When Should You Wait to File for Bankruptcy? In a simpler world, a single day, week, or month of the year would be designated as the “best time” or “worst time” to file for bankruptcy. However, the world we live in is anything but simple, and neither is the matter of filing for bankruptcy. While January might be an ideal time for one individual to declare bankruptcy, it could be financially unwise for another, and vice versa. Regardless of whether (s)he intends to file for Chapter 7 or Chapter 13 bankruptcy, every single debtor in California has his or her own unique set of debt considerations, financial goals, and life circumstances, which is just part of the reason it is so crucial to assess your situation in depth with an experienced bankruptcy attorney before you decide to file – or, for that matter, before you decide you should delay filing. There is no replacement for a detailed consultation with a California Chapter 7 bankruptcy attorney, and this article is not intended to serve as legal advice. However, with that caveat in mind, the information presented here can help give you a clearer idea of when to hit the brakes – or step on the gas – if you’re thinking about declaring bankruptcy. Do either of the following scenarios describe you? If so, you may want to wait to file.
You just lost a high-paying job, but you would like to file for Chapter 7 bankruptcy. There are two main types of bankruptcy for addressing consumer debt: Chapter 7 and Chapter 13, the latter of which is geared toward debtors who possess greater resources. Your resources are evaluated by a “means test,” which dates back six months. The financial impact of a recent job loss will not be accurately reflected, so it may make sense to wait until additional time has passed.
You expect a large expense in the future. When you file for bankruptcy, only your existing debts are, depending on the type of debt, eligible for discharge. If you know that you will incur a major expense in the future – for example, if you know that you will have large medical bills later in the year – it makes sense to wait until afterward to file.
3 Reasons to Consider Filing for Chapter 7 or 13 Bankruptcy in January 2017 Now that you’ve seen some of the reasons to delay a bankruptcy filing, let’s switch gears and examine some scenarios in which it makes sense to file for bankruptcy in January – or at least, in your near future.
You’re going to move to another state. Contrary to the common myth that “you lose everything” when you file for bankruptcy, you are actually permitted to protect a portion of your property by using exemptions. There are two sets of exemptions: state exemptions, which differ from state to state, and federal exemptions, which are consistent throughout the country. Some states, like California, require debtors to select the state exemptions, while others permit a choice. If you know that you are moving to a state where the exemptions are less favorable, it may be prudent to declare bankruptcy soon, so that you can get the benefit of the more generous exemptions available where you currently live.
You anticipate a bonus or inheritance. You must prepare a comprehensive list of your assets and property when you file for bankruptcy, and if a resource is not protected by an exemption, the trustee appointed to your case may apply it toward repaying your debts. You may, therefore, wish to consider filing before your resources increase.
You need immediate protection from foreclosure or repossession. Bankruptcy brings into rapid effect a court injunction called “the automatic stay,” which, generally speaking, temporarily protects you from collection actions. The automatic stay can stop or delay foreclosure or repossession, which will, at the very least, give you time to create a plan for the future.