If you are thinking about filing a chapter 7 or chapter 13 bankruptcy in Oregon it is a good idea to not do any of these things until you talk with your lawyer.  It looks like there are a lot of “don’ts” here, but talking to your lawyer prior to taking any action regarding these matters can avoid potential headaches for you  later.  Do not hesitate to ask questions.  You are paying a fee for one reason–advice.

Don’t sell, give away or transfer ownership of anything prior to filing your bankruptcy case without first discussing it with your lawyer. 

Doing so could allow a bankruptcy trustee to go after the property.

Don’t use credit cards or incur more debt.

Once you have decided to file a bankruptcy you should stop using credit cards or borrowing money.  If you continue to incur new debt prior to filing, it could prompt an objection from the creditor and you may be forced to repay the money.

Don’t pay money to family members or friends.

Money paid back to family members and friends within one year prior to your bankruptcy can sometimes be recovered by the bankruptcy trustee. If the amount paid is small, the bankruptcy trustee probably will not pursue the money, but it is wise to be cautious.

Don’t pay back family or friends by transferring property.

Transferring ownership of property to pay a debt owed to someone could also allow the bankruptcy trustee to get the property back as a preference payment.

Don’t leave assets off your bankruptcy forms, including lawsuits or claims you may have.

The only way to exempt an asset and protect it from the bankruptcy trustee is to list it and exempt in under the applicable Oregon exemption law, federal exemption law, or other state exemption laws if you have not lived in Oregon long enough.  Intentionally leaving out an asset is a federal crime.  The much better choice is to candidly talk about all of your property with your lawyer, through proper prebankruptcy planning much can be done to protect asset. If it is not possible to exempt all of your assets then you can often work out a payment plan with the trustee to keep the property or perhaps a chapter 13 bankruptcy could solve the problem.  Also, if you do not list your claim or lawsuit you may never be able to bring that suit later.

Don’t take money out of retirement plans, IRA’s or 401K’s. 

If you do, the money may no longer be protected. Talk with your lawyer about this if you really need to withdraw some money.

Be careful if you are expecting a large tax refund.

Now that many Oregon residents can use the federal bankruptcy exemptions tax refunds are as big of a concern as they used to be. However, it is still a good idea to discuss with your lawyer to see if your refund will be protected in your case.

Don’t put your money into someone else’s bank account or put your name on someone else’s account if you can avoid it.

A lot of people put their name on their elderly parent’s account “just in case.”  This is usually a bad idea.  If you want to be able to help mom or dad in case of disability or illness, a power of attorney is probably a better choice. I have seen a bank freeze a parent’s account and then send all of the money to my client’s bankruptcy trustee. The money should get refunded once the trustee is satisfied that it is not the bankruptcy filer’s money, but it can take a while.

Don’t get married or move in with someone, especially if that person has a high income. 

Under the 2005 bankruptcy law your spouse’s income may get counted for purposes of the “means test” and in some cases so does income from domestic partners and maybe even roommates or renters.  Discuss your plans with your lawyer before making any changes to your living arrangements.

Don’t fail to be fully candid with your lawyer. 

Your lawyer cannot give you good advice if he doesn’t know all the facts.

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