What not to do before filing bankruptcy in Michigan

The short answer

A useful bankruptcy consultation depends on a complete picture, including facts you would rather not discuss. Tell counsel about property, informal loans, family payments, legal claims, expected refunds, business interests and prior cases. Leaving something off a questionnaire does not make it irrelevant to the court process. If a value is uncertain, explain the uncertainty. If records are missing, identify what is missing. Honest questions early are safer than a filing based on an assumption that nobody will ask about an uncomfortable transaction.

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A careful look

Do not hide a difficult fact

A useful bankruptcy consultation depends on a complete picture, including facts you would rather not discuss. Tell counsel about property, informal loans, family payments, legal claims, expected refunds, business interests and prior cases. Leaving something off a questionnaire does not make it irrelevant to the court process. If a value is uncertain, explain the uncertainty. If records are missing, identify what is missing. Honest questions early are safer than a filing based on an assumption that nobody will ask about an uncomfortable transaction.

Do not transfer property to make it disappear

Signing a car or house over to a relative, selling something for less than its value, or moving an interest into someone else’s name can create serious problems. Bankruptcy law includes rules for investigating and recovering certain transfers, and concealment or other misconduct can threaten a discharge. There is no universal safe transfer that can be recommended on a website. Gather the history of any transaction already completed and obtain advice before attempting to reverse or replace it with another transaction.

Do not favor relatives without advice

Repaying a family member may feel more honorable than paying a collection agency, but pre-filing payments can have legal consequences. Certain payments may be investigated or recovered under the applicable rules. The relationship, timing, amount, type of debt and other facts can matter. Do not assume that describing the money as a gift or reimbursement settles the issue. Keep records of what was paid and why, and discuss it before making another payment based on a generic online checklist.

Do not borrow expecting discharge

New credit-card charges, cash advances, payday borrowing or financed purchases made in anticipation of filing can raise discharge and fraud issues. A bankruptcy case is not permission to spend up to available limits before asking for relief. If recent borrowing already occurred, provide the dates, purpose and documents rather than hiding it. Counsel can explain the issues without promising that the debt will be erased. The correct response to financial pressure is a candid plan, not a transaction intended to leave someone else with a bill.

Do not cash out retirement savings automatically

Many qualifying retirement interests may receive protection that requires careful analysis before money is withdrawn. Paying ordinary unsecured debts with retirement funds can reduce resources the household needs later and may introduce tax or exemption questions. Account type, ownership, distributions and applicable law matter. Gather statements and ask whether a proposed withdrawal makes sense before acting. The same caution applies to selling important property, surrendering collateral or spending an expected tax refund on the assumption that bankruptcy will fix the consequences afterward.

Do not follow a blanket stop-paying rule

Some obligations may continue, some debts may survive and some payments may be essential to keeping housing, insurance or transportation. A generic instruction to stop paying everything can be harmful. Support, taxes, secured debts, utilities and ordinary living expenses require separate review. Give counsel an actual budget and all urgent notices. If a sale, garnishment, eviction or shutoff is approaching, state the exact date; completing a website form does not create a stay or reserve representation.

Do preserve records and communicate changes

Keep bank statements, pay records, tax returns, creditor notices, insurance documents and records of transfers. Do not delete messages or discard paperwork simply because it is embarrassing. After deciding to pursue representation, follow the agreed secure document process and report changes in income, employment, property or family circumstances. Review every document before signing it. A well-prepared case depends on accuracy throughout the process, not just on the first consultation or on whether the initial questionnaire looks complete.

Preparing for a conversation with the firm

Wendy Turner Lewis has been in private practice for over 25 years. A free 30-minute consultation by Zoom or phone is a chance to discuss your priorities, urgent dates, income, property and debts. Gather the paperwork connected to the issue in this article, then add a complete household picture. The document checklist explains which records to gather, including the difference between six-month means-test preparation, federal payment-record duties and local document requirements. Do not ignore an existing court deadline while waiting for a consultation.

What the advertised fee includes and excludes

Chapter 7 attorney fee: $1,300. Reaffirmation agreement hearings are included in the $1,300 attorney fee. Payment plans available on the attorney fee. In Chapter 7, the attorney fee is generally paid before the case is filed, so plans are arranged before filing. The $338 court filing fee is paid separately. The $1,300 does not include credit counseling or debtor-education course fees or services, or adversary proceedings. The attorney and court fees total $1,638 before excluded items. The written engagement agreement confirms scope and any additional charges. Credit counseling and the post-filing education course are separate requirements for most individual filers; confirm the correct approved provider and its current charge before enrolling. Payment plans are available on attorney fees and arranged before filing; Chapter 7 attorney fees are generally paid before filing. Court-fee installments or a waiver require court approval and do not waive attorney fees. The cost tool lets you add course quotes without inventing a price.

A secure, informed next step

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Wendy Turner Lewis, PLLC

Detroit bankruptcy practice · in private practice for over 25 years. Approved educational content by Wendy Turner Lewis.

Attorney advertising. General information, not legal advice. No attorney-client relationship is formed by using this site or sending a form; representation requires a signed agreement. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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