Bad Advice Debtors Considering Bankruptcy Should Never Listen Too

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:

  1. 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.
  2. 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.
  3. 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.