For many debtors, making the decision to declare bankruptcy is the easy part. Determining precisely when to commence the proceedings, on the other hand, often poses a challenge. Naturally, the best time to file your petition will depend on the circumstances. There are a few considerations to keep in mind, though.
When Should You File Right Away?
1. Your Situation Gets Worse With Every Passing Month
If your financial situation only gets more dire with every month that passes, it may be wise to file sooner rather than later. With every missed payment, your credit score will take hit, and you’ll receive even more phone calls, letters, and emails from lenders demanding payment.
2. You’re at Risk of Losing Your Home
If you’re facing foreclosure or eviction, declaring bankruptcy will enact an automatic stay. This prevents creditors from taking legal action to collect on your debts. While it may not be able to stop a foreclosure or eviction altogether, it could provide the breathing room you need to catch up on past due bills.
3. You’re Getting Divorced
If you plan on filing for both bankruptcy and divorce, there are several scenarios in which it makes sense to pursue bankruptcy first. For example, if you file for Chapter 7, it could simplify the divorce proceedings considerably by liquidating all nonexempt assets and discharging applicable debts for both you and your spouse. It will also allow you to share all court costs and legal fees.
When Should You Put Off Filing?
1. You’re Anticipating a Change in Circumstances
If you’re relatively certain your financial situation will change in the coming months, it may be possible to catch up without discharging any debt. For example, if you recently earned credentials that will allow you to pursue a higher paying job, consider looking for such positions to see what kinds of opportunities are out there before resorting to bankruptcy.
2. Your Debt Is Manageable
If your debt is currently manageable as long as you stick to a strict budget, using a little discipline to pay it down may be the answer. Should an unanticipated expense arise that pushes you over the edge, though, you can always reconsider bankruptcy then.
3. You’re Getting Divorced
If you want to end your marriage and file Chapter 13 bankruptcy, it’s typically wise to proceed with the divorce first. Chapter 13 requires a three- to five-year repayment plan, which will have to be modified during the divorce proceedings if you implement it first because your household income will inevitably change.
If you’ve decided to declare bankruptcy, turn to The Gil Law Firm in Dothan, AL, for help navigating the proceedings. Representing individuals throughout Alabama, Florida, and Georgia since 2000, this firm is proud to help clients regain their financial footing. Their areas of focus include bankruptcy, personal injury, and Social Security disability law. To learn more about the knowledgeable attorneys that make up their tireless team, visit their website. To request a consultation, call (334) 673-0100.