Filing for bankruptcy is a monumental decision, particularly for Wyoming residents who might be navigating the legal system for the first time. The journey can feel paralyzing, intensified by the burden of complex legal terminology, aggressive creditor harassment, and incessant collection calls. Regrettably, this stressful period is when individuals often commit significant, sometimes irreparable, mistakes that can jeopardize their entire case. As such, if you are considering filing for bankruptcy in Gillette or throughout Campbell County, it’s important to understand the Wyoming-specific exemption laws. Please continue reading as we explore common pitfalls, how they can be circumvented, and the importance of connecting with our experienced Gillette Bankruptcy Lawyers.
Why Does Preparation Matter Before Filing Bankruptcy in Wyoming?
Filing for bankruptcy is a serious, technical process that goes far beyond simply completing a form. It involves submitting a sworn financial statement to a federal court, where a trustee will meticulously review your income, expenses, assets, and all recent financial transactions. Whether you are considering Chapter 7 bankruptcy to eliminate unsecured debt or Chapter 13 bankruptcy to reorganize your payments, proper preparation is critical to achieve the best possible outcome.
The power of bankruptcy lies in its ability to halt lawsuits, garnishments, and collection efforts while erasing many unsecured debts. Given the complexity of this process, the months leading up to filing are critically important. Mistakes made during this preparatory period, whether poor timing or poor planning, can make your case more expensive, increase your stress, and reduce the overall effectiveness of the filing.
While bankruptcy is a matter of federal law, state law heavily influences the exemptions (the rules determining which property you are allowed to keep). Wyoming has its own specific rules and limits for protecting assets like home equity, vehicles, livestock, tools, and personal property.
Why Wyoming Bankruptcy Laws are Different
- Gillette and Campbell County filers must utilize Wyoming state-specific exemptions, not federal exemptions
- Asset protection rules differ from neighboring states
- Certain property types (livestock, tools, etc.) are uniquely relevant in Wyoming
- Filing incorrectly can result in losing assets that may have otherwise been protected
Risks of Poor Pre-Filing Planning
- Failing to legally protect the hard-earned assets you were entitled to keep
- Erroneously believing you must “hide” or “transfer” property when it was protected all along
- Selecting the wrong chapter for your unique financial circumstances
- Increasing legal costs due to avoidable errors
- Facing case dismissals or delays
What Common Mistakes Do People Make Before Filing?
Unfortunately, there are a number of mistakes that filers make prior to declaring bankruptcy that can ultimately hurt their case. Understanding and avoiding these mistakes is critical.
Top Bankruptcy Mistakes to Avoid
The most common mistakes people make before filing for bankruptcy in Wyoming include the following:
- Transferring or Hiding Assets: Giving property to friends or family to hide it is fraudulent
- Running Up New Debt: Making big purchases, taking cash advances, or using credit cards for luxury items also suggests fraud.
- Paying Back Friends or Family First: Paying a loved one over other creditors is considered a “preferential transfer.”
- Draining Retirement Funds: Withdrawing funds from protected retirement accounts often incurs tax penalties and wastes secure savings without resolving the debt issue.
- Failing to Disclose All Information: Lying or omitting assets, debts, income, or lawsuits on the petition can lead to a dismissal, discharge denial, fines, or even time behind bars.
- Failing to Complete Mandatory Credit Counseling: Failure to complete the required credit counseling course within 180 days from an approved provider will result in case dismissal.
- Waiting Too Long to File: Delaying filing can worsen your finances, leading to avoidable legal action, wage garnishments, or property loss.
- Filing Without Professional Help: A qualified attorney can help ensure you don’t miss deadlines, file the right bankruptcy chapter, and utilize exemptions to protect your property.
How Far Back Does the Bankruptcy Court Review Your Finances?
Bankruptcy courts review your financial activity before filing to detect fraud or preferential treatment.
Look-Back Periods You Should Know
The bankruptcy court typically reviews your financial activity for 90 days to several years prior to filing for bankruptcy, depending on the type of transaction.
- 90 days: Credit card purchases and creditor payments received
- 1 year: payments to friends or family examined closely
- Several years: Asset transfers may be investigated depending on circumstances
What Should You Do Instead Before Filing for Chapter 7 or Chapter 13 Bankruptcy?
Bankruptcy is a complex process, and there are a number of mistakes that can negatively impact the outcome of your case. However, there are also steps you can take prior to filing that will improve your outcome and reduce the risk of delays or issues with your case.
Smart Steps Before Filing for Bankruptcy
- Stop using credit cards for all purchases except essentials
- Gather all financial records, like income, assets, and debt information
- Avoid transferring or selling property without legal advice
- Complete the mandatory credit counseling course early
- Obtain the guidance of an experienced bankruptcy attorney
Contact a Wyoming Bankruptcy Attorney as Soon as Possible
If you are considering bankruptcy in Gillette or anywhere in Wyoming, it’s in your best interest to connect with an experienced attorney with 307 Bankruptcy. Our firm understands how difficult these matters can be, which is why we will do everything in our power to help you understand your options so you can make the best decision for your circumstances. Contact us today to learn how we can represent you.
