Should I pay off any debts before filing?

Be careful. Paying more than $600 to any one creditor on a consumer debt within 90 days of filing can be recovered as a preference under § 547. Paying back family members within one year can be recovered as an insider preference under § 547 because relatives are insiders under § 101(31). Pay routine bills (rent, utilities, current mortgage) but do not selectively pay off old debts to favored creditors.

What documents will my attorney need?

Two years of filed tax returns, six months of pay stubs and bank statements, statements for every credit account showing balances and account numbers, identification documents (photo ID and Social Security card), titles to vehicles and real estate, and copies of any lawsuits, garnishments, or foreclosure papers. Bring everything; do not sort or exclude items that look unfavorable.

Can I transfer assets to family members before filing?

No. Pre-bankruptcy transfers to family members are reachable by the trustee under 11 USC § 548 (fraudulent transfers within 2 years of filing) and under applicable state law (typically 4 years). Transfers for less than reasonably equivalent value can be recovered or the transferee can be sued. Intentional pre-filing asset transfers are also grounds for denial of discharge under § 727(a)(2).

Should I stop paying my credit cards before filing?

Many people do because the money is better used to fund attorney fees, post-petition expenses, and the credit-counseling course. Stopping payment to unsecured creditors before filing does not by itself violate any law and the debts will be discharged at the end of the case. Keep paying secured debts you intend to keep (mortgage, car loan) and post-petition obligations.

When should I complete the credit-counseling course?

Within the 180 days immediately before filing the petition. 11 USC § 109(h) makes counseling within that window a prerequisite to filing. Take the course early but not so early that it expires before filing; many debtors take it 30 to 90 days before filing. The course typically costs $10 to $50 and takes one to two hours.

Things to Do Before Filing Bankruptcy

Complete pre-filing credit counseling under 11 USC § 109(h) from an approved provider. Gather six months of pay stubs, two years of tax returns, all creditor statements, account numbers, and the most recent balance for every debt. Stop using credit cards and especially stop making large purchases or cash advances in the 90 days before filing because of the presumption in § 523(a)(2)(C).

Pre-Filing Checklist

Before filing bankruptcy, take these essential steps:

Complete credit counseling from a DOJ-approved provider (required within 180 days before filing)
Gather all financial documents: Tax returns (last 4 years), 60 days of pay stubs, bank statements, mortgage statements, vehicle titles/values, investment account statements
Stop using credit cards: New charges incurred near filing can be challenged as nondischargeable fraud
Do NOT transfer property: Transferring assets to family or friends before filing is fraudulent transfer and can be reversed by the trustee
Do NOT pay back family loans preferentially: Paying back a relative (insider) within 1 year of filing is a voidable preference under Section 547
Do NOT drain retirement accounts: 401(k)s and IRAs are exempt in bankruptcy. Cashing them out to pay debts you could have discharged is the worst thing you can do.
File all tax returns: You must be current on all tax filings. Missing returns can delay or prevent discharge.
Research your state's exemptions: Know what property is protected before you file.

The #1 mistake: Draining retirement savings to pay credit card debt that could have been discharged for $1,500-$3,000 in bankruptcy costs. Those retirement funds were 100% protected. The credit card debt was 100% dischargeable. Do the math first.

Bankruptcy Tools Network:
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Foundational Caselaw

The cases below define the doctrine on this site:

Union Bank v. Wolas, 502 U.S. 151 (1991) - the "ordinary course of business" defense to preference liability under Section 547(c)(2) extends to long-term debt, not just short-term trade debt.

BFP v. Resolution Trust Corporation, 511 U.S. 531 (1994) - the price obtained at a non-collusive, regularly conducted real-estate foreclosure sale is conclusively presumed to be "reasonably equivalent value" under Section 548(a)(2).

Merit Management Group, LP v. FTI Consulting, Inc., 583 U.S. 366 (2018) - Section 546(e) safe harbor for transfers "by or to a financial institution" is determined by looking at the overarching transfer the trustee seeks to avoid, not at intermediate transfers.

This site provides general information, not legal advice. Consult a qualified attorney for your specific situation.