When to File for Debt Relief in Bankruptcy Court?

A major factor to consider when filing bankruptcy is timing. Even after a Sacramento-area consumer has decided that she will definitely file bankruptcy, in many cases the timing can be crucial. Often, a debtor has little choice but to file as soon as possible. Swift action may be necessary to ward off a repossession, eviction, foreclosure or wage garnishment.

Behind on the mortgage?

Many times, consumers have fallen behind on their mortgage payments and the options become more and more limited. When a house is subject to a mortgage and consumer defaults on the house payments, the lender can foreclose on the mortgage. In those cases, the consumer debtor may need to file immediately before (or even after) foreclosure, if there is still a chance that he or she will be able to cure a mortgage default through a Chapter 13 plan.

Truck soon to be repossessed?

Car loans are another secured debt that can result in the consumer losing the property if they don’t make the payments. However, a quick bankruptcy filing can invoke the automatic stay and stop the repossession. If bankruptcy is filed and the stay is in effect, the lender may not take the car without first gaining court permission.

Wages being garnished?

A consumer may have their wages garnished when a creditor has a money judgment against them for a debt. Once they have the judgment, they can take additional steps to take money out of the consumer’s paycheck or bank account to satisfy the judgment. The automatic stay in bankruptcy stops all garnishments. So, filing before the garnishment begins can prevent it from happening, and filing after it begins can stop the creditors in their tracks.

Sued in state court?

Filing a quick bankruptcy may also be the best or only way to stay a state court proceeding. This could help avoid extensive and potentially unnecessary work in that state proceeding. In addition, filing a bankruptcy petition before the expiration of a statute of limitations or a redemption period can provide the debtor with an extension of the time period to take action.

Emergency Filing

If a debtor needs to seriously file bankruptcy immediately, there are certainly ways to do so. An emergency bankruptcy filing can provide the protection of the automatic stay right away, so it can be a powerful tool. However, it is only the first step in the process and it will require experience and knowledge to move forward to solve the problems that necessitated the emergency filing in the first place. It simply provides a “time out” to stand up and dust off and figure out the next move. When making such a decision, it is typically advisable to discuss the options with a bankruptcy attorney who has handled these types of cases. That way, the debtor can make sure the emergency filing helps them achieve their long-term goals, rather than simply delay the inevitable for a short time.

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