Many people in Georgia believe bankruptcy only looks at what happens after you file your paperwork. In reality, the months leading up to your filing matter just as much. Using credit cards or selling property right before filing can raise red flags. These actions may delay your case or reduce the debt relief you receive.
Using credit shortly before filing
Using credit cards or taking out loans right before filing for bankruptcy can create serious legal issues. Under federal law, the court assumes that when you use credit, you intend to pay it back. If you spend a lot of money just before filing, a creditor may argue you never planned to pay.
In Georgia, specific rules apply to “luxury goods” and cash. If you charge more than $800 for luxury items within 90 days of filing, the court may presume you acted improperly. Similarly, courts view cash advances of more than $1,100 taken within 70 days of filing with suspicion. If a court agrees with the creditor, you will still owe that debt even after your bankruptcy ends.
Selling or transferring assets before filing
Selling property before filing also carries risks. Bankruptcy law requires honesty and fairness to the people you owe. The law sees selling assets for less than they are worth—or giving them to friends and family—as “voidable.”
In Georgia, a bankruptcy trustee reviews your past sales and gifts. Under the Georgia Uniform Voidable Transactions Act, a trustee can look back up to four years to undo a transfer. If the trustee finds a problem, they can require the recipient to return the item to the bankruptcy estate.
Paying off one specific friend or creditor while ignoring others can also cause trouble. If you pay a general creditor within 90 days of filing (or 1 year for a family member), the trustee can “claw back” that money to share it fairly among everyone you owe.
Why legal guidance matters
Bankruptcy rules focus on timing and intent. Actions that seem helpful can lead to legal trouble. Speaking with a bankruptcy attorney before using credit or selling assets can help you plan safely. Legal guidance enables you to understand the rules. They also help you avoid costly errors and protect the relief bankruptcy offers.
