Recovering from Bankruptcy: Chapter 7 Tips

Recovering from Bankruptcy: Chapter 7 Tips

Posted by Chad Van Horn on Dec 13, 2016 7:37:49 AM

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The process of bankruptcy, even a ‘simple’ liquidation bankruptcy – also called a chapter 7 bankruptcy – is a complicated legal process. Nobody gets there without a lot of lost sleep and worry. Among the biggest questions is how to prepare for bankruptcy, and how to recover once the bankruptcy is finished. These worries are well-founded, as exiting bankruptcy successfully takes a toll on your credit, and impacts your ability to rent a place to live, obtain a car, and rebuild your credit. Here are some tips that will help you before, during, and after your chapter 7 bankruptcy.


Before Filing Chapter 7


There are some things you should absolutely never do prior to filing for bankruptcy in any form. To put it mildly, federal judges and US trustee take a very dim view of shenanigans, whether they are intentional or not. Doing any of these is a virtual guarantee that your filing will be dismissed.


  • Do not transfer any money or property. Transferring assets to other people, including parents, spouses, children, and business partners signals to the bankruptcy court that you may be committing fraud.
  • Despite any instinct to “do the right thing” should not take any steps to pay off your creditors. You can pay your normal bills, such as rent, utilities, and any payments you would normally make. However, acting to pay off creditor before filing can be seen as giving the creditor preferential treatment. This can lead to the trustee filing a clawback lawsuit against the person or institution you just paid off.
  • It goes without saying that you should not take on any further debt such as opening new lines of credit or maxing out your current lines of credit.
  • File your taxes. You’re required under the US bankruptcy code to provide a copy of your most recent tax return. The US trustee needs this information in order to work on your bankruptcy, as tax returns provide a significant amount of information. 


Recovering from bankruptcy chapter 7


This kind of bankruptcy will stay on your credit report for 10 years, but it will carry less weight as time goes on. Yes, it will cause some pain, but not as much pain as cascading late payments, collections, and evictions or foreclosures. Here are some tips on how to get your life back on track.
  • Pay your bills on time. This is the very foundation of a good credit score and one that you should pay strict attention to.
  • Go no-frills. You are going to have to learn how to manage without being able to put it on the plastic. Start with learning how to create a budget that allows for paying the bills on time, shelter, groceries and necessities.
  • When it comes to savings, start simple. Get a piggy bank. Feed the pig with your pocket change every day, and dollar bills at the end of every week. Roll it over into a savings account and start all over again.
  • Get a secured credit card from a reputable company, and begin rebuilding credit one step at a time. The credit limit will be low, the interest rate will be higher than what you are used to, but over time you will be able to access higher credit limits.

If you have any further questions or concerns about filing for Chapter 7 bankruptcy, we can better address your individual situation with a free initial consultation at our Fort Lauderdale or West Palm Beach offices. We are now open seven days a week so call us now, and let’s get started on the rest of your life.

 bankruptcy basics free report

Topics: Bankruptcy, Chapter 7


About Chad Van Horn


Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn.


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