First, and probably most obvious, stop using your credit cards. We understand you’re filing bankruptcy because you don’t have the financial ability to support your needs, but continued use of your credit cards can be seen as fraudulent. If you intend to file bankruptcy and continue to charge purchases on your credit cards, your bankruptcy could be denied. The best thing to do is switch your spending habits to a cash based system. “Yeah, right,” you might say. It’s 2017 and we pay everything electronically. I get it. I recommend using a cash based system because it forces you to acknowledge how much money you’re spending every time you buy something. Plus, you might as well get used to not using credit cards. Once your case is filed, you will not be able to use the credit cards you have now. Don’t worry though. You will soon be able to get new credit cards, if that’s what you need to do.
One way to help you stop using credit cards is by freeing up a little extra cash every month. Well, if you’re going to be filing bankruptcy, stop paying your unsecured debts. This will help free up the extra cash you need for other expenses. Unsecured debts take many forms, but it’s mostly your credit cards, medical bills, and old utilities. For example, let’s say your minimum payments every month just for credit cards is about $400. Well, since you’re filing bankruptcy, you can stop paying your credit cards and “save” that $400. We both know “save” doesn’t necessarily mean put the money in your savings account, but it does mean you can put that $400 towards something else. Maybe you have always charged your gasoline to a credit card. Well, now you don’t have to. The extra $400/month you have from not paying the credit cards you can use to pay directly towards gasoline. Ultimately, if you’re going to be filing bankruptcy in the coming weeks, you’re only wasting money if you pay down the credit cards. I understand the sentiment clients have when they stop paying certain bills. It’s an uneasy and confused feeling. We’re raised and conditioned by society to pay our bills, in full, and on time. Really, though, stop paying your unsecured debts. You’re filing bankruptcy to get the relief you need from overwhelming debt. Now’s your chance, take advantage. Plus, there’s no long-term benefit to paying off your credit cards in the days leading up to your bankruptcy.
Not only should you stop paying off your credit cards, but you should also stop transferring property. To be more specific, transfer refers to acquiring, trading, selling, or giving away anything you own. In other words, just keep your stuff right where it is until the bankruptcy is finalized. Once your case is filed, your assets (your property) are held in interest by the bankruptcy Trustee until you receive your discharge. Now, the Trustee doesn’t come and gather up your property, but they control the assets of your estate until you receive your discharge. So, if you decide to sell, trade, or give away something, the Trustee will not find it funny. Even if you’re able to sell a junk car you no longer use for twice the amount it’s worth, don’t. When you have assets that cannot be protected in the bankruptcy, the Trustee may seize the assets and liquidate them. In other words, the Trustee will take the property that couldn’t be protected and sell it to give money to your creditors. If you sell your junk car that is only worth $500, but the Trustee thinks it’s worth more, the Trustee may be able to reverse the sale and liquidate the car. There’s no guarantee the Trustee would, but if they did, the person you sold the junk car to probably wouldn’t be too happy.
In addition to getting rid of property, steer clear from acquiring more assets. The more assets you have the harder it becomes to protect the stuff you own. So, to limit your exposure in bankruptcy, it’s a good idea to stop transferring your assets in the weeks leading up to, and after, filing bankruptcy. As hard as it may be, if you have a rich uncle that gives you $500 every year for your birthday (yes, I wish I had a rich uncle too), you may want to tell him to hold off on giving you that money. $500 would likely not have a big impact on your bankruptcy, but that is why it’s important to talk to your MN Bankruptcy Attorney. However, if you know your parents are about to transfer title of their car into your name because they’re getting a new one, you might want to tell them to wait. Even if the car is worth $5,000, this might change the outcome of your bankruptcy. Ultimately, the best thing to do, when in doubt, consult your MN Bankruptcy Attorney. We can give you the information and advice you need.
Not to beat the dead horse (sorry to anyone that’s offended by that), but if you’re going to be filing bankruptcy, don’t use your credit cards, don’t pay off unsecured debts, and don’t transfer assets. If you have already done this, or you’re thinking about doing any of these, it is best to discuss your options with one of our qualified MN Bankruptcy Attorneys.