Avoid These 10 Mistakes If You Are Going To File For Bankruptcy

1. CONSOLIDATED MY DEBT IS BETTER THAN FILING BANKRUPTCY.

In theory, consolidation seems like a good and viable option. In practice, however, consolidation rarely works, and experience shows that in the long run, people don’t save money, it actually ends up costing them more.

two. DON’T WAIT UNTIL YOU’RE BROKEN BEFORE CALLING A LAWYER.

If you’re not going to be able to catch up on all your bills and get ahead, you’re wasting your money. Filing bankruptcy will eliminate all your debts. There is no point in paying bills that will go away anyway. Save your money to pay filing fees anyway, that will be much cheaper than paying bills you can’t pay.

3. BANKRUPTCY WILL RUIN MY CREDIT.

Actually??? If you can’t pay your bills, your credit probably already sucks. Filing for bankruptcy will not make your bad credit worse. On the contrary, by filing your credit you will start to recover if you are smart about building it after you file. Bankruptcy is a way to fix your credit and debt problems, it didn’t cause them.

Four. DO NOT PAY YOUR PARENTS AND FRIENDS BEFORE SUBMITTING YOUR FILE.

Now I know what you are thinking, it sounds bad but by not paying your family and friends you are actually saving them from a big headache and trouble. In bankruptcy, the trustee (the person who oversees your case) can go after your parents and friends and take the money he has paid them to pay other creditors. Your family and friends will not be happy if you involve them in a legal process because you paid them.

5. DO NOT PAY OFF YOUR AUTO LOANS BEFORE FILING BANKRUPTCY.

By having a bond on your car, you protect the car in case of bankruptcy. The trustee is trying to find any assets (like your car) that you own that could be used to pay off your creditors. Your car loan usually makes that option unworkable and the trustee may not pursue the sale of the car.

6. DO NOT TRY TO HIDE ANYTHING, DISCLOSE EVERYTHING YOU HAVE.

Not listing any property you own can potentially lead to criminal action against you for bankruptcy fraud and cause you to lose your discharge (which eliminates all your debts) in bankruptcy. Also, it’s like the trustee is magical, he usually ends up finding out everything, it’s just not worth it considering the penalty you face if you get caught lying.

7. DO NOT PUT YOUR MONEY IN SOMEONE’S ACCOUNT OR GIVE THEM YOUR PROPERTY.

On the list of the worst things you can do when filing this, it may be 1(b) right behind the one we just mentioned. It is very likely that the trustee will recover the money and the property. This applies to any transfer within one year of filing. Like #6 above, if you do this, you risk not having your debt forgiven.

8. DO NOT SETTLE YOUR RETIREMENT ACCOUNTS.

Your withdrawals are protected, by liquidating them you go from being a protected asset to a general asset with which the trustee can pay debts. You’re still going to need to retire someday, so save up if that’s what you’re there for.

9. FILING BANKRUPTCY DOES NOT MAKE YOU IMMORAL OR A BAD PERSON.

Look, this is not meant to be a philosophical or religious statement. If you don’t have money, your number one responsibility should be to meet the needs of your family. The law allows people to file for bankruptcy as a way to deal with debt. Creditors use the law to help themselves in the same way through tax subsidies, penalties, and judgments. Whether or not this is a justification for applying, it is the reality, it is okay to apply.

10 I DON’T HAVE A TENTH BUT I THOUGHT TEN SOUNDED BETTER THAN NINE.

Take time to think about your options, but not too long. You are wasting your money and stressing yourself out on things that can be fixed so easily.