If you find yourself completely unable to pay of the obligations you owe and you are thinking about filing a bankruptcy, consider the following things you need to be aware of:
1. CONSOLIDATING MY DEBT IS BETTER THAN FILING BANKRUPTCY.
In theory, consolidating seems like a good and viable option. However, in practice, debt consolidation rarely works out, and experience shows that in the long run, people don't save money but in fact it ends up costing them more. Learn more about why debt consolidation rarely works: Debt Consolidation Truth
2. DON'T WAIT UNTIL YOU'RE BROKE BEFORE CALLING AN ATTORNEY.
If you aren't going to be able to catch up on all your bills and get ahead, you are wasting your money. Filing bankruptcy will get rid of all your debt. There is no point paying bills that will be wiped out anyway. Save your money to pay the fees and g costs of filing, that will be much cheaper than paying bills you can't afford to pay.
3. BANKRUPTCY WILL RUIN MY CREDIT.
Really??? If you are unable to pay your bills, your credit probably already stinks. Filing bankruptcy is not going to make your bad credit any worse. To the contrary, by filing and getting rid of the debt your credit will begin to rebound, as long as you're smart about building it after you file. Bankruptcy is a way to fix your credit and debt problems, it did not cause them.
4. DON'T PAY OFF YOUR PARENTS AND FRIENDS BEFORE YOU FILE.
Now I know what your thinking, but by not paying them you are saving them from a big headache and problems. In bankruptcy, the trustee (the person overseeing your case) can go after your parents and friends and take the money back to pay that money to other creditors. Your family and friends won't be happy if you get them involved in a legal proceeding because you paid them.
5. DON'T PAY OFF YOUR CAR LOANS BEFORE YOU FILE A BANKRUPTCY.
By having a lien on your car, you protect yourself from losing the car in the bankruptcy. The trustee is trying to find any asset (like your car) you own that he might be able to sell and use the money to pay back your creditors. The loan on your car, usually makes that option not attractive to a trustee and most likely will deter him from pursing it because he won't get any money by selling it.
6. DON'T TRY TO HIDE ANYTHING, DISCLOSE EVERYTHING YOU OWN.
Failing to list any property you own can potentially lead to criminal action against you for bankruptcy fraud and make it so you lose your discharge (the thing that wipes out all your debt) in bankruptcy. Plus its like the trustee is magic, he usually ends up finding out about everything, it's just not worth it considering the penalty you face if you're caught lying.
7. DON'T PUT YOUR MONEY IN SOMEONE ELSE'S ACCOUNT OR GIVE THEM YOUR PROPERTY.
In the list of the worst things you can do when filing this may be 1(b) coming in just behind the one we just talked about. The trustee could very likely go take the money and property back. This goes for any transfer within a year of filing. Like number 6 above if you do this you risk not being able to have your debt forgiven.
8. DON'T LIQUIDATE YOUR RETIREMENT ACCOUNTS.
Your retirements are protected, by liquidating them you take them from being a protected asset to a general asset than the trustee can come after to pay debt with. You are still going to need retire someday so save if for what it's there for.
9. FILING BANKRUPTCY DOESN'T MAKE YOU IMMORAL OR A BAD PERSON.
Look, this isn't meant to be a philosophical or religious statement. If you're broke, your number one responsibility should be to your family's needs. The law allows people to file bankruptcy as a way of dealing with debt. The creditors use the law to help themselves in the same way through tax subsidies, charge offs and law suits. Whether or not this is a justification for filing it's the reality, it's you're right to file.
10. I DON'T HAVE A TENTH BUT THOUGHT TEN SOUNDED BETTER THAN NINE.
Take time to think about your options, but not too much time. You're wasting your money and stress on things that can be taken care of so easily.
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