Thinking About Filing for Bankruptcy? DOs And DON’Ts

If you are wanting to or planning to file for bankruptcy, you’ve probably at least thought about it. Maybe, even in jest, you’ve thought, “Man, if I filed for bankruptcy, I could really reset my life.” or “Gosh it would be great to be debt free.”

With COVID-19 still causing havoc in our “normal” lives, the fluctuations in the financial and housing market and joblessness may have many people begin to seriously consider filing for bankruptcy.

Filing for bankruptcy is not something to do on a whim. You can’t just pull the trigger at any given time. Even if you were prepared and ready, there might be something you did or didn’t do that will cause problems and make you wish you had thought it through first.

Below is a compilation of a few things you should do and should not do before filing for bankruptcy. Some are common sense, but some will really mess up your petition and you may not receive a discharge, or worse, you might end up losing money.


  1. DO gather all your financial documents. All income statements such as W2s and pay stubs, two years of taxes, all bank statements, rent leases, mortgage statements, car loan statements, utility bills, etc. You get it, right? Documentation on anything you receive as income and anything you pay with that income will be needed.
  2. DO make a spreadsheet of all your expenses. Anything you pay monthly or spend on monthly should be included here. It doesn’t even have to be a fancy spreadsheet; just list what it is and how much you spend on it each month. This is especially helpful when computing your eligibility under the “means test”. If you spend $1,200 on daycare, list it. If $14.99 is auto-debited from your VISA credit card, list it.
  3. DO make a list of all your personal property. This includes things you own that might be worth something, e.g. computers, guns, furniture, appliances, etc.
  4. DO speak with an attorney, especially if you are being sued by a credit card company or hospital for unpaid bills, because swift action may be necessary to prevent loss of property.


  1. Do NOT repay any money to friends or family. This can be viewed as a “preferential payment” if made within 1 year of filing for bankruptcy. You cannot pay some people first before someone else. Also, it has the appearance of you trying to hide money or assets.
  2. Do NOT transfer funds or property to anyone. You may be able to for certain items but do not do this before consulting an attorney. This means, do not give your cousin one of your cars and do not sell it either.
  3. Do NOT withdraw money from your retirement accounts. These accounts have protection. There’s no need to take money out due to fear of losing that money.
  4. Do NOT make any unusual purchases, especially with credit cards, unless it’s a real emergency. You may be able to make purchases with cash without triggering any red flags, but generally it’s a bad idea to go buy things when you’re looking for help due to debt.

Keeping these things in mind, you probably should talk to a lawyer the moment you think you might need to file for bankruptcy. I can advise you what to do and not to do prior to filing to help your petition lead to a problem-free discharge. Give me a call! I never charge to discuss possible representation.