6 Mistakes to Avoid Prior to filing Bankruptcy RUNNING UP YOUR CREDIT CARD BILLS. Once you decide to file for bankruptcy do not make any "luxury" purchases and do not take out cash advances on your credit card. If it looks like you are maxing out you credit card in anticipation of filing for bankruptcy the trustee may find that those purchases cannot be discharged. You can still use your card to purchase food and groceries. REPAYING A FAMILY MEMBER (GIVING PREFERENCE TO A CREDITOR). If you owe a family member money, do not repay them as you are not allowed to give one creditor preference over another. USING YOUR (401K) OR RETIREMENT ACCOUNT TO PAY CREDITORS. Your retirement account is usually safe from creditors. Many people use their retirement accounts to pay down debts that would otherwise be dischargeable. TRANSFERING PROPERTY OUT OF YOUR NAME. If a transfer is made to defraud a creditor it is a fraudulent transfer. Do not quitclaim property to anyone to avoid having to list it as an asset. TAKING OUT A HOME EQUITY LINE OF CREDIT TO PAY DOWN DEBT. If you plan on filing for bankruptcy don't trade unsecured debt for secured debt. If you take out a second mortgage you could be putting your home at risk. FAILING TO FULLY DISCLOSE INFORMATION TO YOUR ATTORNEY. Your attorney can only effectively advise you if he or she has a full and accurate idea of your situation. Being truthful and open is essential in proper planning and drafting of the bankruptcy petition and schedules. Most of our clients keep everything and lose nothing due to our careful petition planning.