Timing Your Bankruptcy Filing
The saying timing is everything has merit for many situations in life and also holds true for filing bankruptcy. It is important not to wait too long until your world comes crashing down on you before resorting to bankruptcy. However, filing too soon may also deprive you of many advantages. Discussing your finances with a seasoned bankruptcy lawyer allows you to put your finances into perspective, rely on the attorney's knowledge, and plan the best timing for filing bankruptcy.
Waiting too long to file
When your house is in foreclosure, the bank is about to repossess your car, and creditors have garnished your wages or filed lawsuits against you, it is safe to say you waited too long. Bankruptcy can still help you, but you subjected yourself to overwhelming stress that you most likely could have avoided.
Early signs of uncontrollable debt are often signals to consult a bankruptcy lawyer. Experienced bankruptcy attorneys only steer you in the direction of bankruptcy when it is the best option and other remedies cannot resolve your financial troubles.
Once you file your bankruptcy petition, an automatic stay (http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Glossary.aspx) holds off creditors and can bring tremendous relief.
Filing too soon
Because the Bankruptcy Code limits debtors from filing a second bankruptcy anytime soon, you want to be sure that bankruptcy you file discharges your most pressing debts. For example, when debt is already unmanageable, but you know that you or a dependent family member has an upcoming surgery or childbirth is soon to occur, it may be better to wait before filing bankruptcy. Medical debts are dischargeable through bankruptcy and filing before these debts arise would not include these anticipated debts.
Another example of filing too soon is when you know that a tax refund or inheritance can provide significant income. You can use that money as a resource to pay down debts that a bankruptcy would not discharge, such as a student loan or child support. If you filed bankruptcy and the money came in, then the trustee might use it to pay creditors for debts that the bankruptcy would otherwise reduce or discharge.
Consult a bankruptcy lawyer to plan the right timing for your situation.