It’s normal for people to not run out and immediately file bankruptcy when financial issues first appear. However, when is the best time to file bankruptcy is a great question? This question is common, but the answer is unique to each circumstance. To get an idea of what might work for you, this article sets out some guiding principles on when filing is probably wise.
Common Reasons to File Bankruptcy
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Garnishments
When you find yourself facing garnishment as a remedy, it is a good indicator bankruptcy is a valid option. Garnishments occur mainly when you are the defendant in a lawsuit and the judge rules in favor of your creditor. The creditor may then take a portion of your paycheck or bank account monies. This will continue until the debt, plus any interest on it, has a zero balance. Garnishments end immediately upon filing bankruptcy. As far as garnishments are concerned the best time to file bankruptcy is before they hit your paycheck. But, in the event they’ve already started filing your bankruptcy will still stop the garnishment in its tracks.
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Repossessions
Repossessions are also a significant indicator that you may want to file bankruptcy. Creditor will sometimes seize vehicles or other property. This happens when you fall behind on your payments. The creditors will then re-sale the item and keep any money from the sell. This off-sets what you owe, but if it does not pay the full amount then you are liable for the remainder. At this point you do not have the property, but you could still pay on it. If you do not keep paying, the auto-lenders or other property creditors may file lawsuits for garnishments.
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Foreclosure
Facing foreclosure or the threat of it could be critical in deciding to file bankruptcy. In this instance, you have a couple of options. First, you can file a Chapter 7. This will allow you to either return the house to the bank wiping out debt, or keep the home and continue to make payments while getting rid of other debt. Second, you can file a Chapter 13. This will allow you to keep your home. It will also stop any sheriff’s sale that may be scheduled. You must though, file the Chapter 13 before the sale.
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Right Timing for You
If you are not facing any of these immediate triggers, then your decision on when to file bankruptcy is flexible. It mainly depends on the confidence you have in your financial situation. As long as you feel comfortable that you can pay off your bills and still have some financial stability, then you may have time to wait and consider. But, if you are drowning in debt and cannot get ahead, you may want to consider filing soon. Examples of this may be using one credit card to pay off another, or continuously taking cash advances.
Help Deciding The Best Time to File Bankruptcy
The decision to file bankruptcy can be a difficult one. Our attorneys understand the process and make it as painless and simple for you as possible. Further, our first consultation is free. This means that you can speak with us before deciding and paying to file. Call us today at 918.379.4872.
