When To File Bankruptcy

The timing of a bankruptcy petition can be critical to how useful the bankruptcy is to any particular debtor. If timing is not a significant issue, then this article will serve only to reinforce the fact that it does not really matter whether you file today, tomorrow or next week.

But many debtors need to have this factor analyzed so they can take full advantage of their legal rights under the bankruptcy code. A bankruptcy can be used as a trampoline to catapult you back into financial stability. If not used correctly, however, many people will continue to struggle even after getting rid of much of their debt.

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So, when should a person file? Of course it depends on a hundred different factors, but there are some general baselines. If you are about to have your paycheck garnished, then this is a factor that leans towards filing immediately.

If you have scheduled surgeries that will result in medical bills, then this factor is one that leans towards delaying a bankruptcy. These are pretty simple baselines. If you have both a garnishment and upcoming medical bills, then this is where your attorney can help you figure out how to proceed.

Finding a new job that is going to provide you with a significant income is another factor that is important to analyze. This leans heavily in the direction of filing sooner rather than later. Many people find themselves in a situation where they had a high paying job, but have been unemployed for perhaps a couple of years.

These people may run into a new position but have so much debt, that climbing out of it is still very hard to do. But if we wait too long, then we may be unable to pass the means test and will be stuck in a very onerous Chapter 13 plan.

Another huge factor that needs to be analyzed is whether or not you are going to be facing foreclosure on a home. What follows is the best way to use a bankruptcy in the case of a person who does not wish to keep their home.

Default on the loan. Begin saving money that used to go to the mortgage. Eventually at some unknown future date, the bank will foreclose. This is a minimum of four months and could extend out much farther.
Then, on the eve of the foreclosure, file bankruptcy. This will halt the foreclosure and most likely give you many more months in the home. The bank cannot foreclose on you during the bankruptcy court without permission from the court.

Once the bankruptcy is over, then the bank needs to begin foreclosure proceedings again. This is another four months before the house is actually foreclosed upon.

Using a bankruptcy properly can extend a stay in your house, without paying the mortgage, for many months. This would allow you to build up a savings account and find financial stability through strategic use of your bankruptcy.

By analyzing these factors, you can determine when a bankruptcy is going to be most advantageous for you. And if timing matters, a properly filed bankruptcy truly can be much more of a weapon used to secure your financial stability than if a bankruptcy is filed at the wrong time.

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