Just like stand-up comedy and batting in baseball, filing bankruptcy is all about timing.
Timing your bankruptcy filing is no different.
File bankruptcy too early, or too late, and you risk losing assets or advantages that better timing could have assured.
Admittedly, you don’t always have the luxury of filing bankruptcy on your own schedule. But for those who can plan ahead, better bankruptcy outcomes are available.
When IS right time to file bankruptcy
Bankruptcy law measures lots of rights with reference to events occurring before filing. Some of these rights involve you, the debtor. Other rights belong to the bankruptcy trustee, or your creditors.
These time periods affect
- Discharging taxes
- Tax refunds
- Clawbacks of money transfers
- Eligibility to file bankruptcy
- The amount of your Chapter 13 payment
File bankruptcy before
The most common and avoidable mistake in bankruptcy is waiting too long to file. Filing sooner can avoid
- Spending money you could keep if you filed bankruptcy
- Enduring stress caused by debt
- Creditors get liens you can’t avoid
File bankruptcy after
Some events you want behind you before you file. Usually, you want to know that the worse of the debt is behind you. File bankruptcy when
- Finances are improving
- Tax year is closed
- Receipt of one time income event
- Payments to insiders have aged
- You’re over a health crisis
It doesn’t take much to realize that each of these timing issues are complicated. And each issue interacts differently with other timing issues.
Sometimes you have to weigh some circumstances that suggest an immediate filing against others suggest waiting.
Weighing those competing factors is what a good bankruptcy attorney does for you.
Nationally recognized financial writer Liz Weston had thoughts about considering bankruptcy. Her thoughts boil down to plan ahead. Get advice early, so you can pick the time that’s right.
Any attorney can fill out the forms for you. Skilled attorneys understand what the information in those forms means for the outcome of your case.
Just as importantly, skilled attorneys help you understand the pro’s and con’s of filing at any particular time so you can pick the right time to file bankruptcy.