Don’t repay family members. The thing is that they can’t be treated different than other creditors. Under the law, relatives have the same exact legal status as every other creditor that you owe. Thus, relatives can’t be treated differently than all of the other places. I know that stinks, however it’s the law.

Don’t liquidate your retirement account! They are usually exempt property in a bankruptcy regardless of what chapter you file, so it’s unnecessary to do this. Some people liquidate and still owe massive amounts of money, and if you withdraw these funds early that makes you liable for taxes and penalties which might not be discharged in the bankruptcy.

Don’t transfer property out of your name before you file bankruptcy. Its just a bad idea. This action can be undone if a fair price isn’t received, or if it were made with intent to hinder, defraud, or delay a creditor. Friends and relatives slip into this category too.

Don’t use your equity line of credit to pay off your debts. Under most federal and state laws, you do have the option to claim exemption for the your home equity. That way, you can go through bankruptcy and still be able to have this equity.

So in a nut shell, if you utilize your equity line to pay off debt or take out a second mortgage, you will pretty much be converting debt that would have been discharged in bankruptcy into debt which you will still need to pay so you can keep your house.

And one last do: Always speak to your attorney with honesty and make them fully aware of all of your concerns. Courts take their rules seriously and have the ability to file criminal charges if intention fraud is committed. And even if they don’t go that far, they can refuse to discharge a particular debt, or simply dismiss the entire case.

Filing for bankruptcy is a no small matter. The most extreme of all financial makeovers, financial analysts continue to warn us that it should be used as a last resort and that bankruptcy shouldn’t be entered into without knowing what you are doing.

Bankruptcy is stamped onto your credit report for a full ten years. And without a decent credit report, your ability to obtain a car, living situation or employment could be greatly hindered. If you are filing, it is a good idea to keep in mind that this is a big deal, and you should do your best to plan for your bankruptcy.

In America, there are five chapters of bankruptcy that you can file for. Chapter seven is the most common form. A trustee will collect non-exempt property and will sell it and distribute the proceeds to the creditors. Chapter nine is a bankruptcy that is only available to municipalities. It’s pretty much a form of reorganization, not liquidation.

Chapter eleven, twelve, and thirteen are more complicated because they involve letting the debtor keep some or all of her property while they use her future earnings to pay off the debt. Most consumers file chapter seven or chapter 13. Chapter 11 filings are mostly for businesses, individuals are allowed, but are a rarity. Chapter twelve is similar to Chapter 13 but is only available to “family farmers” and “family fisherman” in certain situations.

Now for the list of bankruptcy DON’Ts.

First off, don’t use your credit cards once you’ve made this decision. It’s just a bad idea to incur even more debt that you don’t intent to repay. It makes you look suspicious, so you could lose your right to cancel out that debt in the bankruptcy. Thing is, there were bankruptcy reforms in 2005 that are responsible for lowering the threshold on so called luxury purchases to five hundred dollars and extended the abuse period to ninety days before filing. Anything you buy in this period will be under extra scrutiny.