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When To Hold Off On Filing For Bankruptcy

When you are drowning in debt, finding the best debt relief option can be a daunting task. To make matters worse, many debt relief options may not always be the best solution for your unique financial situation.

Although bankruptcy can provide asset protection while working to reduce your debt burden, the process can be complicated because it is heavily governed by rules about the filing process. If you have considered filing for bankruptcy, there are a few things you should know about when is and is not a good time to file.

Why You May Have To Wait

Bankruptcy laws dictate strict rules for the filing and completion of the process. The ultimate goal in filing for bankruptcy is to obtain a debt discharge and be alleviated of your debt liabilities either through a debt elimination in Chapter 7 or a debt repayment in Chapter 13. Once the court approves your debt discharge, you are no longer responsible for your debts and the creditors will be required to mark your accounts as having been satisfied. However, obtaining a discharge can be jeopardized by many things.

Previous debt discharges. If you have filed for bankruptcy in the past and had your debts discharged, you may not be eligible to file again for a specified period of time. Bankruptcy laws prevent anyone filing for Chapter 7 to wait (a) 8 years after they received a discharge in a previous Chapter 7 case and (b) 4 years from receiving a previous Chapter 13 discharge. If you are filing for Chapter 13, you cannot file again until (a) 6 years from a previous Chapter 7 discharge or(b) 2 years if you received a discharge under a previous Chapter 13 case.

Previous debt dismissals. If a previous case was dismissed by the court you may be required to wait before filing again. In general, if your case was dismissed due to failure to complete filing requirements or pay the necessary fees, you can re-file after you satisfy the requirements. If the court dismissed your case for suspicion of fraud or other non-logistical reasons, you may be required to wait 180 days before re-filing your case.

Changes to your assets. When filing for bankruptcy protection you will be required to list all of your income and assets in the petition. This includes all of your wages, amounts held in various types of accounts and a list of your personal property that hold value. In some cases, making changes to your assets prior to filing your case may appear suspicious, which the court may deem as fraud. Bankruptcy laws prohibit anyone filers from transferring assets to friends or family members prior to filing.

You may be able to sell assets prior to filing as long as you (a) receive fair market value for the item, (b) claim the income from the sale on your petition and (c) have not spent the money received from the sale of the item. However, even these actions could be questioned by the court, so it is important to keep all of your documents from the sale and be upfront in your filing. A good rule of thumb is that you should wait to file at least 2 years after transferring or selling assets. Read more

2011
09/17
CATEGORY
Bankruptcy
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Choosing a Good Bankruptcy Lawyer

Bankruptcy law is a highly technical area of law. Be wary of attorneys that practice in areas other than bankruptcy law, as staying on top of bankruptcy law changes and updates effectively is difficult enough without also trying to practice additional areas of law competently. Seek an attorney that practices exclusively in the area of consumer bankruptcy law.

A good starting point is the website for the National Association of Consumer Bankruptcy Attorneys. There you can locate an attorney in your area that practices in the area of consumer bankruptcy law. Otherwise, a referral from a friend, family member or co-worker should be the best indicator of a bankruptcy attorney’s reputation.

I would recommend selecting a few attorneys and attending initial consultations with each. Most bankruptcy attorneys will provide a free initial consultation for those considering filing for bankruptcy, and these consultations can be very beneficial to a debtor for a variety of reasons.

A good bankruptcy attorney will first question you thoroughly regarding your financial situation. Don’t be surprised if the consultation takes an hour or longer. The attorney does this to discover if bankruptcy is a good option for your situation. If bankruptcy is an option then what particular chapter would be most beneficial, and if bankruptcy is not the appropriate solution, the attorney can provide advice on viable alternatives that may provide an effective solution to your debt problem. Additionally, the attorney should be able to describe exactly how filing bankruptcy will impact you, both during and after the case. Do not be afraid to ask the attorney if bankruptcy is the best option, and how filing bankruptcy will affect you.

For the most benefit from the initial consultation, make sure you come to the appointment thoroughly prepared. Bringing the following documents with you will enable the attorney to properly provide a comprehensive analysis of your situation:

  • Most recent two years tax returns;
  • preceding six months paystubs;
  • spouses’ paystubs for preceding six months;
  • credit reports;
  • bank statements;
  • statements for the home and vehicles you own; and
  • any court documents you possess. Read more
2011
09/15
CATEGORY
Bankruptcy
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