Top Mistakes People Make Before Talking with a Bankruptcy Lawyer

Bankruptcy is the best solution to many serious financial problems, but unfortunately individuals often wait too long before talking with a bankruptcy lawyer.  Many people make significant financial mistakes before they get legal advice, and these mistakes can make it harder for you to get the fresh start that bankruptcy is intended to provide. 
An experienced Melville, NY bankruptcy lawyer can help you to find the best solutions to your financial problems and avoid costly mistakes.  Call Ronald D. Weiss, P.C. today to learn more about how you can get help from a bankruptcy lawyer.
 

Bankruptcy Mistake to Avoid

Some of the most common mistakes that people make before talking with a bankruptcy lawyer include the following:

• Continuing to make payments that do not reduce their debt balance. if the entire payment you make each month goes towards fees and interest, then you are wasting money when you send in debt payments. You could pay forever and your balance would not decline. If your debts are so high that you can’t pay and the money you sent is eaten up by interests, then you should strongly consider talking with a bankruptcy lawyer to learn about your options.
• Paying credit card debts using a second mortgage or home equity loan. Credit cards and personal loans are unsecured debt. This means you can get these debts discharged in a Chapter 7 or reduce the payments and amount owed in a Chapter 13 repayment plan.  If you take out a second mortgage or home equity loan, on the other hand, the debt is secured debt. You will need to pay back the loans in order to keep your house, and cannot discharge the mortgage debt or reduce the balance during a bankruptcy.
• Draining retirement accounts to repay debts. If you have money in a 401(K), an IRA or other retirement account, you may be tempted to take this money out and use it to repay your debt balances. This is almost never a good idea. You will pay a big tax penalty and fees to take the money out. It will also be very hard for you to catch up and save enough for retirement if you take cash out of these accounts since you will lose the compound interest you would otherwise earn. When you file for bankruptcy and have debts discharged, you are allowed to keep these retirement accounts and you are far better off dealing with debt problems by talking with a bankruptcy lawyer than by jeopardizing your future.
• Giving away property or money or paying back certain creditors.  Transactions that were done leading up to your bankruptcy may be reversed because creditors may be entitled to the money or the property you gave away.  There are also special rules under bankruptcy law that determine the order creditors must be paid back.

You do not want to make mistakes that could jeopardize your ability to discharge debt in bankruptcy or that could leave you in a worse financial position.  If you cannot pay back what you owe, talking with a bankruptcy lawyer will allow you to find out about your legal options and work towards resolving debt problems.
Ronald D. Weiss, P.C. is here to help. Call today to speak with an experienced Melville, NY bankruptcy lawyer who can review your situation and assist in solving your financial troubles.