Do Accept the Situation

• Many debtors delay a bankruptcy filing, hoping to be somehow suddenly rescued. Kansas consumer attorney Jill Michaux states, however, that waiting too long reduces the options. Bankruptcy halts collection activities that severely impair cash flow, such as garnishments and tax liens. By accepting the situation, a debtor is less likely to burn through retirement or savings accounts needed to survive a downsized lifestyle, says Michaux.
  
  

Do Budget Within Your Means

• Financial life after bankruptcy is not pretty, MSN Money analyst Liz Pulliam Weston observes in her column, "Bounce Back Fast After Bankruptcy." However, debtors can still use the experience to address what went wrong financially, Pulliam Weston says. If medical bills prompted the bankruptcy, getting health insurance coverage through a job or state program should be the goal. If the debtor filed due to overspending, a stricter budget approach is in order.
  
  

Do Get Competent Legal Help

• Individuals may do their own legal work in a bankruptcy. The chances of success, however, are small, due to the complex nature of bankruptcy law. Any technical misstep can mean dismissal of a debtor's case and can limit future claims. Even if the debtor cannot pay an attorney, free help may be available through law schools or special service programs.
  
  

Don't Lie to a Bankruptcy Court

• Federal law requires debtors to list all debts and property on petition filings. If a debt goes unlisted, it may not be discharged. Criminal penalties can apply to bankruptcy fraud. Examples include falsifying records as well as destroying or hiding property. Moving assets to third parties may also be deemed fraudulent. Transfers made within a year of a petition filing can raise red flags with the court.
  
  

Don't Use Bankruptcy to Avoid Foreclosure

• Bankruptcy takes precedence over foreclosure, making it an attractive maneuver for debtors struggling to keep their homes. However, the consequence of a 10-year credit blemish is only one reason that this notion makes little sense, financial analyst Ilyce Glink states in an August 2009 "CBS Moneywatch." If the homeowner lacks the income to make a mortgage payment, or has no job to meet that obligation, a bankruptcy filing simply delays the inevitable, Glink says.