4 Mistakes To Avoid Before Bankruptcy

4 Common Mistakes to Avoid When Contemplating a Bankruptcy Filing

It is inevitable that when faced with financial hardship, most individuals will take steps to improve their financial situation.  These steps however, generally do not improve the financial situation and more often than not, a bankruptcy still becomes necessary.   If your faced with a mountain of debt that doesn’t seem to be going away, bankruptcy is often your best bet to achieving the financial fresh start you are looking for.  Below are some tips on mistakes to avoid before bankruptcy which can complicate your ability to file and become debt free.

  1. When faced with financial disaster borrowers will often look towards their own assets to liquidate before considering bankruptcy. Don’t fall into this trap!  Liquidating your retirement, your belongings and savings will only affect your ability to get back on your feet.  Most retirement accounts, household belongings, and savings are entirely protectable in bankruptcy and do not have to be liquidated.  Do not sacrifice your future to your present financial situation!  Before you clean out your 401K to pay off your debt seek the advice of a bankruptcy attorney, and learn the alternative options available to you that don’t require you to be penniless first!
  2. Avoid taking your name off of assets such as: real estate, bank accounts, and vehicles. Under the Bankruptcy Code transfer of property for less than fair value prior to a bankruptcy are considered fraudulent and can complicate your ability to file.  Before you transfer your house to a family member or friend consult with legal counsel to ensure that you are not going to hinder your ability to obtain a fresh start.
  3. With soaring credit card rates, late charges and fees, borrowers find themselves in a vicious circle of making high minimum payments only to be forced to re-incur debt each month to pay for basic living expenses. If you’re in this vicious circle of payments, stop using your credit and seek professional legal assistance immediately.  Get the education you need to break the cycle that will never end well for you and your family.
  4. Be aware that if you stop paying your creditors and are contemplating a bankruptcy filing please do not pay back your family and friends. In the eyes of the law, grandma is an equal creditor with visa, repayment on debt owed to family and friends is consider preferential and can create serious issues if you need to file bankruptcy.  There are numerous other options that will work far better.  Until you get specialized legal guidance, treat all your creditors the same and prevent issues arising from paying back grandma.  Notify your legal counsel immediately if you have debt to family and friends and they will be able to advise you on the proper course to take in handling that debt.

By keeping these four simple tips in mind, you will avoid common mistakes made by people in financial trouble.  There are professionals out there with the answers and education to assist you in getting out of your debt, and back on the road to financial success! Call us today to get answers to all of your Bankruptcy questions.  At the Law Offices of Neil Crane, we want to quick get you back on track quickly and into financial recovery.  Call us today at  203-230-2233, or complete our online contact form to get a free consultation.