29 Nov Simple(?) Ways To Avoid Bankruptcy!
I recently read an article on simple things you can do to avoid bankruptcy. This article is probably one of the best examples of why you need to consult an experienced bankruptcy attorney before deciding whether or not to file for bankruptcy.
Here are just two of the suggestions:
SUGGESTION NO. 1: SELL YOUR BELONGINGS
Well, honestly, the suggestion was that you make a list of all of your possessions that are worth over $60.00 in value to get an idea of how you spend your money and then be prepared to sell those possessions to pay your creditors.
What’s wrong with this suggestion? A number of things:
- While bankruptcy exemptions vary from state to state, as a general rule when you file for bankruptcy your belongings are exempt from seizure to pay your creditors.
- If you try to sell your belongings it is unlikely that you will get more than garage sale values for those belongings.
- That computer or flat screen TV you purchased six months ago is either being sold for new at a significant amount less than you paid for it, or it is already obsolete.
- Some creditors which issue their own store credit cards, take the position that you have given them what is known as a “Purchase Money Security Interest” (PMSI) when you use their credit card to buy things. APMSI is a security interest that is taken by the seller to secure all or part of the price of the item that you purchased. Whether a PMSI is enforceable is a topic in itself (See Jacksonville Bankruptcy Attorney Chip Parker’s article on PMSI), but to suggest selling things that may have a security interest attached to them is bad advice.
SUGGESTION NO. 2: GET A HOME EQUITY LOAN
Getting a home equity loan to pay off your unsecured creditors is a really bad idea.
Your credit card debt is unsecured debt. A home equity loan is secured debt.
Most unsecured debt can be discharged in a bankruptcy. However, you are limited in your options regarding secured debt.
As an example, if you filed a Chapter 7 bankruptcy you will normally be able to get rid of your credit card debt. However, you have limited options with your secured debt: Your main options are to either reaffirm and continue to pay the debt or to surrender the secured property to your secured creditors in satisfaction of the debt.
So by following the advice of taking out a home equity loan, you are running the risk of losing your home if you need to file for bankruptcy because you have converted your unsecured debt to secured debt.
But I was inspired by this article and have come up with a couple of other simple suggestions of my own to avoid bankruptcy:
MY SUGGESTION NO. 1: SELL A KIDNEY
Sure its illegal, but who is going to know. And anyway, you’ve got two of them, right? You only need one.
A variation on this would be to sell an eye or other redundant body parts you may have.
MY SUGGESTION NO. 2: GIVE UP YOUR KIDS FOR ADOPTION
Let’s face it: The best part of having a kid occurred about nine months before he or she was born, and the dependent exemption really isn’t worth the trouble.
And the United States Department of Agriculture (USDA) estimates that it costs over $234,900.00 to care for a kid born in 2011 from birth to age 18.
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