If you are facing a heavy debt load that you fear you have no chance of paying off, bankruptcy may be your best solution. Should you consider going down this route, you should refrain from making certain transactions before you file your bankruptcy petition.
For one thing, you may lose money that you could have kept after your bankruptcy is complete. As Kiplinger explains, making certain expenses and property transfers might also complicate your bankruptcy or possibly endanger it.
Do not add more debt
If you know you will file for bankruptcy in the near future, refrain from expensive purchases or taking out loans. Your creditors may take note of any debt increases during the 70 to 90 day period before you file your petition and accuse you of bankruptcy fraud. They could go to court and object to your efforts to discharge your debts on that basis.
Refrain from property transfers
If you try to transfer or sell off property shortly before your bankruptcy filing, your bankruptcy trustee may try to reverse your transactions. A bankruptcy trustee has certain powers to undo property transfers in order to recover money that could go towards paying creditors. Similarly, if you try to hand off property to a family member, the trustee could call it a fraudulent conveyance and cancel the transfer.
Hold on to retirement funds
It can be tempting to raid your retirement account in a last ditch effort to pay off some of your debts and avoid bankruptcy, but depleting your account could endanger your plans for retirement. Also, bankruptcy will protect many retirement accounts from creditors. You have a good chance of exiting bankruptcy with most if not all of your retirement money intact. Remember that bankruptcy exists to help relieve you of burdensome debt and not to financially ruin you.