Deciding to use Chapter 7 bankruptcy can be an answer to your debt problems, as it provides a discharge for qualifying debts. If you apply for bankruptcy, though, you must follow strict rules. These rules prevent people from misusing bankruptcy and filing fraudulent cases. Therefore, if you plan on using Chapter 7, here are three things you must avoid doing before you file.
1. Intentionally Racking Up New Debt
Chapter 7 offers a discharge for qualifying debts, which typically include forgiveness for credit card bills. When people find this out, some may want to go on a shopping spree with their credit cards. They might feel that now is the time to buy some things they want, and they might charge the purchases assuming the bankruptcy case will discharge them. Spending money like this before filing is not wise. If you intentionally rack up new debt, the court could do one of two things. First, they might make you repay these debts. Secondly, they might dismiss your case for fraud. You cannot intentionally buy things on credit right before filing to receive a discharge on these purchases.
2. Hiding or Giving Away Things You Own
The second thing you must avoid is hiding or giving away things you own. The risk you assume with Chapter 7 is the court taking things you own. As a result, people will often give away some of their things or hide them. If you do this intending to avoid losing assets, the court might find out. If they do, they can throw out your bankruptcy case, leaving you without any relief for your debt load.
3. Working Extra Hours or Collecting "Extra" Income
The other thing you might want to avoid is earning extra money. When you file for Chapter 7, you must earn less than the average income in your state. If you try to get ahead just before filing, you might disqualify yourself from meeting this income threshold. If you are going to work more, wait until after you file. By waiting, you can avoid losing the opportunity to use Chapter 7 bankruptcy for debt-relief purposes.
By abstaining from these three things, you can avoid filing a fraudulent case. You can also prevent other problems during your case. If you are interested in finding out if you qualify for Chapter 7, you can do so by meeting with a bankruptcy attorney of your choice today. Contact a bankruptcy attorney for more information.