The federal bankruptcy laws promise a fresh financial start for the honest but unfortunate Oregon debtor. Any Oregon consumer considering bankruptcy should take care to avoid making any of the following mistakes.
Mistake #1: Incurring Debts Close to Filing Bankruptcy
Some people decide to charge up credit cards or take payday loans just before filing bankruptcy. Big mistake. If you have decided to file bankruptcy in Oregon, take care to avoid incurring additional debts. Taking loans with no intention of repayment on the cusp of filing bankruptcy could result in you not getting the full discharge of all your debts.
Mistake #2: Paying an Insider
The bankruptcy laws attempt to treat creditors fairly. One concern is that the debtor will pay loans back to either friends or family before filing bankruptcy. The thought is letting debtors do so deprives other creditors from receiving their fair share.
Family, business partners, friends and other creditors who have close relationships with the debtor are called insiders. Transfers to insiders can be avoided by the bankruptcy trustee if the transfer occurred within one year before the bankruptcy filing.
For example, lets say an Oregon debtor takes $1,200 from her income tax refund and repays her father for a short term loan, and then filed bankruptcy a month later. The result is that the bankruptcy trustee would be able to sue her father to recover the $1,200 or make her pay that amount for distribution to her creditors. Making matters even worse, normally the debtor could have waited until the bankruptcy was filed and then repaid the debt to her father without incident.
Fortunately, if you have made such a transfer, there are ways of undoing them that may help you avoid the negative impact of an insider payment, but you have to let us know about these payments for us to help you.
Mistake #3: Cashing out Retirement Accounts
Most retirement accounts are completely protected during bankruptcy. Unfortunately, many Oregonians are unaware of these protections and cash out their retirement accounts out of fear that it will be taken during the bankruptcy. In doing so, the debtor converts what was an exempt asset into a non- exempt asset.
Mistake #4: Transferring Property
Debtors often give away or sell property to avoid losing it in bankruptcy. This is unnecessary as almost all property can be protected under Oregon and Washington’s extremely generous exemptions. The problem with transferring property is that once you have transferred an item it is no longer eligible for protection under the bankruptcy code.
For instance, a truck worth $3500 is completely protected from turnover during your bankruptcy. But if you transfer title of this vehicle to your sister before the bankruptcy, the trustee can avoid the transfer, take the car, and sell it to pay your creditors.
Mistake #5: Failing to Be Honest
Failure to truthfully disclose all of your debts, income, expenses and assets are grounds for dismissal. Moreover, you may face allegations of bankruptcy fraud.
Mistake #6: Owing your Credit Union or Bank and Filing Bankruptcy with Money in Your Account.
If you do owe money to your bank or credit union and you are going to be filing bankruptcy, it’s time to open a new account with a bank that is not also your creditor. Why risk having your current bank freeze your account and take your money as soon as they find out that your bankruptcy has been filed. The reality is that you can extricate yourself from your creditor bank easily. Changing over your automatic bill pays and deposits is just not that hard.
If you are experiencing financial difficulty and are considering bankruptcy, discuss your situation with us. Set an appointment at any of our offices in Portland, Salem or Vancouver. We have an ‘A+’ rating from the Better Business Bureau. We are the only firm in the Portland or Salem metro area offering real payment plans to help you get your bankruptcy filed more quickly.