any property or money out of your name before you file bankruptcy. Transfers are reviewed with strict scrutiny for fraud or trying to hide assets. This is a federal crime and comes with hefty criminal penalties.

If you find yourself contemplating filing bankruptcy, you need to contact our office. Our attorneys will help you avoid any “No-No’s” before you file bankruptcy and keep you out of hot water. For more information, visit us at or call 913-422-0909 to make an appointment with one of our experienced attorneys. At WM Law, we are here to help.

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Jeffrey L. Wagoner


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