4 financial mistakes on your way to bankruptcy

Today I read an article by Katie Adams titled Financial Mistakes That Could Haunt You Forever and it got me thinking. In this unprecedented economic depression, we face tougher financial decisions than ever. Who can we turn to? Who do we trust? I say that now more than ever before we need radical self-reliance. Don’t wait for someone else to tell you what to do. Educate yourself and then decide on the right course of action for your own financial well-being.

I listen to it every day. “We collect our savings and retirement to try to stay afloat.” “We used to live on our credit cards and now we can’t pay the payments.” These 4 financial mistakes can be fatal in the long run and you can end up in bankruptcy:

* Living beyond your means is so yesterday.

* Withdrawing retirement accounts to pay bills is fatal.

* Fear, shame, and guilt will paralyze you financially.

* Never, ever co-sign on a loan unless you intend to own it and can afford the payments!

We are not in a recession, we are in a depression. We need to adjust our lifestyles accordingly and stop creating debt and living within our means. Never, never, and I’ll say it again, never switch your savings or retirement accounts to pay bills because you’ll lose that compound interest, be penalized for early withdrawal, and end up paying taxes. Not worth it. Also, you will most likely be able to keep many of your bankrupt assets under an exemption. Lastly, you absolutely must not panic. Don’t let your fear paralyze you into inaction. The last thing you need is to have your wages garnished by a creditor who has sued you before you decide you need to file for bankruptcy.

I think the most important thing to remember is never to co-sign a loan for anyone, unless you have the ability to pay it yourself and intend to own it. Here is the reason for this. When you are a co-signer of someone else’s debt, you are putting yourself in jeopardy for that debt, in the event that this other person can no longer pay it. If the person for whom you have signed as a co-signer ends up in bankruptcy, then the lender can go after you for that debt. You can find yourself being thrown under the bus, so to speak, and you can also end up bankrupt, if you didn’t intend to pay off that debt.

Don’t go broke before talking to a bankruptcy attorney about your current financial circumstances. Each situation is unique and you may have options outside of bankruptcy, but you must act now.

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