Articles Tagged with Things not to do

Things not to do before filing Chapter 7

April 2, 2024 | by Christopher Hewitt

Filing for Chapter 7 bankruptcy is a significant financial decision that can have long-lasting effects on your credit and economic future. Before filing for Chapter 7 bankruptcy, there are several things you should avoid doing to ensure the process goes as smoothly as possible and to maximize the benefits of bankruptcy protection. Here are some things you should not do before filing for Chapter 7 bankruptcy:

Don’t incur new debt: Adding more debt shortly before filing for bankruptcy can raise suspicions of fraudulent behavior. Avoid using credit cards or taking out loans once you decide to file for bankruptcy.

Don’t transfer assets: Transferring assets or property to friends or family members before filing for bankruptcy can be seen as an attempt to hide assets from creditors. Such transfers may be considered fraudulent and can complicate your bankruptcy case.

Free Consultation - Se Habla Español Palm Desert: 760-585-4451 San Clemente: 949-669-1014Riverside: 951-717-9020

How does debt consolidation affect credit scores?

Initially, it might cause a slight dip due to credit inquiries. However, consistent payments can improve your credit score over time.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking a new loan to pay off debts, while debt settlement is negotiating to pay less than you owe. Settlement can negatively impact your credit score.

What are secured vs. unsecured debt consolidation loans?

Secured loans require collateral (like a house or car), usually with lower interest rates. Unsecured loans don't require collateral but typically have higher rates.

Is debt consolidation right for me?

It depends on your total debt, interest rates, credit score, and payment capability. It's suitable if you can pay off your debt within five years and secure a lower interest rate than your current debts.

Should I consider long-term financial planning?

Yes, debt consolidation should be part of a broader financial strategy including budgeting, cutting expenses, and building an emergency fund.

How do Chapter 7 and Chapter 13 bankruptcies in California differ?

Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows debt restructuring over a set period, usually three to five years.

Can my spouse's bank account be garnished for my debt?

Bankruptcy laws offer protections against such actions, but specifics depend on individual cases and state laws.

How can I learn more about my options?

Consulting a California bankruptcy attorney can provide clarity. Firms like The Law Offices of Christopher Hewitt offer free consultations to explore debt relief paths.