10 Things To Know If You Are Considering Bankruptcy
February 12, 2009 by Marie Claire
If you are having trouble paying your bills, looking at your financial situation with a clear, objective view can be difficult. Seeking the help of a credit counselor or bankruptcy attorney can help you get a better understanding of what your options are to get out of debt. If you need help finding an attorney, look for one in your local yellow pages or search online using attorney locator services like BankruptcyHome.com.Here are some things to think about if you are considering filing bankruptcy.
1. If your monthly income is higher than the minimum payments on your outstanding debt, consider budgeting better and speaking to a consumer credit counselor to help reduce your debt.
2. In bankruptcy, all creditors are treated the same. Don’t try to repay a large personal loan to a friend or family member within six months of filing bankruptcy. The bankruptcy trustee will likely sue to have the money returned and evenly divided among your creditors.
3. Don’t cash out your retirement or 401(k) accounts. The balance in those accounts is protected up to over $1 million. Keeping those assets safe for your future should be a priority.
4. When completing the paperwork for your bankruptcy, be completely and totally honest. Don’t try to leave assets, bank accounts, brokerage accounts, credit union accounts, cash deposits or other assets off of the lists. The bankruptcy trustee will likely find anything you are trying to hide anyway and the punishment could cost you more in the long run.
5. List all of your creditors in your bankruptcy. Include loans from friends and family members along with all your credit cards, mortgage loans, car loans.
6. Never allow a creditor to draft funds from your account to pay a bill.
7. Don’t transfer balances on credit cards, draw cash advances from your credit cards or charge your credit cards up to their limits.
8. Don’t transfer funds to your children’s bank accounts.
9. If you own a home, don’t take out a second mortgage before filing bankruptcy. Unless changes are made to the bankruptcy laws, you will have to keep making all of your mortgage payments in order to keep your home. You should never take out a second mortgage to pay off credit cards that would likely be discharged in bankruptcy.
10. Tell your attorney everything about your small business, sole proprietorship, partnership, LLC, LLP, LC, corporation, hobby or side business. The asset must be considered when developing your bankruptcy plan.
First and foremost you need to remember that your financial problems will not go away if you do nothing about them. It is important to face your money issues head on and take responsibility for your situation. Coordinate with your attorney to make all court appearances. Keep your attorney up-to-date on changes in your financial situation. Provide your attorney with a current address, phone number and email address.
About the Guest Blogger:
Rob Beard is a staff writer for BankruptcyHome.com. He specializes in legal and financial topics such Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
(Personal Finance Management Guide by Marie Claire Cooper. It's all about good reading and smart information.) http://personal-finance-management.blogspot.com/
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