December 29th, 2009 by Reed Allmand 
When it comes to getting out of debt and “avoiding bankruptcy,” it seems that everyone is an expert. Your neighbor, boss, co-worker and the random stranger on the street are all ready to offer their “guaranteed” advice on how to handle debt problems and avoid bankruptcy. However, most of them offer the same dead wrong advice that could send you straight to the poorhouse if you listen to and worse—follow their advice. Here’s why:
- Surprisingly the most common piece of advice given to debtors is that they should do everything possible to repay their debt, even if that means selling all of their worldly belongings at a rummage sale and forgo eating regular meals. This piece of advice is completely worthless unless you owe only a few hundred dollars. But for most debtors, who owe tens of thousands of dollars, selling their belongings won’t help even pay half of their bills. And this common advice is only a short-term “solution” to a long-term problem. If a debtor needs to sell his belongings and stop eating just to pay debt, then they are probably drowning in debt and way past due on filing for bankruptcy. Bankruptcy is designed for those over their head in debt. And even in bankruptcy, no bankruptcy judge will ask you to stop eating and sell your kid’s video games.
- Some of our “debt advisors” suggest that you put your house, car and bank accounts into your mother’s name if you want to file bankruptcy. If you listen to this advice you may be risking jail time. If a debtor transfers property to someone with the intent of defrauding the bankruptcy system not only will their case be dismissed but they may be sent to prison. Besides, bankruptcy offers so many generous exemptions that most debtors are able to protect their most important assets including retirement accounts, their home and the car they use for work.
- And finally, another segment of “debt advisors” suggest that you wait it out and find another job or two to pay off your debts. The problem with this piece of advice is that if you “wait it out” you could find yourself facing foreclosure and lawsuits. And working a second or third job is unlikely to repay your bills considering the fact that you still need to eat, sleep and get some relaxation if you don’t want to add medical debt on top of that heap of bills you’re battling.
For debtors considering bankruptcy, understand that the bankruptcy code was designed for people like you. The bankruptcy code makes no judgment regarding how you accrued your debt unless it was via fraud. What that means is that even if you made bad or even foolish decisions regarding your finances, bankruptcy is still available to you.
About Reed Allmand
Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."
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