The timing of a bankruptcy is often the most important decision to insure that a debtor gets the full benefit of the filing and the discharge. In a Chapter 13 case, where a debtor is restructuring their debt, the time to file may depend on how close a lender is to foreclosing on the home, or repossessing the car. Often, a Chapter 13 case is designed to stop creditor actions while there is still time to set up a plan to pay back missed payments on a secured loan. If an individual waits too long to file the bankruptcy, a foreclosure may occur and it will be too late to reorganize the debt and keep the home.
In Chapter 7 cases, there are several things to consider when determining the best time to file bankruptcy:
• Are there existing lawsuits that may result in a judgment soon?
• Are any creditors attempting a wage garnishment or bank levy that needs to be stopped quickly?
• Are all the assets of the debtor exempt (protected)? If not, it may be wise to use the assets in the debtor’s favor prior to filing to avoid liquidation.
• Has the debtor used credit recently in a way that might cause a creditor to challenge the discharge on that particular debt? If so, it may be better to wait a few months to file the case.
• Are there tax debts that are too recent to discharge now, but which may be dischargeable in the coming months if the debtor waits to file?
• Pending foreclosures and/or repossessions may also be considered, but Chapter 7 often has little impact on secured debts except to delay creditor actions. However, a short delay may be what the debtor needs to bring some loan(s) current, especially if the unsecured debt will be eliminated.
There are times when a debtor has two or more conflicting issues. One factor might suggest that waiting to file would be best, while another could indicate a benefit to filing right away. In those situations, the debtor and his/her attorney can evaluate the best course of action by considering the options and what the likely result would be from each option.
An individual who is unsure about whether it is the right time to file a bankruptcy, or when the best time would be, should consult with an attorney to evaluate the available options.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com .