Bankruptcy do's and don'ts in 2009
There are many things a person can
do in the new year to have a smooth and positive
bankruptcy experience. Yes, I know people
might be upset that I am hoping people file
bankruptcy, but I have nothing to be defensive
about. Our society does not benefit from
having people who cannot pay their bills and
have to run from creditors. Getting a fresh
start benefits all of us and is much better
than having someone informally bankrupt and
unable to access credit again.
|Do's and don'ts for 2009
1. Commit yourself to
Yes, that is always the easiest thing to tell
someone facing financial chaos and is sometimes
impossible to achieve. But if you face a very
tight financial situation, you need to try
to maintain daily, weekly and monthly budgets.
It may be impossible to stick to an artificial,
inflexible budget, but over the long run you
will have more and more success living within
2. Find out the current
value of your property
Many people unable to make the payment on
their first and second (and sometimes third)
mortgages might have options to extinguish
mortgages in bankruptcy. Be open to the fact
that most property values have decreased in
the past year, and look at all viable options.
For example, some lenders, but not many,
will work with borrowers to lessen their monthly
payment even when the lender knows there is
no equity in the property to secure the loan.
You should talk to a local bankruptcy attorney
about extinguishing the junior, unsecured
mortgages on your property through Chapter
3. Accept your current
Many of our clients come to us after all other
options have failed. They have a judgment
against them and wages are being garnished
or a bank account is being levied. Avoid
the ostrich approach to your financially precarious
situation. Don't stick your head in the sand
and hope someone will come to your rescue.
4. Find a way
to entertain your family without
The Internet is full of thoughtful suggestions
on how to enjoy your day without depleting
your wallet. Family and friends should
be able to recognize that spending time together
can be as enjoyable as spending money together.
1. Transfer property
out of your name
Trying to hide assets is risky and illegal.
If you have an asset that cannot be protected
in a bankruptcy filing, you need to discuss
your situation with a competent professional.
There are legal ways to protect assets, and
transferring an asset out of your name and
immediately filing bankruptcy is not a smart
way to begin the new year.
2. Take large cash advances
from your credit cards
People always say to me, "I have $5,000
of available credit on a credit card. Should
I use it before filing bankruptcy?" This
is fraud because you obviously have no intention
of paying that money back. It is hoped creditors
will catch this type of conduct and make you
pay back every penny of recent spending.
3. Buy a car that overextends your budget.
Car purchases are one of the most common drains
on your monthly income. Be very careful about
taking on a new car payment, especially if
your household already has one car payment. That
second payment could be the tipping point
to financial insolvency.
4. Try to comfort yourself with 'retail therapy'
Many people believe that their self-worth is based on the newness of their clothes or the gifts they buy their friends. One act of unbridled exuberance can be the difference between a happy new year and one filled with more financial uncertainty.
5. Take out your financial
frustrations on those closest to you
Happy New Year from the one guy NO ONE wants to meet.
When faced with financial challenges, many
people will take out their anger and frustration
on the people closest to them. This is easy
to do but completely unacceptable. All you
will do is alienate those that care the most