Filing For Bankruptcy Considerations
A question I am often asked by clients is “When do I file for bankruptcy?” If you are considering bankruptcy, it is important to time the bankruptcy filing so that you can take the most advantage of the benefits of bankruptcy, and avoid the pitfalls created by filing too early or too late. There are many reasons why delaying or accelerating filing for bankruptcy may be beneficial. For example, if you are expecting to incur necessary expenses that would be dischargeable in bankruptcy, such as medical bills, then it is advisable to delay the filing until after you incur these expenses. That way, you can discharge these expenses through the bankruptcy.
Another common reason to delay filing is if a presumption of non-dischargeability applies to a certain debt you owe because it was recently incurred. For example, under the Bankruptcy Code, consumer debts over $550 for “luxury goods or services” are presumed non-dischargeable if incurred within 90 days before the bankruptcy filing. Delaying bankruptcy in such cases may make it easier to show that the debt is dischargeable.
On the other hand, a bankruptcy filing may need to be accelerated if you are trying to protect your interest in property that may be taken away by a creditor. The most common example of this is if you are trying to protect your home from a foreclosure. While bankruptcy can help you save your home from a foreclosure, in most cases it will only work if you file before the foreclosure takes place. If you file too late, after the foreclosure already took place (even if you file later on the same day), you will not be able to keep your home in almost every case.
Ultimately, however, you will need to consult with an experienced bankruptcy attorney to determine when you should file for bankruptcy (If you are in Southern Arizona, you will need a Tucson bankruptcy attorney, as your case will need to be filed in Tucson). The biggest mistake most people make is trying to deal with their debt problems on their own until the very last moment. They usually only seek professional advice when they are faced with an imminent and cataclysmic threat, such as a foreclosure or a collection action by a creditor. Unfortunately, at that point it is often too late to fully take advantage of the benefits bankruptcy can offer, and in extreme cases bankruptcy may no longer offer any benefits at all. Keep in mind also that in most cases an attorney will need time to prepare the necessary documents to file for bankruptcy, so you want to make sure that you start the process early enough to give your attorney the time to properly prepare your case. Therefore, my best recommendation is to seek professional advice as soon as your debt problems begin, so that you know all your options and can plan ahead. Most bankruptcy attorneys offer a free consultation.
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