3 COMMON MISTAKES PEOPLE MAKE BEFORE FILING BANKRUPTCY

3 COMMON MISTAKES PEOPLE MAKE BEFORE FILING BANKRUPTCY

1.           PAYING OFF DEBT FROM A TAX-EXEMPT RETIREMENT PLAN

              As an example, IRAs and 401K Retirement accounts are protected from creditors under bankruptcy law. (certain limits and conditions apply).   

2.           BORROWING MONEY FROM LOVED ONES TO PAY OFF UNSECURED DEBT

              Most people want to pay back their family and friends and you can’t give preferential treatment to pay back your loved ones and not pay back your unsecured debt in bankruptcy.  Most people have good intentions and want to pay their debt; but this is not an effective way. 

3.           PAYING OFF SECURED DEBT FIRST

              We realize that when people are over extended they look for ways to reduce their monthly expenses.  A lot of people make the mistake of paying off their auto loans or their mortgages (With their retirement no less!!) for ways to free up money to pay their unsecured debt.  Inside Bankruptcy there are exemptions (immunities) for your automobiles and real properties.  To help you better understand, IF you have a car that had a 10K balance at Bank XYZ and the value of the car is 11K, and if your exception (as an example only, not a true number) is 2K then your vehicle is an exempt asset.  IF you paid off your auto loan, then your vehicle is not exempt and you now have a 9K Asset (11K value minus the 2K exemption).

Check out more valuable information about Guam's Laws and working with Mark Williams, Guam's Best Lawyer, on Dededo Law Office's website, www.GuamLegal.com.