7 reasons why the timing of your bankruptcy filing is crucial
August 3, 2010 Leave a comment
Over the years I have seen that time and time again the timing of the filing of the bankruptcy is crucial for a debtor to receive the most out of the bankruptcy as he or she possible can. Your filing discharges all debts before you file. You can amend and add debts during the bankruptcy but after it’s closed it’s more difficult.
1) If you are going to incur some unavoidable debt– in the near future you don’t want to file too soon. You may want to wait until after the debt has been incurred. Many people have a medical issue like an upcoming operation that is going to occur in the near future. If that is the case then it is best to wait until that medical procedure is finished and you are billed for it. Then we can add the debt to the bankruptcy and the debt can be discharged.
So if you have debts that will be incurred in the near future it is a good idea to wait to file so you can include them in the bankruptcy.
2) If it has been less than 8 years since you file a chapter 7- Then you want to wait until the 8 years elapses before you file again. If you file too soon the case will be dismissed. We need to carefully examine when your last filing occurred before we file for you again.
3) If some creditor has sued you– then you want to be sure to file in around 30 days after the suit was served on you (not 30 days after the suit was filed). So try to remember when you were served with the suit and you have 30 days from that day to file the bankruptcy before the creditor can default you and begin to attempt to collect on your debt.
4) If foreclosure has been started then you want to probably get the maximum time to stay in your house. In this case you want to wait to file until the last possible day before the trustee sale where your house will be sold. A filing the day before the sale will stop the sale and the creditor will have to file a motion for relief from stay to proceed with the sale. From my experience this will delay the sale for around two more months on average in a chapter 7.
If you file a chapter 13 you can stop the sale but if you want to keep your house then you would have to have sufficient income to pay for it and in addition you would need disposable income to at least partially pay your unsecured creditors.
5) If you are currently unemployed or underemployed and you believe that you might get a higher paying job in the future then you might want to file soon. It is possible that the new job could pay you sufficient income that you would fail the means test and thus lose your ability to file a chapter 7 because you waited.
I have encountered this case a few times and would be a shame to not file quickly here. To lose a chapter 7 can mean that you would be in a 13 where for up to five years you would be paying debts you could have discharged if you filed sooner.
6) If you have recently charged some large amount on your credit card then you might want to wait for some time to elapse so that this charge ages. This also occurs with cash advances. Both can invite a fraud challenge from a credit card company if the charges are too large and too soon before the bankruptcy filing.
Here I like to look at the charges and see when they were made, for how much, for what purpose, and how recently. I analyze the risk of filing on a case by case basis.
7) If you just want to get started re-building your credit then you would want to push the bankruptcy forward and file right away.
I am a bankruptcy lawyer in San Diego.
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