Bankruptcy can be a great thing. If you are overwhelmed by debt and don't know what to do, bankruptcy might be your best bet. You can often get your life back in order by liquidating your assets with a Chapter 7, or by putting yourself on a rigid payment plan with a Chapter 11. Still, choosing bankruptcy is often difficult. You will want professionals by you every step of the way to help you handle the many difficult decisions that come with filing for bankruptcy.

One thing you should never do when filing is transfer assets out of your name. You may think that by transferring things like cars or valuable assets into a friend or relative's ownership will protect them from being liquidated. While this may sound like a creative strategy, the fact is that transferring an asset to protect it is illegal. If you own something that you are terrified to lose in a bankruptcy, then you should express your worry to an attorney. Normally a competent attorney can find a way to keep you from losing a precious keepsake.

Also, don't pay back loans to your friends or family prior to filing. You may owe your sister $3,000 and you may be $900 in debt to your brother. While it is great that you want to pay these dear relatives back, you shouldn't do it in the 12 months prior to filing. This is because the court will still see these relatives as your creditors. They will look harshly on payments that are made to family prior to filing. If you feel there is a pressing need to pay a family member back before your bankruptcy, then talk to your attorney about the situation. He or she will know the different rules concerning payment prior to bankruptcy, and can help you to arrive at a solution.

Another tip: list all potential or pending lawsuits you have against anyone on your bankruptcy paperwork. If you are suing your former employer for unpaid wages, or involved in a personal injury case against the supermarket where you slipped and fell, then you will want to let the court know. These are considered assets, and must be listed in your paperwork. Most often, you will still be able to continue with your case. But the court-appointed trustee will need to stay informed on the case. You may lose the right to continue your lawsuit if you try to hide it. If you let the court know, the trustee may take over the lawsuit for you on your behalf. This way, they may be able to lose your compensation in the case to pay back your creditors. Lawsuits and bankruptcies is a complicated issue, and your attorney will be able to give you more advice.

As well, don't gamble when you are filing for bankruptcy. Most often, gambling is not a wise investment. If you lose, you may be in more debt, or a more dangerous position than ever before. As well, any gambling losses in the 12 months prior to filing for bankruptcy will need to be listed in your paperwork. In addition, don't run up your credit card balances before your file. A lot of bankruptcy clients say that they are going to use up all their available credit before filing for bankruptcy.

They hope that they will be able to get a little bit more out of their cards before they are taken away. Normally, this strategy backfires. The creditor will review your charges after receiving the bankruptcy notification. If your creditor notes that you ran up your balance, he or she might challenge your request to eliminate some of your debt. You might end up owing money even after you bankruptcy is over. By following these helpful tips, you will avoid many of the problems that could complicate your bankruptcy.