Debt relief agencies as well as anyone who acts as a Dayton bankruptcy lawyer have seen people make some mistakes when they are in the midst of a debt crisis. These are some common mistakes that people often make thinking they can work out the debt on their own; regardless of how bad it seems at the time. However, these four common mistakes can prevent a consumer from being able to successfully discharge their debts using the bankruptcy laws.
1. Cash advances/credit card balance transfer
When a credit card company offers to transfer balances to a lower interest rate card, it can be tempting to take advantage of this service. Not only will this mean a drop in the amount that is payable on a monthly basis, it may also significantly reduce the amount of interest paid. For many consumers, this may seem like a great idea. However, if you are in a financial bind and considering bankruptcy, this could be problematic.
Why is this a problem? Bankruptcy laws are designed to protect both consumers and their creditors. When you transfer your balance from one card to another, the transaction may be considered a cash withdrawal by the bankruptcy court. If your creditor feels you were considering filing bankruptcy before you made the transfer, they may dispute your claim and in most cases, the bankruptcy court will find in their favor.
2. Transferring assets to another party
Asset transfers are tricky when you are considering filing bankruptcy. In fact, the court may go back as many as forty-eight months to see what personal assets you may have transferred to another party. When the court reviews these transfers, they may have the authority to reverse any transfer of property. The court may also rule that you cannot file for bankruptcy especially if they view the asset transfer as a method of defrauding the creditor.
3. Liquidating retirement accounts
Consumers typically will do nearly anything to avoid filing bankruptcy and that includes liquidating their retirement accounts to pay off some of their debts. Unfortunately, what most consumers do not understand is that these accounts are typically protected under current bankruptcy laws. When you liquidate your retirement accounts, you are simply hindering your own retirement and chances are you may still have to file for bankruptcy protection.
4. Last minute loans
When you are in debt it may seem like a good idea to borrow money to pay off existing debt. This is a very bad idea, since most consumers cannot borrow their way out of debt. In addition, new credit lines may actually hinder your ability to file for bankruptcy.
If your current debt levels are overwhelming, before you do anything drastic, seek advice from someone who understands bankruptcy rules. Chris Wesner Law Office, LLC in Dayton, Ohio is a debt relief agency and we can help you make sure you avoid these common errors before filing bankruptcy.