Many people find it difficult to take the first step when facing debts they can’t pay. There is nothing wrong with being confused or uncertain. Dealing with collections calls and bills you cannot pay is a hassle. However, you can act to protect yourself so you don’t accidentally end up making your financial situation worse. Here are the Top Mistakes People Make Before Talking with a Bankruptcy Lawyer.
Top Mistakes People Make Before Talking with a Bankruptcy Lawyer
Many different money mistakes can be made before a bankruptcy filing. The three most common errors are the following:
- Using a 401(K) to pay down debts. The bankruptcy code protects your retirement money because it is so important to your financial security in the future. You don’t want to use this money to pay down debts and put your retirement at risk. Not only do you jeopardize your ability to live comfortably later in life. You also end up losing a lot of money to taxes and penalties if you withdraw money from your 401(K) early.
- Tapping into home equity to pay debts. The bankruptcy code also protects equity in your home so you don’t have to lose your hour when you file bankruptcy. The fact is, unsecured creditors (like credit card companies) cannot take your house when you owe them money. If you take a second mortgage or home equity loan to pay your debts, you turn those debts into secured debts. All of a sudden, an inability to pay can result in losing your house. It is far better to talk to a bankruptcy lawyer in Alexandria Virginia and have your debts discharged than to endanger your home.
- Paying debts when you don’t have the money. Many people send payments to their debts month after month and don’t make a dent in actually paying them down. If all of your payment (or most of your payment) is eaten up by interest, then you are basically throwing away money each month and will never make progress. If you don’t have the money to actually get rid of the debts in any reasonable length of time, bankruptcy may be the right answer for you.
Talking with a Bankruptcy Attorney Throughout the Process
Once you decide to actually file for bankruptcy protection, there are also many mistakes you can make in choosing what chapter to file under or in completing your bankruptcy forms. Avoid errors that could jeopardize your ability to discharge your debts. Talk to an experienced bankruptcy lawyer as soon as you know that you have debts you cannot pay. Contact Lee Legal today if you are having debt trouble in Washington D.C., Virginia, and Maryland, so you don’t make an error that could cost you.