When is the best time to consider bankruptcy?

No one really wants to file for bankruptcy, it’s kind of like admitting you failed. Still, if you’re in a situation where you’ve borrowed more money just to eat and survive, while borrowing more money to pay off previous debts, filing bankruptcy may be a prudent path forward. If you can’t juggle all your current debt and have no near-term prospects of increasing your income, it’s time to at least give this concept some thought.

Going deeper and deeper into debt doesn’t do you any good, and it’s not fair to your current creditors or creditors you might be seeking to “pay Peter back to Paul.” If you keep juggling it for too long, you’re bound to see the whole thing come crashing down. It’s much better if you have plans to go into bankruptcy. If you do it right, you may find that the whole experience is far less painful than you thought.

Filing for bankruptcy will give you a chance to start over

Just imagine how wonderful it would be to get rid of all this debt. Debts that hold you back and don’t allow you to return – get stuck. Imagine all the financial stress disappearing instantly. Maybe it’s time to consider filing for bankruptcy.

This is not a decision you should take lightly, nor is it a move to get out of paying legal debts you have. It’s just that sometimes people get into bad situations. Generally, it’s a chain of events that builds up to lead to a road that ends at a cliff.

There are some assets that you may not be allowed to keep, and some debts that you will not be able to pay off. Tough decisions will need to be made, but if you plan well, this could be the smartest decision you’ll ever make.

Why Hiring a Bankruptcy Lawyer Is Important

There are some things we might be able to do ourselves, but without the right prior experience, can lead to disaster. Filing for bankruptcy could be one of them. The best bankruptcy lawyers will usually give you a short consultation, usually around 30 minutes, for free, explaining the basics of bankruptcy.

You should take advantage of this. Bring your list of problems and a list of all debts and sources of income. You need to know your reality ahead of time in order to get the right answers and ask the right follow-up questions.

If you file for bankruptcy yourself, that’s it. You are only on your own. Bankruptcy courts, judges, trustees are not allowed to advise you and beware of getting advice online. A bankruptcy attorney can look at your specific situation and all of your assets and advise you on which assets you can keep and which you must turn over to the court or your creditors.

A bankruptcy attorney can also advise you which creditors should continue to pay and which creditors should stop paying throughout the process. Also, any tax consequences you will be dealing with or may have.

A lawyer on your side can also be there by your side and on your team as a strong negotiator. Perhaps, you can come to an agreement with your main creditors; auto loan, home loan, credit cards, and the IRS, and let go of bankruptcy? You won’t know unless you ask. Remember that filing for bankruptcy has consequences, but also benefits. Make sure you get the facts.

When is the best time to file for bankruptcy?

After consulting with a bankruptcy attorney and knowing all the relevant information, you will need to strategically plan when to file. This is very important. Why does this matter? Well, depending on the type of bankruptcy you choose, you might use the “income average” format, in which case it’s important when the average starts and stops.

Perhaps, you have real estate that is about to be foreclosed on, and if so, you will want to file paperwork prior to foreclosure. If you’re preparing to modify your mortgage payments, that could also change the best time to file for bankruptcy.

Filing for bankruptcy can become more complicated and expensive if you are in divorce proceedings. Maybe, on the other hand, it does make more sense to you. This is another reason you need an experienced bankruptcy attorney to help you through the process from start to finish.

Do you have huge expenses, unavoidable costs? Do you have future costs that you are already obligated to pay?

Are you being bombarded by credit bureaus chasing money you owe but can’t pay? Are you missing a rent or house payment? Are you using super to pay living expenses and bills? In general, retirement accounts are safe, so you may want to file for bankruptcy before you deplete your retirement accounts, which you’ll obviously need to do later.

In summary

Did you know that the most common time people file for bankruptcy is during the first quarter, after Christmas spending and before taxes are due? Did you know that most people use their tax refunds to partially pay their bankruptcy filings? Some people filed for bankruptcy in the first quarter as a New Year’s resolution to get out of debt.

These may seem like good reasons to choose a first-quarter filing, but they’re certainly not the most important reasons to choose the best time. Call a law firm to talk and work through this together. You need a plan, a plan that makes sense for you.

Why not talk to a bankruptcy attorney about your specific situation and let them help you create a plan. You know what they say; “Sometimes, timing is everything!”

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