Common Mistakes When Filing for Bankruptcy

Deciding to file for bankruptcy is a difficult decision, but if you think you are ready to take the step of filing, it is essential to do so properly.  The bankruptcy process is complex, and mistakes can result in complications that can cause your discharge of debts to be denied or, even worse, be considered fraudulent and lead to criminal charges.

To avoid mistakes, it’s best to have the guidance of an experienced Ohio bankruptcy attorney. The skilled and seasoned Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer understand that even the most well-intentioned people can find themselves in financial trouble and that no one wants to have to file bankruptcy.  However, if you are at the point where you can’t meet your bills and find yourself drowning in debt, a correctly filed bankruptcy can eliminate many debts, provide protections from creditors and give you a fresh financial start.

Our compassionate attorneys understand what you are going through.  We provide a free consultation to evaluate your individual situation and make sure you avoid costly problems before, during, and after your bankruptcy procedure.  The following is a list of some common mistakes you want to avoid.

Failing to Disclose the Whole Truth

Since the inception of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, there has been a greater emphasis on eliminating acts of fraud, so make sure the information you provide is as accurate as possible.  Attorneys can only provide legal advice and representation based on the information you give them. No matter the state of your financial matters, telling the complete truth to your attorney will prevent problems and result in a better outcome.

Be aware that even debts you believe to be nondischargeable in bankruptcy must be listed in your paperwork. If you fail to disclose any income, asset or creditor, even unintentionally, it may result in of the following:

• Dismissal of your bankruptcy case
• Additional paperwork and fees you will have to pay
• Denial or forfeiture of your discharge of debts
• Seizure of assets you planned on keeping
• Criminal charges being filed against you

Not Understanding How Bankruptcy Will Affect Your Property

If you file Chapter 7 bankruptcy, the most common form of bankruptcy, it discharges most or all consumer and/or business debts.  In return, the courts will liquidate your non-exempt property.  The bankruptcy trustee will sell the property, distribute the proceeds to your creditors, and then discharge (wipe out) debt that remains after the sale. An experienced attorney can make sure you will lose little or no property in the process and don’t wind up with unexpected losses.

There are many Ohio Exemptions for property that cannot be seized.  The Ohio Revised Code allows you to protect part of the value of your vehicle in bankruptcy, but still problems often occur with auto loans.

The exemption situation can get especially tricky in situations where you are involved in a joint bankruptcy case, in a divorce situation, or if the auto loan company didn’t record their lien properly against your automobile.  Also, some auto finance companies will automatically repossess your automobile in a Chapter 7 bankruptcy unless you execute a special contract called a reaffirmation agreement.  An experienced bankruptcy attorney knows how to deal with these finance companies.

Tax refunds owed to you in the future can present problems, since any monies due to you must be listed as property in bankruptcy paperwork.  People often lose at least part of their upcoming tax refund unless they know how to claim the right exemptions and time the date of the bankruptcy.  The same situation exists for proceeds of personal injury or other lawsuits, money or life insurance proceeds that may be inherited, and sales commissions and bonuses that are due to be paid.

Paying Back Certain Debts to Certain Creditors

Under 11 U.S. Code § 547, debtors may not pay one creditor a larger amount than other creditors before filing for bankruptcy. To do so can be considered a preferential transfer, and the bankruptcy trustee may even file a lawsuit to recover money that should have been evenly distributed among all creditors.

This is especially true if the people you are paying back are friends or other family members, who may wind up being sued if you pay back a personal loan. Trustees will look back for 90 days to see whether any such payments were made for most creditors, but for friends and family, they will look back as far as one year.

If you have people you wish to pay back, do so after your bankruptcy is discharged.  And giving away assets such as a car, to friends and family is also likely to be viewed as fraudulent. So are attempting to sell items cheaply so they can be purchased back later and transferring items out of your name to avoid losing them in bankruptcy. Doing any of the above may result in your being subject to investigation for intent to hinder, delay or defraud a creditor.

Not Complying With Bankruptcy Requirements

Bankruptcy cases can be dismissed without discharging your debts if you do not comply with Ohio bankruptcy requirements for filing, producing documents, or other administrative matters. Here are some common reasons for bankruptcy dismissal:

• Not completing the pre-bankruptcy credit counseling class.You must complete an approved credit counseling class within the 180 days before your bankruptcy filing and file a certificate with the court stating that you took this class.
• Not filing required bankruptcy forms.You must complete and file all required forms with the Ohio bankruptcy court. An attorney can help you do this correctly.
• Not paying court filing fees.You must pay a filing fee to start a bankruptcy case.  If you can’t afford the fee, you may qualify for a fee waiver or an installment plan, if you can get court approval.
• Not providing requested documents after filing.Once your case is under way, you’ll have to provide the bankruptcy trustee with all required documents, such as tax returns, pay stubs and mortgage statements, within the specified timeframes.
• Not appearing at the creditors’ meeting. In both Chapter 7 and Chapter 13 bankruptcy, you must attend a hearing in front of the bankruptcy trustee.
• Not making your Chapter 13 plan payments. If you are filing for Chapter 13 bankruptcy, you must make the agreed upon payments to the bankruptcy trustee for three to five years. If you get behind in payments, you must make alternative arrangements with the bankruptcy trustee to catch up.
• Not obeying court orders. Once you have filed for bankruptcy, you must comply with all Ohio state court orders or your debts will not be discharged.

Contact us for Help and Guidance

The experienced Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer know that bankruptcy can give you a fresh start, but you need to know what you are doing or you could wind up in a worse situation than before you started.  Proper legal assistance from our compassionate attorneys can help ensure that you avoid problems and actually wind up saving money in the long run.

We recognize that everyone’s individual situation is different, so we offer a free consultation to evaluate your entire financial picture. We will examine your income, your debts and your goals and help you find the best path to a brighter financial future.

Delaying can only make your situation worse, so take control of your financial future and learn more about how our firm can be of assistance today.  Call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email for your free consultation so we can determine what solutions will work best for you.