Bankruptcy is misunderstood by many as something they “declare” and move on from without debt. They know it damages their credit, but beyond that they do not understand that bankruptcy is a process. And because it is a process, there are things that should and should not be done in advance to prepare for filing for bankruptcy.
Rushing into a bankruptcy without thinking about the consequences can be devastating. It can also create problems if you attempt to file on your own or work with someone who does not understand bankruptcy laws. The key to a successful bankruptcy that helps you repair financial problems is to file at the right time and follow through with what you intend to do.
What are some of the things you should avoid if you intend to file for bankruptcy?
Feeling Ashamed You are Facing Financial Troubles
It happens to the best of us. Financial problems are a part of life and you should never feel ashamed. Postponing bankruptcy because you are embarrassed will only make your problems worse.
Lying to Creditors
Chance are creditors are contacting you on a daily basis, if not more. It can be tempting to be dishonest with them or avoid their calls all together, but this is a mistake. In many instances, creditors will work with you if you are upfront about your financial issues. This helps them because it enables them to collect some money, even if the debt is not paid in full. If you lie to them and avoid them, they are more likely to seek out ways to collect the entire debt – even if that means taking you to court or garnishing your wages.
Postponing Bankruptcy Too Long
Avoiding your financial problems and putting bankruptcy off for too long can result in more damage to your credit. You are better off taking the leap into bankruptcy and beginning the cleanup process as soon as you realize there is a problem.
How do you know if there is a problem? If your monthly income is less than what you owe each month, it is a problem. Catching up on what you owe will only be harder unless action is taken to regain control of your finances.
Using Your Savings Retirement Nest Egg to Deal with Debt
There are occasional instances when it might make sense to dip into your savings to pay off a debt, but if you are routinely pulling from your retirement accounts and paying penalties for using that money too early, you need to find an alternative to dealing with your debt problems. If you are consistently draining your savings every month to make credit card payments, it is a clear indication that a change, such as bankruptcy, might be the best path to managing your finances.
Filing for Bankruptcy without Expert Assistance
It is possible to file for bankruptcy without hiring an attorney, but it is almost always a mistake. The process is complicated and if things are not handled properly, your case can be dismissed.
Having the assistance and guidance of a bankruptcy expert ensures your case is handled correctly.
Do you have questions about bankruptcy? Are you ready to file and you want to make sure things are handled properly? Contact the law office of Frank J. LaPerch, PC at 845.942.5500.