Bankruptcy & Timing
When a clients come to you about filing Bankruptcy it should be all about timing. Sometimes, waiting to file makes good sense and will save the debtor a lot of headaches and some significant debt. Sometimes, however, the time to file is as soon as possible.
Let’s look at six reasons to file now; and six reasons to wait:
File now when:
1. Your house is appreciating and may exceed the homestead amount if you wait;
2. Your house is appreciating and you can strip a wholly-unsecured second deed of trust now, but might not be able to in a few months;
3. You are expecting a significant raise or you just got a good job;
4. You are anticipating a change in your marital status and want this done beforehand;
5. You just want to get started on being debt-free; or
6. You want to avoid litigation or collection annoyances.
File later when:
1. You just got a bonus from work and it significantly affects your income level;
2. You are anticipating some significant medical treatment and aren’t sure if your health insurance will cover all of the associated costs;
3. You need a new car and want to pay lower interest while your credit is still good;
4. You are expecting a change in your marital status and want to wait until that is resolved;
5. You gave something of value away and need to wait until it is no longer an issue in a bankruptcy case; or
6. You have income tax debt that could be discharged if you wait the requisite amount of time.
These lists are far from complete. There are many other reasons for filing now or later.
The key here is to remember that timing is everything. Consult a competent bankruptcy attorney as soon as you can to help determine the right time to file.