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Avoiding Common Bankruptcy Pitfalls

For people in a tight financial situation with limited options on the table, bankruptcy can often be a smart outlet. However, what many people don’t realize about the bankruptcy process is that it’s vital to maintain certain habits while your filing is being considered – not doing so can badly hurt your case.

At Utah Bankruptcy, our bankruptcy attorneys are here to help with all these possible pitfalls you need to avoid. Here are some of the most common mistakes people make that may damage their case.

Credit Concerns

If you have financial issues that are leading to bankruptcy, one of your first steps should be stopping the use of all credit cards. This includes all basic expenses, and also includes taking out cash advances against credit cards. You can continue to use a debit account for the things you need to buy.

In addition, while it may seem like making additional payments to creditors will improve your chances of an approved claim, this isn’t always the case. Large, abnormal payments to creditors are called preferential transfers – when a single creditor receives funds over other creditors that hold the same weight. In these cases, your trustee may need to sue a creditor to get these funds back so they can be distributed evenly, a process that will delay your filing and ultimate discharge.

Extra Money Deposits

If preparing to file for bankruptcy, only money directly from sources of income should be deposited into your bank. Never deposit any other forms of money, including gifts from friends or money from relatives trying to help out.


Some people mistakenly believe that transferring major assets like houses, cars or large cash sums to friends or relatives will keep those assets safe during bankruptcy. This is totally false – not only will this do little to protect your assets, you can be charged with fraud in certain cases. Just having assets doesn’t mean you can’t file for bankruptcy, and just because you file doesn’t mean you’ll lose all your assets. Hiding them is totally unnecessary.

Want to learn more about bankruptcy pitfalls to avoid or any of our other bankruptcy services? Speak to the bankruptcy lawyers at Utah Bankruptcy today.