When I started getting into trouble I became pretty acclimated to legal procedures. Calling my attorney and working out bail was just another way to spend a Saturday night. Unfortunately, the stiffer the charges, the more difficult it was to talk my way out of a bad situation. After so many charges, I found myself slapped with a long jail sentence, and I realized that I wanted to turn things around. Fortunately, my lawyer was able to walk me through yet another process, so that I could make the right changes. My blog discusses how to emotionally cope with legal issues so that you can start living a good life.
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If it's become clear that you need to consider bankruptcy, you may have had one of two reactions. On the one hand, you may want to treat it like ripping off a bandage — the sooner you get it over with, the better. On the other hand, your instinct may be to put it off and hope the situation eventually resolves itself. However, deciding exactly when to file bankruptcy shouldn't depend on how you feel about the bankruptcy, but on whether it makes strategic financial sense to file now or wait a while longer. Take a look at some of the times when you should file right away, and when it might make more sense to delay your filing for a bit.
When You're Facing Foreclosure or Repossession
Are you in imminent danger of losing your house, your car, or both? If so, then you should probably file for bankruptcy as quickly as you can. A Chapter 13 bankruptcy comes with an automatic stay of all collection attempts, and that includes foreclosures and repossessions.
A Chapter 13 bankruptcy involves making a payment plan for all of the debts that you owe, and that includes your home and car loans. Your plan will include bringing your mortgage current and paying off your car loan. That means you'll be given the chance to catch up and hang on to your property. When it comes to car payments, you may even be able to stretch out the payment schedule, resulting in lower monthly payments, or if your car is old enough, reduce the interest rate that you're paying.
The automatic stay will also stop bank levies and garnishments, and it will stop litigation against you for unpaid debts.
When You've Filed Bankruptcy Before
If this isn't your first bankruptcy, you may need to wait for some time to pass before filing another one. Technically, there's no minimum time limit between bankruptcy filings, but there is a time limit between bankruptcy discharges. So, if you've had your debts discharged before and the time limit hasn't passed yet, you can file, but you can't get a discharge.
The time limit between two successive Chapter 7 bankruptcy discharges is eight years, and the time limit between two successive Chapter 13 discharges is two years. If you filed for a Chapter 13 previously and plan to file a Chapter 7 this time, you'll need to wait at least six years, and if you filed a chapter 7 first, but want a Chapter 13 this time, you'll have to wait for four years.
If that sounds complicated, it can get even more complicated when you realize that sometimes Chapter 13 bankruptcy plans aren't approved, necessitating a switch to a Chapter 7 plan — this means that if you've waited the two years required between successive Chapter 13 bankruptcies, but your Chapter 13 plan has to be converted to a Chapter 7, you may not qualify because you haven't waited for the six years required between a Chapter 13 followed by a Chapter 7. This is why it's very important to get a bankruptcy attorney's input on the timing of your bankruptcy.
When You've Recently Made a Large Purchase on Credit
It's usually a bad idea to file bankruptcy shortly after making a large purchase or running up a line of credit. The bankruptcy court doesn't necessarily have to include all the debts you list into your discharge — debts incurred too close to your filing date may not be included in your discharge.
What's more, incurring a large debt too close to your filing date could be construed as an attempt at fraud, especially if the purchase is something extravagant, like a vacation or a luxury vehicle. A judge could conclude that you knowingly ran up a debt that you never intended to pay. While rare, people do try this, and you don't want to be mistaken for one of them. It's best to avoid large purchases that aren't necessary if you suspect that a bankruptcy is on the horizon, and if you have one of those purchases in your recent past, your bankruptcy attorney may recommend waiting to file.
As you can see, the timing of a bankruptcy can be a delicate issue. An experienced bankruptcy attorney can help you decide when the time is right for you to file for bankruptcy.
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