Let's face it, many of us are facing tough financial times; but in our efforts to "do right" by our creditors some of us are doing things that are destroying our financial future.
Here are some of the things you should not do in an attempt to repay your creditors if you're considering bankruptcy:
- Do not raid your retirement account. Many people in an attempt to be "honorable" will empty out their retirement account to repay creditors only to be hit with taxes and early withdrawal penalty fees. Bankruptcy may be able to protect your retirement account and by extension protect you when you retire.
- Don't use mortgage and rent payments to pay down credit cards. Many debtors are so afraid of their creditor's threats of lawsuits and wage garnishments that they will use rent/mortgage money to pay credit card bills . In bankruptcy the bankruptcy trustee will not require you to become homeless in order to pay your creditors. But if you take it upon yourself to forgo paying rent/mortgage payments to pay creditors you may end up homeless by your own actions.
- Do not begin to sell other assets such as cars, jewelry and electronics and use the cash to pay creditors of your choosing if you are considering bankruptcy. The bankruptcy court may consider those payments to be favoritism on your part and may dismiss your case or at least demand that the money/assets are returned to the bankruptcy estate.
If you are considering bankruptcy, speak with a Dallas- Fort Worth attorney to discuss how your assets should be handled prior to filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy .