The Top Mistakes to Avoid Before Filing for Bankruptcy

Deciding to file for Chapter 7 bankruptcy can be one of the smartest financial choices you’ll ever make but timing and preparation matter. A few simple mistakes before filing can delay your case or even cause you to lose protections you would otherwise have.

At Royes Law LLC, we help clients avoid those pitfalls and make sure their bankruptcy filing goes smoothly from start to finish. If you’re thinking about filing, take a few minutes to understand the most common mistakes and how to avoid them.

Mistake #1: Waiting Too Long to Get Legal Advice

Many people wait until things have completely spiraled before calling a lawyer, after their wages have been garnished, their car has been repossessed, or their accounts frozen.

The truth? The sooner you speak with an attorney, the more options you have. Even if you’re not ready to file right away, a consultation can help you plan strategically so you don’t make moves that could hurt your case later.

Bankruptcy is about timing and preparation. The earlier you plan, the stronger your case will be.

Mistake #2: Using Credit Cards or Taking Out New Loans Right Before Filing

It’s tempting to rely on credit cards to stay afloat when money is tight but using them right before filing can create serious problems.

The court may see recent charges or cash advances as a sign of fraud, especially if they were made within 90 days of filing. Those debts might not be dischargeable.

Avoid:

• Large purchases on credit
• Cash advances
• Balance transfers
• New personal or payday loans

Instead, pause all new borrowing and speak with Royes Law LLC first to review your options.

Mistake #3: Transferring or “Hiding” Property

One of the biggest misconceptions people have is that transferring assets to friends or family before filing will protect them. It won’t.

If you sell, gift, or “move” assets to someone else before bankruptcy, the court can view that as an attempt to hide property even if your intentions were good. These transactions can be undone (clawed back) and may put your discharge at risk.

The best move? Be transparent. When you work with Royes Law LLC, we review your finances carefully to make sure every decision protects your rights legally and ethically.

Mistake #4: Paying Back Family or Friends Before Filing

It’s natural to want to pay back loved ones before filing, but doing so can actually create problems.

Payments to “insiders” such as family members or close friends within one year before filing can be treated as preferential payments, meaning the bankruptcy trustee can demand that money back.

You’re better off waiting until after your bankruptcy case is complete. Once your debt is discharged, you’ll have the freedom to repay them on your own terms without legal complications.

Mistake #5: Selling or Spending Exempt Property

Certain assets like your car, household goods, or a portion of your home’s equity are protected (or “exempt”) in bankruptcy. But if you sell or spend those assets before filing, you might lose that protection.

For example:

• Selling a car to pay bills may seem helpful, but you could have kept the car and cleared your debt.
• Spending money in savings could eliminate funds that might have been protected under D.C. exemptions.

Always check with your attorney before selling, gifting, or using large sums before filing.

Mistake #6: Filing Without an Attorney

It’s true that you can technically file bankruptcy without a lawyer but it’s almost never a good idea. Bankruptcy law is complex, and even a small paperwork error can result in your case being dismissed or delayed.

A qualified attorney ensures:

• Your forms are complete and accurate
• You’re claiming every exemption available
• You’re protected from creditor mistakes or harassment
• You avoid losing property unnecessarily

At Royes Law LLC, we guide you through every step, so you don’t face those risks alone.

“A small mistake on a bankruptcy petition can have big consequences. The right legal guidance protects you from the start.”

Mistake #7: Forgetting to List All Debts and Assets

When you file for bankruptcy, you must disclose all of your debts, assets, and income. Leaving something out even by accident can cause delays or lead the court to question your honesty.

Common oversights include:

• Old debts in collections
• Co-signed loans
• Bank accounts you rarely use
• Small assets (like online accounts or digital currency)

We help clients double-check every detail before filing, so your case is accurate, complete, and fully compliant.

Avoiding Mistakes Starts with Good Guidance

The most common theme behind all these mistakes is simple: acting without proper guidance. Bankruptcy is designed to protect you but it only works when handled carefully.

When you work with Royes Law LLC, we make sure your Chapter 7 filing is done correctly, completely, and with your best interests at the center of every decision.

We take pride in helping clients move forward with confidence not confusion.

Start Smart – Start With Royes Law LLC

If you’re considering bankruptcy or unsure when to file, don’t take chances with your financial future.

Contact Royes Law LLC today to schedule your consultation and learn how to avoid the common pitfalls that can delay or derail your fresh start.

With the right preparation and a trusted guide, you can move forward faster and stronger.