When is the Best Time for Me to File Bankruptcy?
Much of the anxiety surrounding bankruptcy is a factor of the timing. It is said that timing is everything and nothing could hold truer when it comes to the timing of filing a bankruptcy petition. When filing for either Chapter 7 or Chapter 13 bankruptcy there are certain situations when it makes sense to file immediately and still other times when it makes more sense to delay bankruptcy.
File Bankruptcy Now
The first instance where delaying your bankruptcy could cost you dearly is when facing with the threat of foreclosure of your home or repossession of your automobile. With regards to your home, both chapters of bankruptcy will allow you to invoke the automatic stay and prevent foreclosures and repossessions. It should be noted that Chapter 7 bankruptcy could only provide temporary relief from foreclosures. Alternatively, Chapter 13 bankruptcy will prevent foreclosures in the long term by placing all your past due mortgage payments into your bankruptcy plan and allowing you to pay them back over time.
Additionally, if you are facing a lawsuit from a creditor, filing a bankruptcy right away will help you stay legal proceedings against you. Furthermore, when you file bankruptcy, if the debt you are being sued over will be discharged in your bankruptcy then the lawsuit will normally be dismissed, causing any judgment against you to become unenforceable.
File Bankruptcy Later
Now that we have discussed the main reasons to file for bankruptcy as soon as possible, what about instances where you may want to delay a bankruptcy? When you file for bankruptcy, you must file with the bankruptcy court in the state that you have resided in for the majority of the past 180 days. And to use the state bankruptcy exemptions to protect your property, you must have lived there for at least two years before filing bankruptcy in your new state. If the state you have moved to has more generous bankruptcy exemptions than your previous state of residence, you might need to wait so that you will be able to keep more property.
Secondly, when filing for Chapter 7 or Chapter 13 bankruptcy, your income from the previous 6 months is used to give your average monthly income. This determines if you are eligible to file for Chapter 7 bankruptcy under the means test, and defines the amount you will pay to the bankruptcy trustee every month under a Chapter 13 bankruptcy repayment plan. If your income has recently decreased, it makes sense to wait some time in order to bring down your overall average monthly income. This will greatly improve your chances to pass the means test or will lower your monthly Chapter 13 payments.
Another reason to delay your bankruptcy is if you have recently taken out new debt on credit cards. There may be a limit on discharging recently incurred debts. This rule is designed to prevent abuse of the bankruptcy system by going on a shopping spree and then filing for bankruptcy protection. If you have put new charges on your credit card and then immediately file for bankruptcy, there is an excellent chance that the debt will not be discharged.
In conclusion, we realize that there may be many other times that either filing right away or delaying a bankruptcy is the best move for you. If you have had any major life changes take place recently such as received or lost a large sum of money or property, it would be highly advisable to consult a bankruptcy lawyer before taking any steps toward filing bankruptcy on your own. By hiring a trusted Elk Grove bankruptcy attorney you will have an experienced partner to advise you on when the best time to file bankruptcy is, and how to ensure you save the most money and property.