What you do before filing bankruptcy can sometimes be just as important as what happens after you file.

People trying to solve financial problems on their own sometimes make decisions that create unnecessary bankruptcy complications.

If you are seriously considering Chapter 7 or Chapter 13 bankruptcy in Oklahoma, talk with a bankruptcy attorney before making unusual financial moves.

1. Don’t Give Away or Transfer Property to Protect It

Transferring a car, land, money or other property to a friend or relative before bankruptcy can create serious problems.

Bankruptcy requires disclosure of property transfers, and transferring property does not necessarily put it beyond the reach of the bankruptcy process.

In some situations, the transfer itself can create a problem that did not previously exist.

Get advice before transferring anything.

2. Don’t Repay Family Members Without Getting Advice

Suppose you owe your mother $5,000 and repay her shortly before filing bankruptcy.

You may believe you are doing the responsible thing.

Bankruptcy law, however, contains rules concerning preferential payments to creditors, including special rules involving insiders such as relatives.

Before making a substantial repayment to a family member, tell your bankruptcy attorney.

3. Don’t Run Up Your Credit Cards

Do not assume that you can charge purchases immediately before bankruptcy and automatically discharge the balance.

Certain debts arising from fraud, and certain luxury purchases or cash advances made within statutory periods before bankruptcy, may receive different treatment.

Once bankruptcy becomes a serious possibility, be cautious about creating additional debt.

4. Don’t Cash Out Retirement Accounts Without Advice

This can be an especially expensive mistake.

Many qualifying retirement assets receive substantial bankruptcy protection.

Someone may cash out protected retirement funds in an attempt to pay credit cards, only to discover later that bankruptcy could have eliminated the credit-card debt while the retirement account might have been protected.

There may also be tax consequences associated with retirement withdrawals.

Talk to an attorney before using retirement money to pay unsecured debt.

5. Don’t Hide Assets

Bankruptcy requires honest and complete disclosure.

That includes property that may seem insignificant.

Trying to conceal an asset can turn an otherwise manageable bankruptcy case into a serious problem.

Tell your attorney everything and let the attorney determine how it should be disclosed and whether it is protected.

6. Don’t Ignore Lawsuits, Garnishments or Foreclosure Notices

Thinking about bankruptcy is not the same as filing bankruptcy.

Until the case is actually filed, you generally should not assume that bankruptcy protection has stopped a creditor.

Court dates, garnishments, repossessions and foreclosure deadlines may continue.

7. Don’t Make Major Financial Decisions Without Telling Your Bankruptcy Attorney

Before filing, tell your attorney if you are considering:

• Selling property
• Transferring property
• Repaying relatives
• Taking a large cash advance
• Using retirement funds
• Receiving an inheritance
• Settling a lawsuit
• Getting divorced
• Buying or selling a business
• Paying one creditor a substantial amount

Sometimes the best advice is simply to wait. Other times action needs to be taken quickly.

What SHOULD I Do Before Bankruptcy?

Gather accurate information.

Start collecting recent tax returns, pay information, bank statements, vehicle information, mortgage information and a list of creditors.

Most importantly, do not rearrange your financial life merely to make it look better for bankruptcy.

Let your attorney see the situation as it actually exists.

Free Bankruptcy Consultation

If you are considering bankruptcy in Oklahoma, getting advice before moving money or property can prevent avoidable problems.

Contact Brown Law Firm for a free bankruptcy consultation. We can review your income, debts, property and recent financial transactions and explain what you should—and should not—do before filing Chapter 7 or Chapter 13 bankruptcy.