If you’re considering filing bankruptcy in today’s climate, you’re not alone.  Yes, bankruptcy filing is going to be harder than it was a few years back but it doesn’t mean that you can’t do it.  If you’re considering today but you don’t know if you shouldn’t take the right steps, I’m going to show you what you should look up to determine if you should file or not.

Can you make all of your minimum payments?

If you’ve already answered yes to this question, don’t rely on bankruptcy because it’s going to do more harm than good.  If you can afford to make those minimum payments, I would recommend that you meet with an advisor on debt or do the necessary homework on how to lower your credit card bills.

Never cash out your retirement accounts

If you have a 401k, don’t think about cashing it out.  This is going to be protected when it comes to your bankruptcy.  If you can keep that money in your account, I would recommend you do everything in your own power to keep it there.  This money is going to be safe.

Know who you have to pay off

Before you go out and file, make a list of everyone that you owe money to.  Everything from your credit cards to your home mortgage.  If there’s a negative number amount, they are going to be paid off.  Once again, see if you’re able to pay them each and every month.  If your minimum payments are higher than what you’re bringing in, you may want to file.

Stand still if you file

If you do decide to file, stop using your credit cards, don’t play around with money.  You’ll want to do as little spending as possible while you go through the process.  If you try to hide money or transfer it somewhere, etc, you can find yourself in legal troubles.  It’s always best to be honest.  Is money really worth more fines or jail time to you?

Don’t pay family debt off

A lot of people actually do this when it comes time to file.  They will pay off friends and family before they do the creditors.  If the court knows of this, they can legally turn and sue your friends and family for that money back.  I would highly recommend you pay off friends and family after your legal battle.

Bankruptcy is a long and tiresome process.  If you can avoid it, by all means, do it. It’s going to be on your report for the next 7 years.  You won’t get a good rate on mortgage, loans and many people may shy away from you.  Know some of these tips because they will come in handy if you do decide to file.