Once you have decided to file for Chapter 7 bankruptcy, you are probably anxious to get the process going. A Chapter 7 bankruptcy can get rid of all your qualifying debts and allow you to start over financially.
The Chapter 7 bankruptcy process generally takes about 4-6 months from filing to discharge. There are steps you must take prior to filing, such as obtaining copies of your credit reports and identifying all your debts.
Payments to creditors
There are some additional things you should specifically avoid before filing your Chapter 7 bankruptcy. One of these is continuing to pay your creditors.
While you can certainly continue to pay your creditors if you can, do not make more or larger payments to any creditors. All your creditors will receive notice of your bankruptcy when you file and have a chance to object and creditors who see others were paid more could claim they received an unjust benefit.
Do not accrue any new debt. Any new debt taken on immediately before filing for bankruptcy could open you up to fraud charges because the credit could claim that you ran up the debt knowing that it would be discharged in bankruptcy.
Any uncommon financial transactions right before filing for bankruptcy could also potentially be viewed as fraud. Hold off on purchasing any expensive items, transferring assets or doing anything else unusual until after your bankruptcy is complete.
One of the most important things to remember as you prepare for your Chapter 7 bankruptcy is to be honest. To qualify for a Chapter 7 bankruptcy, you must pass a means test, which examines your assets and debts.
You may be tempted to lie or hide certain assets to make it look like you own less than you do, but do not do this. You will be appointed a bankruptcy trustee, who will have access to your financial records. In short, you will probably get caught.
The exact steps you take before your bankruptcy depend on your situation, which should be discussed with a bankruptcy professional.