Things You Shouldn't Do To Avoid Bankruptcy
Debtors often go to great lengths to avoid bankruptcy. Unfortunately many of these drastic measures not only fail to help the debtor avoid bankruptcy; but may worsen their financial situation.
Let's take a look at a few of the drastic actions debtors should avoid:
- Ignoring the debt problem because they don't want to file bankruptcy. While ignoring a debt problem may not seem drastic, the consequences of doing so can be dramatic. Debtors who ignore their debt problems can find themselves facing lawsuits which they often also ignore. The problem comes when these lawsuits turn into judgments and wage garnishments .
- Taking out more debt to pay off existing debt in an effort to avoid bankruptcy. Also known as robbing Peter to pay Paul. Attempting to avoid bankruptcy by taking on more debt can cause even more financial issues. Also, that new debt may not be dischargeable depending on how long ago you accrued the debt before filing bankruptcy and whether or not you were already insolvent.
- Emptying out a retirement account in an effort to repay debt and avoid bankruptcy. Unless emptying your retirement account will completely pay off your debts AND you still have plenty of time to save for retirement, it probably isn't a good idea.
- Taking out loans from friends and family in an effort to avoid bankruptcy. Most debtors know that it's not a good idea to borrow from friends and family but doing so when you're having financial difficulties is an even worse idea. If you borrow from friends in an effort to avoid bankruptcy, they will mostly likely be angry when you end up filing bankruptcy anyway because you can't repay them.