Chapter 7 bankruptcy can be a big step, but it can be a great way to have your debts discharged so that you can take control of your finances once again. However, there are some common mistakes that you can make that can prevent you from getting approved by a judge. Make sure that you avoid these three things if you are planning on filing bankruptcy.

1. Paying Back Family Members or Favorite Creditors

If you owe money to your family members, or if you have favorite creditors that have worked with you during your tough times, you might be thinking about paying them back first. However, you can't pick favorites in a bankruptcy claim. If you are preparing to file bankruptcy, avoid paying any of your creditors until you have talked to your lawyer about it.

2. Racking Up High Debts

You might assume that it's acceptable to swipe your credit card a few more times before it is cancelled. Since many of your debts will be discharged, this can seem like a good idea, but it's actually considered fraudulent activity. If a judge thinks that you used your credit cards after you decided to file bankruptcy, you could be accused of fraudulent behavior; this can put you at risk of legal trouble, and could at the very least cause your claim to get denied. Put away your credit cards until you are sure that you won't file bankruptcy.

3. Selling or Transferring Your Assets

If you have assets, such as a home or a vehicle, you might be thinking about transferring these items to your family members or other loved ones to help prevent them from being sold during a chapter 7 bankruptcy proceeding. You may also be in a big financial mess and could think that selling your property could help you get the cash that you need. However, it is best to avoid selling or transferring any of your major assets. The judge could ask why you don't have these things anymore and could assume that you sold or transferred them to avoid losing them in a bankruptcy proceeding, which could be considered fraudulent activity. Instead, talk to your lawyer about how you can keep these things; you might be surprised by what you will be able to keep during bankruptcy if you have a good reason and a good lawyer (from firms like Morrison & Murff).

Chapter 7 bankruptcy can be the perfect solution for your financial problems, but there are ways that you can mess up your chances at getting approved. Avoid doing any of these three things if you are even thinking about filing bankruptcy; otherwise, the judge could deny your bankruptcy claim, or even worse, you could get in trouble for fraud.