Things to consider before filing for bankruptcy

Illinois consumers who might be considering bankruptcy may be interested in a recent article that discusses issues that a person might need to consider before they file for bankruptcy. Some of these actions might draw scrutiny from a bankruptcy trustee who is assigned to the case after the person files for protections.

Some actions, such as taking out a cash advance, paying off family members who are also creditors and retitling assets, might be viewed negatively. A person who seeks cash advances before they file for bankruptcy might be investigated for fraudulent activity. In many cases, a portion of that advance must be paid back after the person pursues bankruptcy. Furthermore, family members who are owed money are the same as other creditors, and taking steps to pay them back during a bankruptcy may not be allowed.

Finally, if a person attempts to transfer their assets to other parties in an attempt to shield them from liquidation during a Chapter 7 bankruptcy, it may have the opposite effect. As an example, a car might be protected from liquidation if it is paid off, but if that vehicle is transferred to another person, a bankruptcy trustee might be able to take possession of it. Typically, there are legal ways to shield assets that do not involve retitling them.

In order to plan a bankruptcy to avoid unnecessary seizure and liquidation of assets, it might be beneficial to work with an attorney who is familiar with how relevant state and federal laws apply to the process. That attorney may be able to explain available exemptions to a client in an effort to minimize the possible negative impact of the action.