Oklahoma Bankruptcy HelpSeven Things to Never Do in a Tulsa, Oklahoma Chapter 7 Bankruptcy

Clerk holds bankruptcy chapter 7 documents about insolvency.

Mistakes should be avoided in all legal proceedings. However, in bankruptcy, some mistakes can be more costly than others. Bankruptcy judges are more likely to allow minor mistakes to be cleared up without dismissing the proceedings. Other mistakes will require that the proceedings be re-filed. Still, others will cause serious ramifications in bankruptcy.

Here are 7 things to never do in a Tulas, Oklahoma Chapter 7 Bankruptcy.

  1. Incurring Substantial Credit Card Debt Right Before Filing

Running up your credit card bills is never a good idea, but it is a particularly bad idea to do so before filing for bankruptcy. Because credit card debt is a non-secured debt, you might be tempted to do so, but courts do not like to see much if any, new debt incurred in the last 90 days before filing. In particular, any credit card debt incurred for non-necessities owed to a single creditor in excess of $500.00 within that time frame will not be discharged. Cash advances are treated much the same way.

  1. Inadvertently Leaving Off Certain Creditors

It is important that your bankruptcy filing be as complete as possible. You should sit down with your attorney and make sure that all debts are listed. This includes all secured and unsecured debt, old debts, potential debt, disputed debt, and any other debt that could be claimed against you. Any debt left off the petition will not be included in the bankruptcy and will not be discharged. This means that you could still be legally liable for any debt not listed on the petition.

  1. Preferential Payments Are Problematic

Favoring one creditor over another by making preferential payments in the year before filing may be invalidated, and the amount paid taken by the bankruptcy trustee and divided between the other creditors.

Let’s say you borrowed $10,000 from a sibling and want to make sure that they get paid back as you approach bankruptcy. You make several substantial payments to your sibling several months before the filing of your petition, but only make several small payments on your other debt in the same period.

The money paid to your sibling or another creditor can be taken back and redistributed. This can be awkward and difficult.

  1. Liquidating Protected Assets

While your savings account may not be protected in a bankruptcy proceeding, your retirement accounts usually are protected, if they are ERISA-qualified accounts. It can be tempting to borrow from your IRA or Roth account to pay your debt down, but it can be a big mistake. Make sure and talk to an experienced Tulsa bankruptcy attorney before you dip into your retirement savings. Bankruptcy is meant to help you get a fresh start, not put you in the poor house. Many individuals drain their retirement accounts in a futile attempt to pay down credit card debt.

  1. Waiting Too Long to File for Bankruptcy

Along the same lines, it can be tempting to wait until you are really in a pickle to file for bankruptcy. Debtors often resist filing in order to “do the right thing.” This often just makes it more difficult to move on after bankruptcy.

Avoiding wage garnishment, if possible, is important. It makes bankruptcy simpler and more straightforward. It can be important to avoid selling your assets to pay down your debt. Having a car, a place to live, your clothes, and other personal possessions make it much easier to recover after bankruptcy. If you have questions about whether this is the right time to file, ask your bankruptcy attorney for guidance.

  1. Timing Can Be Important in Loan Modifications

Issues surrounding a home loan are serious in bankruptcy. Home loan modifications are one way to make it easier to keep your home in bankruptcy. However, if you have recently applied for a home loan modification or are considering doing so, you may want to wait until the modification is approved before filing. If you file while a loan modification is pending, it is likely that the modification will be denied.

  1. Transferring Property or Assets

It is a mistake to transfer property or other assets before filing for bankruptcy. Doing so in the two years before filing can make the trustee suspicious of fraud. Debtors can be worried about protecting their homes or other assets. It is far better to work out a plan with your attorney regarding your assets than it is to transfer your house to your Uncle Vinnie six months before filing.

There are ways to transfer assets without raising suspicions, but any transfer must be done so carefully and legally to avoid raising a problem in a later filing.

It is better to get clear guidance from an attorney than it is to try to go it alone. Filing mistakes can be costly.

Low-cost Consultation With a Tulsa Bankruptcy Attorney

Financial Freedom Bankruptcy Lawyers of Tulsa offer low-cost strategy sessions to help debt-burdened Oklahomans to discover the best approach to their financial crisis.  Your home is important to you. Don’t delay. Call us at (918) 786-9600 to start your initial consultation with a Tulsa bankruptcy lawyer today. You may also contact us using the contact form button on this page to ask a professional bankruptcy attorney in Tulsa your personal questions.

 

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