Bankruptcy Timing is Important

Once you’ve decided to file bankruptcy, you may already feel a huge weight lifted off your shoulders. Part of that will come from simply having made the decision to liquidate your debts and move on with your life. Another part will come from being able to tell creditors that you’re in the process of filing, which usually cuts their calls short. (They’ll often ask your attorney’s name and contact information, and that’s all.)

After deciding to file bankruptcy, many people are understandably anxious to have their attorneys file their petitions quickly and get done with it. However, timing is important, as your attorney should advise you. That’s because you want to make the most of your bankruptcy relief.

Three Keys to Proper Bankruptcy Timing
Deciding when to file a Chapter 7 bankruptcy depends on your circumstances:

• A delayed filing can help you benefit from a future exemption or take advantage of an anticipated bonus or tax refund. You can then spend it by making house repairs or stocking up on food and other household goods that won’t become part of your bankruptcy estate and the court won’t question.  Also, because the trustee will review your records for the past year and look for any preferential payments – payments deemed to be attempts to minimize your bankruptcy estate – it can be wise to delay filing for a few months so any such payment (or apparent payment) can age longer.
•  A fast filing can help keep creditors from foreclosing or seizing property. Filing creates an automatic stay of foreclosure proceedings until the bankruptcy is complete.
• Tax issues such as liens should be cleared if at all possible, so they don’t make filing bankruptcy more complex. Tax liabilities are generally not dis-chargeable debts. Discussed this with your attorney.

Other factors can come into play in deciding the timing of a bankruptcy. If a debtor’s in the middle of a divorce, bankruptcy can stop activities related to the settlement. If other litigation is pending or in progress, bankruptcy can affect where and how the matter is decided. Filing sooner rather than later could put the litigation issue in federal court instead of state court. Conversely, filing later could keep the legal matter in the state court where the debtor might get a more favorable ruling

Tags: bankruptcy, bankruptcy relief, Chapter 7 bankruptcy, filing bankruptcy, Proper Bankruptcy Timing

Posted in What Does Bankruptcy Mean To You