Bankruptcy is often seen as a borrowers' last resort when it comes to permanently addressing debt issues. However, prior to considering one of the bankruptcy's chapters, many of those individuals try to come up with and apply debt-reduction strategies that are often costly in the long run. A mere bankruptcy filing removes all debts instantaneously, and protects from creditors' harassment. There's no other debt relief program that offers borrowers better benefits. This article lists two errors you must never make if you've decided to file for a bankruptcy chapter. 

Turning unsecured debt into secured debt

Unsecured debt is debt contracted without the inclusion of guarantees when signing the contract. For example, the balance on your credit cards is considered unsecured debt. There are many people in the U.S. who accumulate monstrous amounts of debt on their credit cards each year, and consider using one of their valuable assets to take out a loan, and get rid of their financial woes.

Applying such a strategy is the last thing you want to do because you'll find yourself dealing with an even bigger debt problem. Indeed, not only will you have turned unsecured debt into secured debt by using your home or any valuable asset to get financing, but you'll also be dealing with the higher interest rates associated with loans. In this type of scenario, if you used your home to back your loan contract, then you're almost guaranteed to lose it the process. The monthly payments will be just too high.

Transferring your debt to a credit card offering better terms

This is another strategy that certainly looks well thought out, but that is also guaranteed to increase the level of troubles you're in. As you might know, there are many financial institutions that introduce new credit cards each year with promotional offers. In many cases, these cards bear low interest rates, and thus offer interesting opportunities to borrowers who are seeking to reduce their debt burden. After signing up for one of those cards, debtors transfer their debt to take advantage of the better credit terms associated. Yet, creditors are aware of such tactics, and typically file a court motion to denounce what borrowers are trying to do.

If you're thinking about filing for bankruptcy, then simply do it without trying to do anything that you think will improve your financial situation. Indeed, very often, the outcome will be negative. Contact a bankruptcy attorney like Thomas M. Denaro, Esq. for help.