Q: When selling business equipment should I use that money to pay bills before or after I declare bankruptcy?
My husband is selling his equipment, we plan on using the money to pay off some of our bills, but we would like to know if we should do it before or after we declare bankruptcy.
A: Do not pay large amount of money to family, friends, or credit cards before filing chapter 7 bankruptcy. These are considered "preferences" and the bankruptcy trustee will be able to take such money back and re-distribute to all of the creditors on a pro-rata basis. The amount of money that you have from selling your husband’s equipment can possibly be protected depending on your state exemption limits.
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