Filing Chapter 7 is often described as a “fresh start,” but it’s not an anything‑goes free‑for‑all.
From the moment you submit the petition until long after your debts are wiped out, the Bankruptcy Code—and the trustee who enforces it—put real limits on what you may (and may not) do. Understanding those limits up front keeps you out of hot water and helps you rebuild faster.
Below is a practical, everyday explanation of the main “don’ts” that kick in once you file.
1. You can’t hide, give away, or sell property without permission.
The second you file, nearly everything you own becomes part of a legal “bankruptcy estate” overseen by the Chapter 7 trustee. Selling your jet‑ski to a buddy for a dollar, transferring the car title to your cousin, or stuffing cash in a home safe after filing is forbidden. The trustee can unwind those transactions and may refer suspected fraud to the U.S. Trustee or the FBI. Keep every asset where it is and let the trustee decide what’s exempt and what isn’t.
2. You can’t ignore the trustee or skip the 341 meeting.
About a month after filing, you must attend the “meeting of creditors” (section 341 meeting). It usually lasts five minutes on Zoom or in a federal building, but skipping it—or refusing to provide pay stubs, bank statements, or tax returns—can get your case dismissed. Worse, the court could bar you from refiling for 180 days. Show up, tell the truth, and answer the trustee’s questions directly.
3. You can’t play favorites with creditors.
Maybe you feel morally obligated to repay Grandma’s $2,000 loan. Tough as it sounds, you’re no longer free to do so without court approval. Chapter 7 treats all unsecured creditors equally; paying one back within 90 days (or insiders within one year) is called a “preferential transfer.” The trustee can claw that money back. Press pause on all voluntary repayment until the case is closed.
4. You can’t run up new debts you know you can’t repay.
The credit card in your wallet may keep working after you file, but using it for a shopping spree is financial Russian roulette. Debts you incur after the filing date aren’t protected by the automatic stay and won’t be discharged. Worse, running up charges when you know bankruptcy is pending can be labeled fraud, making those new balances permanently non‑dischargeable.
5. You can’t keep non‑exempt property just because you like it.
Each state, including Michigan (or the federal system, if you qualify) lets you shield specific amounts of equity in a home, car, household goods, retirement funds, and personal items. Anything above the exemption limits is fair game for liquidation. If your vintage motorcycle is worth $9,000 but your state’s vehicle exemption tops out at $4,000, expect the trustee to sell it and send you the exempt $4,000 share.
6. You can’t skip the post‑filing debtor‑education course.
Filing requires a pre‑bankruptcy credit‑counseling session. Afterward you must complete a second course—financial‑management education—within 60 days of the 341 meeting. Fail to file the certificate on time and the court withholds your discharge, effectively wasting the entire case.
7. You can’t shake certain debts, no matter what.
Chapter 7 wipes out most unsecured balances, but Congress carved out 19 categories that survive, including child support, recent income taxes, many student loans, and debts for willful injury. Trying to ignore those obligations after filing guarantees collection efforts will resume the moment the case closes—and interest keeps ticking the entire time.
8. You can’t file another Chapter 7 for eight years.
A discharge is a one‑time gift for most people. If you receive one today, you must wait a full eight years from the filing date before you’re eligible for a second Chapter 7 discharge. Filing too soon will leave you without protection and owing every dollar.
9. You can’t get a big‑ticket loan the day after discharge.
Credit offers will show up, but major lenders draw bright lines:
- FHA mortgage: Two‑year waiting period after discharge.
- Conventional mortgage: Often four years.
- Auto loans: Many lenders want 6–12 months of on‑time post‑bankruptcy payment history.
Trying to force the issue early usually means sky‑high interest rates or outright denial. Patience—and rebuilding through a secured credit card or credit‑builder loan—pays off.
10. You can’t hide the bankruptcy on credit or job applications.
Chapter 7 stays on your credit report for 10 years, and many employment forms (especially in finance, government, or armed‑security positions) ask directly about prior filings. Intentionally omitting it can cost you the job or constitute loan fraud. Instead, be ready with a short, honest explanation and proof of your new, on‑time payment history.
11. You can’t stop paying secured debts if you plan to keep the collateral.
Your discharge eliminates personal liability, but a lender’s lien lives on. If you want to keep the house, car, or refrigerator you’re financing, you must stay current or work out a reaffirmation agreement. Stop paying and the creditor can repossess or foreclose—no lawsuit required.
Chapter 7 can absolutely wipe the slate clean, but that fresh start comes with guardrails. Knowing where those guardrails sit—and respecting them—lets you steer your financial life in a healthier direction. If you’re unsure about any post‑filing move, protect yourself first: pick up the phone and ask your bankruptcy attorney or trustee before acting. The right question today can save you a costly mistake tomorrow.