Facing Bankruptcy? Don't Withdraw All the Money in Your Accounts

When facing bankruptcy, people shouldn’t withdraw all the money in their accounts for a variety of reasons. For instance, anything people do shortly before filing bankruptcy is looked at closely by bankruptcy trustees, according to Flume & Associates. Typically, bankruptcy allows people seeking financial freedom two avenues to do so. Chapter 7 allows people who can’t to afford to repay their debts to eliminate them through bankruptcy. For people who can afford to repay, chapter 13 is the way to go. Usually, people can repay their debts and save their property—such as their homes—over a three to five year period. Granted, people are limited on how much money they can have—on hand or in the bank—but the amount depends on several factors. However, when people try to hide their money they place their bankruptcy chances in jeopardy. For example, people who hide debts, use false social security numbers or someone’s identity can results in jail time. In fact, people should always include any money they are planning to receive in the future. For instance, they may list all property they have coming to them which includes inheritance, pensions and money from judgments, according to NOLO.

Don’t Transfer the Money

Besides not withdrawing money from their account, people shouldn’t transfer their assets. Shifting assets, according to Legal Zoom, into relative’s accounts or into their names prior to filing for bankruptcy is not permitted. People facing chapter 7 bankruptcy may have their transfer deemed fraudulent. While people facing chapter 13, may have their payments increased to include the transferred assets as debt.

Don’t Max Out Credit Cards

Facing bankruptcy isn’t a reason to run up debt. Debt incurred within 90 days of filing for bankruptcy is assumed to be non-dischargeable. This means debt in excess of $500.00 and any cash advances more than $750.00 which happened within the 90 day time period will not be included in the bankruptcy, according to the Los Angeles Bankruptcy Law Monitor.

Don’t Liquidate Retirement Accounts

People shouldn’t liquidate their retirement accounts when facing bankruptcy. Retirement accounts are protected from liquidation. Instead people should keep the money where it is.

Do Consult Attorneys

Attorneys are paid to help people before, during and after bankruptcy. Thus, attorneys can advise clients what they should do about money they have in their accounts.