Palm Springs Law Blog

Thursday, November 24, 2022

Things You Shouldn't Do When Filing for Bankruptcy

Bankruptcy is a tool that individuals, businesses, and organizations can use to help them through difficult financial times. However, there are certain actions you can take while filing for bankruptcy that can sabotage the entire process for you and even lead to criminal charges.

Read on to learn about some of the things you should never do while going through bankruptcy proceedings.


The bankruptcy process relies on truthful statements. If you lie, not only are you failing to address your financial problems, but you are also opening yourself up to serious criminal liability.

Sadly, many believe that hiding certain assets or being deceptive in some other way is appropriate just before or during bankruptcy proceedings. But it never is. If you are not prepared to go through the process with complete honesty about your assets and other material factors, you should consider skipping filing to avoid civil and criminal liability.

Forego Speaking with an Attorney

Yes, there are do-it-yourself bankruptcy kits. But bankruptcies are all about the details. And these kits typically cannot help you address the unique details of your situation.

Additionally, bankruptcy is a major life decision you want to get right the first time. With a bankruptcy attorney navigating your case, you will get things right the first time, and you’ll be able to take full advantage of the protections that bankruptcy offers.

Even if you still want to go ahead with the DIY bankruptcy, you should consider scheduling a consultation with an experienced bankruptcy attorney. Often, initial consultations are free, meaning you have nothing to lose by attending one.

Acquire New Debt

Debt is what got you onto the bankruptcy path in the first place. As such, acquiring more of it right before or during bankruptcy is not a good look; nor is it financially or legally advisable.

If you do decide to rack up more debt within 90 days of your filing, your financial records will be scrutinized for specific purchases, such as:

  • Luxury items on credit
  • Cash advances from credit cards
  • Major purchases

If the bankruptcy trustee does find any of these types of financial activity, your creditors might object to the bankruptcy, and you may be forced to look for other options for easing your financial woes.

Transfer Assets Out of Your Name

Transferring assets out of your name is just like lying. You are essentially saying that you are worth less than you really are in the hopes of receiving a favorable bankruptcy ruling and terms.

Unfortunately, for those who move their assets around before filing, criminal penalties may await them. The court can and will discover whether a person, business, or organization has moved assets and will take swift action. As such, it is best to approach bankruptcy with full transparency.

Ignore Actions from Banks and Creditors

Although you are experiencing serious financial pressures, you should never ignore creditors and collectors. Doing so creates a negative and potentially hostile relationship between you and those who you may have to face in bankruptcy proceedings. Inform your creditors about your plans for filing bankruptcy and have them communicate with your bankruptcy attorney.

A bankruptcy can go a long way in helping you start fresh financially. However, engaging in these actions before or during the proceedings can lead to trouble.

If you are considering going through bankruptcy, Heritage Legal, PC, is here to help. We can also guide you through any other business and legal matters you have in Palm Springs, CA. Contact our office for a consultation with an experienced bankruptcy lawyer today and learn how Heritage Legal can help you.

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