If you have accumulated debt that surpasses what you are able to pay, it can be overwhelming to navigate your options and try to find the best solution to the problem. Bankruptcy is one solution many people in Kentucky consider. In fact, according to the Courier-Journal, Kentucky has one of the highest bankruptcy rates in the country.

It is important not to make any of the following missteps when it comes to handling your debt.

1. Waiting until it is too late

If you are thinking about bankruptcy, perhaps you are already in default on some loans or have had accounts go into collections. Wage garnishments, repossessions and foreclosure can make your life even more difficult. It’s a good idea to start exploring what bankruptcy can do for you before you lose your income, your vehicles and your home.

2. Cashing out retirement accounts

Although you may see your retirement funds as a life raft that will keep you afloat, if you do not increase your income, you will still be in trouble after you deplete those funds. Even worse, you will no longer have money to retire on. Because retirement accounts may be exempt in a bankruptcy, leaving them where they are may be the wisest option.

3. Making bankruptcy assumptions

Many people make assumptions about bankruptcy that are not true. You might assume, for example, that you will have to liquidate some or all of your assets in order to file. This is not always true. Bankruptcy laws allow you to exempt certain assets, even though you are seeking liquidation through Chapter 7. If you file Chapter 13 bankruptcy, you are restructuring your debt rather than liquidating it, and you will likely be able to keep assets such as your home and your vehicles.