You should avoid some crucial actions if you feel you are falling behind financially. Below are some areas you should look at and what you should not do before bankruptcy.
It has been reported that this year, around 1.5 million people will file for bankruptcy. This problematic situation has led to significant financial ramifications for several years. Therefore, there are several steps one should take to avoid these drastic financial steps. If you feel you are falling behind financially, there are some important actions you should avoid. These so-called financial traps could end up causing more financial trouble that could lead to bankruptcy.
Six (6) Things Not To Do Before Filing For Bankruptcy
The following are the things you should take a look at and what you should not do before bankruptcy. Read on.
1. Rolling Other Types of Secured Loan or Unsecured Debt into a Mortgage. Should you have slackened debt, make sure to keep it that way. Many individuals who end up in bankruptcy roll their unsecured debt into other secured loans or mortgages. The problem is that you can lose the collateral if you fail to service a secured loan. People often lose their homes because they are used as collateral on unsecured debt. Remember that the roof over your head is not just an asset. It is where you and your family live; thus, avoid using your primary residence as collateral.
2. Borrowing Money from Your Retirement. Yes, it may be tempting to reach into your retirement to pay off your loan. However, you have to consider the long-term damage you can do to your financial security. For instance, if your retirement funds are in a 401K or IRA, you will have to pay the penalty for withdrawing those funds. Also, be aware that your retirement is designed to provide you with an income when you can no longer work. When you borrow money from retirement, you can compromise your financial stability when you can no longer generate an income through labor.
3. Borrowing Money from Friends and Family. A family will always have that one relative or friend constantly hitting everyone for cash. You do not want to become that person. You should avoid using your friends or family as loan officers. This can strain relationships and lead to legal trouble if you can not pay back the loan.
4. Speculating in the Financial Markets. When people get desperate, they may tend to look for easy answers. Sometimes these “easy financial answers” are sought through dangerous speculation in the stock, options, forex, or crypto markets. Most people lose all of their money when they speculate in the markets, do not throw away what little resources you may have.
5. Taking Cash Advances. Finally, avoid going to the cash advance stores to pay your bills. These cash advance companies can charge as much as 278.10% per year! That means if you borrow one thousand dollars ($1,000), you will have to pay back the company $2,781.00 in interest on top of the $1,000 you borrowed from them.
6. Making the Right Choices to Avoid bankruptcy. At this point, you know what not to do before bankruptcy. If you want to make the right choices, be sure to talk to an attorney or debt counselor to learn your best plan of action. By making intelligent choices, you can avoid financial traps that can hurt your future.
Are You Considering Bankruptcy?
The Law Offices of Ronald E. Stadtmueller offers free consultations to review your circumstances, analyze your situation and advise you on the course of action that fits you best. Our certified bankruptcy law specialist with over thirty (30) years of experience will and can help you not continue living under a cloud of unmanageable debt. Chapter 7 bankruptcy solution San Diego can quickly discharge your qualifying debt and give you a fresh start. Call the office today or get a hold of us online to schedule your bankruptcy consultation at our offices at Rancho Bernardo, Mission Valley, San Marcos, or La Jolla. Let us help you file for Chapter 7 quickly and efficiently. Once you have filed for bankruptcy, creditors must immediately stop collection efforts, including harassing letters and phone calls.