Choosing the Right Time to File For Bankruptcy
Filing Bankruptcy Now
If you are facing imminent foreclosure of your home or other real estate, repossession of your car or boat or seizure of your business assets, you should consult a bankruptcy attorney who may need to file your bankruptcy immediately so you can keep your property.
If the IRS is about to levy your bank or other accounts or garnish your wages, the filing of a bankruptcy case usually stops levies and garnishments before they occur. Where a levy or garnishment has already occurred, filing for bankruptcy usually ends both actions.
If you are thinking about moving to another state, you may want to file a bankruptcy case before you do. Moving from one state to another can significantly change the outcome of a bankruptcy.
There are other reasons to file for bankruptcy sooner rather than later. If you were unemployed or underemployed for a period of time in the last six months and you are now working again or earning more money, you may be in a better position to pass the Means Test and qualify for Chapter 7 by filing sooner rather than later.
Filing a Bankruptcy Later
There are many valid reasons to delay filing for bankruptcy. If you need tax relief, your bankruptcy attorney must determine precisely the first date when you can file your bankruptcy case to eliminate some or all of your tax liabilities. The timing can vary significantly from case to case.
If you think you may incur more debt in the near future or you recently moved to Massachusetts or New Hampshire and want to take advantage of either state's exemptions, delaying your bankruptcy filing may make sense. State exemptions that can protect your property from seizure by your creditors vary widely from state to state.
If you recently lost your job or are now underemployed and making less than you did in the previous six months, it may benefit you to wait to file for bankruptcy so you can qualify for Chapter 7. Calculations under the Means Test can be complicated and should be done by your bankruptcy attorney.