It seems alot of people have pre-conceived notions about bankruptcy that are incorrect. I hear it all the time. Everyone hears things from family, co-workers, and friends. A lot of the time what they hear is misinformation and clearly wrong.
For instance, you do not have to be "flat broke" to file for bankruptcy. There is no formal test or requirement about how "broke" you have to be to file for bankruptcy. Each individual files bankruptcy for his or her own reasons.
Sometime ago I talked with an elderly who had extinguished their retirement accounts in an effort to pay off their creditors. Even after doing this, they still had to file for bankruptcy. This was extremely unfortunate, because federal bankruptcy law lets you keep (with some narrow exceptions) your retirement accounts.
I understand the couple were trying to do the right thing, but they would have greatly benefited from some pre-bankruptcy advice and strategy. (I'm not even going into the tax implications of withdrawing funds from retirement accounts). That way they could have taken care of their debt and also kept the funds in their retirement accounts.
Another common occurrence is that people wait too long while in foreclosure. Many people, through the loss of a job or a medical reason, fall behind on their mortgage. A Chapter 13 bankruptcy can help you save your home by catching up on the mortgage arrears. However, if you want to assert your rights in a Chapter 13, it really does you no good to wait until the last minute to file. If you wait too long, (meaning right before the forced sale) the mortgage arrears will keep on accumulating to the point where it will be impossible to pay them back.
If you are experiencing financial hardship, such as burdensome credit card debt or are facing a foreclosure – don't wait! It can really cost you. It does not hurt to get a consultation from a qualified bankruptcy lawyer. It can really save you in the long run.