Without proper preparation, bankruptcy can be a complicated process. However, there are small adjustments you can work out with an attorney to set you up for success. Make sure that you speak with an attorney about what will work best for you.

Here are several things to keep in mind:

Your Bank Account

Any extra money in your checking or savings account will be required to go to your trustee. However, this is only applicable to the money in your account on the day your case is filed. Once the bankruptcy is files, you can go back to using your accounts prior to your filing.

When planned correctly, you can avoid turning in additional money to the bankruptcy trustee. Therefore, it is important to have a professional bankruptcy attorney that you trust. Your attorney will help you plan to file when it is most beneficial for you. Remember, you cannot just take out money, file your case, and put it back in. The money limits also apply to your “cash on hand.” This means any cash you have in a bank or at home. If you have more than the exempt limit, you will need to speak in detail with your lawyer about a better strategy for filing.

Credit Cards 

Once you file for BK, you will want to stop using your credit cards. If you take out an advance on your credit card, it can affect what is owed in your bankruptcy. Check with your lawyer before taking out any advances on your credit cards.

Stay Away from “Luxury Purchases” 

You will want to avoid “luxury purchases” within a few months of your bankruptcy filing. Keep in mind, the amount of time will vary depending on the state in which you live. The Bankruptcy Code is not specific about what items are considered “luxury items.” So, you will want to discuss any plans for upcoming purchases that you worry may be considered “luxury items” with your attorney.

Repaying Friends & Family First

It may be tempting to try to pay back a friend or family member before any other debt. But, doing so can complicate your bankruptcy. If you show preference by repaying a loved one within a year of your bankruptcy, the trustee will ask that the money be turned over to repay your creditors first. Talk to your attorney if you have already done this or were planning on repaying a loved one before anyone else. This reasoning also applies to repaying unsecured creditors first.

Selling Property/Transferring Assets

Keep in mind that there are legal consequences for transferring your assets out of your name prior to filing for bankruptcy. If you sell something, you must sell it for what it is worth. If you need to sell something prior to your bankruptcy, speak to your attorney first.


In the event you become entitled to an inheritance within your bankruptcy filing, you will need to notify your attorney and the trustee. The inheritance may be seized to repay your creditors. There is a difference between receiving an inheritance and being entitled to one.

Personal Injury Claims

If you were injured in an accident before your bankruptcy filing and receive compensation after its filing, those funds can be seized to repay your creditors. Be sure to let your attorney know about any accidents, especially ones you expect will result in compensation. It can be more beneficial to hold off your filing until after your claim is settled.

Tax Refunds

You are likely to lose some or all your refund if you file a Chapter 7 bankruptcy. On the other hand, if you file a Chapter 13, you are likely to lose any refund for the remainder of your bankruptcy filing. Be sure to go over any concerns you may have about your taxes with your attorney. Sometimes, filing at different times of the year will affect how much of your refund will be taken.

Need More Information?

Please note that this is a short list and that there are many other situations to be mindful of. Therefore, we recommend meeting with a professional bankruptcy attorney to discuss your personal situation in detail. If you are unsure what to do or how to find an attorney, please click here for more information. Our office prides itself on offering honest and detailed information. If you have not met with an attorney yet, we recommend that you call our office today for a free consultation.