Mistakes to Avoid When Filing for Bankruptcy in Wichita

Once you’ve made up your mind, you can safely ignore calls from your creditors.

Wichita, KS – When your finances are completely out of control, filing for bankruptcy may be your only solution. No need to be scared. If you seek counsel from experienced lawyers, you can get rid of your debts and save most of your assets. However, you need to plan things carefully. You don’t want to end up facing fraud charges or lose money that you could have easily saved under Kansas bankruptcy exemptions.

1. Don’t transfer property to friends or family

Wichita bankruptcy lawyers say this is one of the most common mistakes they encounter in their practice. People know that if they file for bankruptcy under Chapter 7, the court will appoint a trustee to sell their assets. They think they can beat the system and hide their property. Selling your vacation home to your brother-in-law for $1 is not a smart move. When you file for bankruptcy in Kansas, all your real estate and financial transactions will be examined. Sometimes the examination may go as far as 2 years back. At the same time, once notified of your bankruptcy your creditors will use their lawyers to do some digging. If it is discovered that you tried to hide your assets, your bankruptcy application may be denied or you may be charged with fraud.

2. Don’t borrow from your pension fund

In an effort to avoid bankruptcy, many people try to cover their most pressing debts by taking money from their pension funds. Seasoned Kansas bankruptcy lawyers warn that you will lose that money and it will be for nothing. If things are so bad you need to take money out of your 401K, you probably won’t be able to avoid bankruptcy. And when you do file for Chapter 7 you will discover that your 401K is exempt. No one can touch it. You could have kept it!

3. Stop making expensive purchases

   

This is another trick some people use – use their credit cards to the max to buy all sorts of luxury items. If you’re considering filing for bankruptcy, stop using your credit card. At least, stop buying expensive stuff. The credit card company will examine your purchases over the past 3-6 months and they may accuse you of fraud. Use your credit card only to pay for basic stuff, if you must.

4. Keep up payments on property you intend to keep

When they’re preparing to file for bankruptcy, many people simply stop paying their mortgage or their car loan. According to knowledgeable Wichita bankruptcy lawyers, this is probably the worst mistake people in such a situation can make. If you apply for the state’s Homestead Exemptions you can keep your house when filing for bankruptcy. The Kansas homestead exemption allows homeowners to protect an unlimited amount of equity in their homes. However, if you’re behind on your mortgage you may lose the house. 

5. Don’t talk to creditors

Once you’ve made up your mind, you can safely ignore calls from your creditors. Do not tell them you’re filing for bankruptcy. If they threaten you with a lawsuit, there is nothing to worry about. Once you initiate the bankruptcy procedure, all lawsuits are stopped. On the other hand, do keep all the bills they send you as you will need them when you prepare the list of debts you have.

Also, since you’re going to be around lawyers and court clerks for the next few months, do yourself a favor and read up on legal matters.