Two weeks ago I discussed some of the problems with bankruptcy.

    Let me reemphasize. Debtors should pay their just debts whenever possible. Overextended debtors should seek help from genuine credit counselors (most urban areas and some rural areas offer charitably supported counseling for free or for a nominal charge). Bankruptcy protection should always be a last resort.

    If debt problems are so severe bankruptcy appears to be a possibility, there are some dos and don'ts for the debtor:

    Do talk to your creditors about your situation. Some creditors are more likely to defer payments or even forgo part of the debt if the debtor maintains communication. They would rather get most of the debt paid back than have the debtor to file bankruptcy and get practically nothing. If, however, the debtor merely ignores them, they are motivated to intensify collection efforts.

    Don't get high interest "consolidation loans." Consolidation loans can sometimes help people with debt problems. These days, however, some lenders are advertising loans at amounts exceeding the value of the home (125 % equity and the like). What happens if you mortgage your home for more than its value and you get a job transfer? You will be unable to sell your home.

    Never consolidate unsecured debt into a mortgage if the mortgage rate of interest is higher than or the same as the unsecured rates. Even if the new mortgage rate is lower, carefully evaluate whether you can afford the new payments, their term, and whether any overall improvement in payments is offset by added risks. Remember, you are betting your home that you can make all the payments.

    Don't use fee charging debt poolers or "credit repair" companies. Credit repairers cannot legally do anything for you that you cannot do for yourself with a little research and legwork. Many such schemes are illegal. They may tempt you with offers of new credit . The "remedy" of getting new credit for an overextended debtor is like trying to put out a fire by dousing it with gasoline.

    Do tell the truth to your attorney and the Bankruptcy Court. If you hide assets or income, it will come back to haunt you, quite possibly when the trustee examines you under oath.

    Do contact your attorney and the Court if collection calls continue during the automatic stay.

    Don't rush out to get new credit after a bankruptcy discharge. Don't agree to reaffirm discharged debts, particularly if the reaffirmation is offered in connection with lures of trifling amounts of credit. If you could pay that debt, why did you go through bankruptcy to begin with? Some creditors will grant credit to bankrupt debtors because they are no longer overloaded with debt (even if they charge high rates because of the risk that the bankrupt debtor still cannot manage money). The benefit of bankruptcy is that the debtor gets a fresh start after a financial failure. Debtors who reinstate their financial woes with new credit will find that one thing is different this time. They cannot file bankruptcy again for several years.