Bankruptcy is a big step for most Americans. Your struggle with debt has probably been exhausting, expensive, and ongoing. But once you do make the difficult decision to file for bankruptcy protection, now may not be the best time to do so.
In some cases, you would do well to delay filing your case for a few important — and time-sensitive — reasons. Here are some examples to help you find the best path forward for yourself.
1. To Lower Average Income
Has your income recently gone down dramatically? If so, factor in the six-month average of your earnings. High-income earners may be barred from filing Chapter 7 or may see a higher monthly repayment amount in Chapter 13. Waiting long enough to lower your average income could solve both problems.
2. To Pay Down an Asset
Each state's and the federal bankruptcy rules permit debtors to exempt some assets up to the allowed amounts. If you want to save an asset (such as your home or car) it's vital to know if its equity is below that threshold. If not, could you wait until the equity falls below it? This may be a realistic goal but is not always.
3. To Spend a Tax Refund
During tax filing season, anyone who anticipates or has recently received a refund may want to consider carefully how to use it. If you get the refund and spend it down normally for standard living expenses, you've received full benefit from it. File Chapter 7 too early, and your check will go to creditors.
4. To Sell an Asset
Most of your assets going into Chapter 7 bankruptcy could be used to pay off creditors. If the trustee is likely to liquidate a particular asset and pay your debts, you may do well to use that money yourself now. Selling the asset and using the money for normal living expenses allows you full use of it.
5. To Await Additional Debt
Finally, be sure you have all debts accounted for before filing bankruptcy. This is often an issue for those claiming bankruptcy over medical debts. Bills may come in for months or even years after a major health crisis. Make sure you have as much accounted for as possible since debts received after filing may not be included.
Where to Learn More
The timing of your bankruptcy claim is often just as important as its protection. Contact a bankruptcy lawyer for more information.
Share23 February 2023
When I was a child, I regularly visited a local department store. At this lovely business establishment, one could purchase many items including clothing, shoes, and even hotdogs. Sadly, due to competition and other factors, the store closed its doors for the last time several years ago. If the owners of the store had considered bankruptcy options, they might still be meeting customers’ needs today. On this blog, you will learn how to resurrect your business with available bankruptcy alternatives. Regardless of whether you choose to liquidate your assets or reorganize your entity, the opportunity to remain in operation might be an option for you.