When should you file for bankruptcy?
Posted on Monday, January 31st, 2022 at 2:02 pm
If you are considering filing for bankruptcy, there are some timing considerations you need to understand before you can determine if you should wait to file, or if this is an urgent situation that requires you to move fast.
Reasons to Move Fast
- Home foreclosure. Filing for bankruptcy can stop a foreclosure and give you more time to repay your past-due mortgage balance through Chapter 13. Such a cure may be possible even after the foreclosure, if the sale process has not been completed.
- Auto repossession. If your vehicle is being repossessed, filing for bankruptcy can help you keep your vehicle, save money on your vehicle loan balance, and reduce your interest rate.
- Avoid garnishments, eviction, execution sale, or utility shut-off. Most people’s finances cannot survive garnishment. An immediate filing may be the only way to stop a state court proceeding, put an end to garnishments, stop an eviction or execution sale, or stop utility shut-off.
Reasons to Wait
- Judgment Proof. If you are currently “judgment-proof”, meaning you have no property in your name and no paycheck coming to you, there may be little advantage to filing at a time when the creditor’s attempts to collect will not result in the loss of your property or income.
- Domiciliary requirements. The timing of the bankruptcy may affect which state’s exemption law you are entitled to use based on the place you are currently living. If you have recently moved, you may still be required to file in your previous state or use that state’s exemptions. This could make your bankruptcy case more complicated or difficult to manage depending on where you have moved and in some situations, this may be the best option for you. A bankruptcy attorney may suggest waiting a certain period of time to file to allow you to do so in your new state of residence.
When you work with our law firm, you can count on receiving the legal representation necessary to answer these questions in more detail and others that you might have while considering filing for bankruptcy. We are here to help you get a fresh financial start.