If you have credit cards or loans and feel you no longer have control, you are not alone. Many Americans feel this way but do not recognize that bankruptcy can help.
People tend to feel shame when they cannot afford to pay off their debts. However, most people experience financial hardships and may require the fresh start that bankruptcy can offer. However, before they file for bankruptcy, they should know what actions to avoid.
Do not take on new debts
People apply for credit cards, loans and for other forms of financial help for various reasons, including to help make ends meet, to afford emergency costs and to pay for their lifestyle. In stressful economic times, more people take on new debt, and more people file for bankruptcy. In fact, bankruptcy rates rose about 10% from June 2022 to the same time in 2023. The crux of the issue is that credit card bills increase and people choose to take out loans and more credit cards to pay for other expenses. It becomes an overwhelming cycle of debt that people do not know how to escape.
However, if you apply for new credit cards shortly before filing for bankruptcy, it looks like fraud.
Do not transfer your assets
If you fear creditors seize some of your assets to pay off your debts, you may feel the temptation to transfer them to friends or family members. The law looks down on people who hide their assets, and even if you had every intention of transferring assets before the bankruptcy, you may want to refrain until after. When you try to transfer property or assets to others, the courts may assume that you want to defraud the creditors and you may face legal repercussions.
Once you have your fresh start, with fewer credit card bills to worry about, you can focus your income on what matters to you and your family.