If you are considering filing for bankruptcy, timing is key. First of all, if you are hoping to see a credit card (or several) become discharged in your bankruptcy, it’s important that there aren’t any charges made at least 90 days before the filing—and with cash advances being taken out, 70 days. This is crucial as it shows you weren’t out piling up big charges when you knew you were going to file for bankruptcy and not pay them back. With bankruptcy in the back of your mind, weeks before it may be tempting to go spending willy nilly as you have given up on repayment structures and simply aren’t sure where you are going with that; however, if you were to file and this came out, the bankruptcy court could refuse to discharge that debt, and the credit card company could indeed accuse you of fraud. Obviously, these are not the complications you need during the stress of sorting out bills and trying to work toward a discharge of your debt.
How you paid creditors and other individuals prior to bankruptcy is just as important too. The simple goal is to make sure that you have all your debts accounted for honestly months before and that as you head into bankruptcy, you are able to arrive in front of the trustee with a comprehensive list of creditors to be contacted and dealt with accordingly.
The rule is that all creditors must be dealt with fairly. How this is handled during your bankruptcy will be approved by the trustee and it is not up to you any time within a year or that filing to decide who you might rather pay first while you have some cash on hand. Even if you entered into a loan agreement with a family member and keeping your word is important, this can’t supersede a payment to another creditor who by all accounts should be just as deserving of your payment. That would be termed preference, and can be tracked back up to a year before your filing. And while it is not illegal and it is certainly understandable as to why you would pay a family member back when that was all the money you had to dole out in pre-bankruptcy, believe it or not, the trustee could actually ask for and sue for that money to be given back.
While knowing that the trustee is going to be asking for money back from an entity such as a bank or credit card company is messy enough, watching a friend or family member get mixed up in your bankruptcy issues could be seriously distressing. You may be impatient to get your bankruptcy filed, but make sure first that you will be able to present your information, debts, and payments in as clean a manner as possible. These issues, like when to file and how to handle any potential manners of preference, may become much more clearly defined when you consult with an attorney who is experienced and has been dedicated to bankruptcy law for many years, such as those at Fitzgerald & Campbell, APLC. We are here to help you with legal advice.