When is the Best Time to Declare Bankruptcy?

Hi all! Happy November! Hopefully, everyone had a good Halloween and got lots of candy and goodies. Thanksgiving and Christmas are going to be here before we know it. Today I want to keep demystifying bankruptcy and help you all to better understand what is involved with declaring bankruptcy.

So, when is the best time to declare bankruptcy? Unfortunately, there is not one clear answer. Ultimately, it depends on your specific circumstance and what is going to be best for you and your family. However, I will share some tips and tricks for you to figure out “when” filing is the best for you.

1.) When you decide to file, you may realize that you want to delay doing so for a number of reasons. For example, you may still be taking on new debt, have experienced a significant change in income, or have recent financial activities that may negatively impact your case. It is important to evaluate all of these factors before deciding to file.

2.) Because Marcie deals in Chapter 7 Bankruptcy, I want to further address the change in income point. As I have said in previous posts, to be eligible for Ch. 7 bankruptcy you have to pass the means test. This is a test that, “looks at your average income over the last six months. If your income is too high and you don’t pass the means test, you may not qualify for Chapter 7.” This is why it may be a good idea to wait to file if you are about to experience a significant income change.

3.) Chapter 7 bankruptcy offers many who file a fresh start or a “clean slate.” But, it is important to note that the record of your bankruptcy will stay on your credit report for 10 years. That is why it is important to evaluate all current factors in your and your family’s lives because making the choice to file will stay with you for a significant period of time.

4.) Another reason to potentially delay is that you foresee more debts coming your way in the future. Under federal law, there are strict deadlines and waiting periods when it comes to how long you have to wait between filing multiple bankruptcies. If you file Ch. 7, then you must wait eight years before receiving another Chapter 7 discharge. This is just important to be aware of because the law does not allow for any exceptions to this waiting period and you need to make sure when you are filing really is the best time for you and your situation.

5.) Finally, here are some important questions to ask before deciding to file for bankruptcy.

Am I unsure how much I owe?

Will bankruptcy actually resolve my debts?

Do I get frequent calls from bill collectors?

Evaluating these questions and others will help you put your situation into perspective and decide if now is the best time for you to file.

Hopefully, this helped you all better understand the best time for filing bankruptcy and what that can mean for you. As always, please reach out to us with any questions or concerns. We are happy to help!

**Nothing contained in this blog constitutes legal advice of any form. The information and facts included are not a substitute for speaking with an attorney and obtaining legal advice. Please reach out to our office if you have any questions.

Sources: 

https://upsolve.org/learn/delay-filing-bankruptcy/ 

https://www.legalzoom.com/articles/bankruptcy-basics-when-should-you-throw-in-the-towel 

https://www.youngmarrlaw.com/when-to-file-bankruptcy-is-there-a-best-time/