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If you were planning to use your tax return to catch up on your mortgage and car note payments or simply to help you make ends meet, you are not alone. Each year, thousands of people in Tilton eagerly await their tax refunds to help them resolve their financial issues. While it may seem like a good idea, your tax refund may not be enough to keep your home from foreclosure and your vehicle from repossession. Bankruptcy might be a more practical solution to help you keep your house and car and help you to get your finances back on track.

Before filing bankruptcy, it is vital for you to become aware of your spending habits. There are certain things that you should avoid prior to bankruptcy to avoid issues with your filing. Here are some mistakes to avoid.

1. Ignoring creditor and collection attempts

Until you have formally filed for bankruptcy, you should try not to ignore your creditors. The constant phone calls and demand letters may have you stressing out, but try to work things out with your creditors.

Lawsuits and judgments do not bar you from bankruptcy, but could make the process more time consuming and challenging for you. Once you file, an automatic stay goes into effect prohibiting your creditors from contacting and harassing you for payment. This gives you breathing room to get a sense of your financial obligations and look to the future.

2. Paying off certain debts

Some debts may seem more manageable for you to pay off than others, such as small loans from friends and family members or small credit card bills. Even if you have the means to do so, discuss this with your bankruptcy attorney first to see whether it would be considered to be a preferential payment. The trustee in your case could sue for those payments and redistribute them amongst all of your creditors.

Before filing bankruptcy, learn more about the options available to you and carefully analyze your financial behaviors and responsibilities. You can use bankruptcy’s fresh start to make changes where necessary and lessen the possibility of a similar outcome in the future.