1. Stop using your credit cards.  If you use credit cards within 90 days of filing for bankruptcy, it could appear that you are intentionally using credit knowing you are unable to repay the creditor and this may be considered fraud.  Also, if you make a large purchase, that amount may not be discharged in your bankruptcy.  If viewed as fraudulent, you may be denied a bankruptcy discharge.

​

2.  Stop paying your credit cards and unsecured debts.  Paying on your credit cards or unsecured debts could be viewed as preferential payments to creditors drawing objections from other creditors.  Additionally, because the debts will be discharged in a Chapter 7 bankruptcy, any payment is a waste of money.

​

3.  Do not accept gifts of cash from anyone.  Cash gifts received by you may be considered income especially if the payments are received regularly or in larger amounts.  If you are just barely qualifying to file under the Means Test, cash gifts may cause you not to qualify.

​

4.  Do not accept large item gifts.  Not only may a large or expensive gift qualify as income, it becomes an asset that the bankruptcy may want to take and sell to pay your debts if you do not have sufficient exemptions to protect the property.

​

5.  Do not borrow from your retirement account without immediately establishing a repayment plan.  If you make an early withdrawal from your retirement account, the money is considered income unless you have established a regular repayment which would then characterize the withdrawal as a loan.  Additionally, once the funds are withdrawn, they lose their otherwise protected status.

​

6.  Do not give or lend money to anyone.  Giving or lending money draws suspicion.  If money is lent, the amount is considered an asset that can be taken by the bankruptcy trustee if you have no exemption to protect the amount owed.  If you have given money, the gift could be considered a fraudulent transfer interfering with your ability to receive a Chapter 7 discharge.

​

7.  Do not make cash withdrawals.  $20 here and there is not a problem but larger cash withdrawals draw suspicion as there is no record that identifies how the money was used.

​

8.  Avoid unecessary purchases.  Frequent unecessary or frivolous purchases could interfere with your ability to receive a Chapter 7 discharge.  The bankruptcy trustee may question why you are able to spend so much money on frivolous purchases yet not able to pay your creditors.

​

9.  Keep monthly entertainment, travel and meals out expenditures under $250 per month.  Excessive spending on entertainment, travel and dining out reads as "extra money to pay creditors" to bankruptcy trustees and creditors.  The bankruptcy trustee may question why you are able to spend so much money on luxury items yet not able to pay your creditors.

​

10.  Advise your attorney IMMEDIATELY if there are ANY CHANGES to your income or financial status.  One small change could drastically affect your ability to qualify under the Means Test to file for Chapter 7 bankruptcy.  Also, events like paying off your car, trading in your vehicle on a new vehicle, or selling an item could alter your available exemptions.​​​