Is Timing Important When Filing For Bankruptcy?

29 April 2016
 Categories: , Articles


If you have made the decision to file for bankruptcy to get out of the debt trap you are in, the timing of your filing is very important. When you visit a bankruptcy lawyer to discuss your case, he or she is likely to talk to you a lot about timing. Here are some of the ways timing matters when filing for bankruptcy.

Filing At Tax Time Offers A Way To Pay The Fees

Filing for bankruptcy can cost anywhere from $500 to $6,000, and your cost will depend on your individual situation. Lawyers factor in the type of bankruptcy, complexity, and many other things when calculating the fees. If you are in bad financial shape, you probably do not have this kind of money available to use to pay your attorney. This is why a lot of people file around tax time. They wait until they receive their tax refund checks, and they use this money for the bankruptcy fees.

Paying Your Bills First Helps You Drain Your Bank Account

As you near the time you will file, you should plan on filing right after you pay all your bills. The reason for this is to drain your bank account before you file. The money you have in your bank accounts might become assets in your bankruptcy case, and this is why you should pay everything you can with the money you have just before you file. By doing this, your accounts will have low balances, and you may not have to worry about the trustee including these funds as assets in your case.

Waiting Until After A Layoff To Reduce Income or Before A Pay Increase

If you know you will be laid off of your job for a while, waiting a month or two after your layoff might be beneficial for you. To determine which branch of bankruptcy you can use, you will have to run a means test. This compares your income for the last 180 days to the average income of a person in your state. If your income is lower than the allowed amount in your state, you can qualify for Chapter 7 bankruptcy, which is often the better branch of bankruptcy to use.

You should also plan accordingly if you think you will be getting a raise at your job. This raise may push your income over the median income amount, so you may want to file before the raise takes effect.

Waiting For Your Home Modification To Go Through

If you are behind on your mortgage payments and are currently working with your lender on a home modification plan, you should wait to file for bankruptcy until the plan is complete. If you are behind on your mortgage, you could lose your home if you file Chapter 7 bankruptcy. By waiting until the modification is approved and in place, you will probably be able to reaffirm this debt and keep your house.

Waiting Until After You Received New Debts

If you are expecting a large bill to come in the mail at any time, you may want to wait to file until after you have received this. The only debts you can have discharged in bankruptcy are those that you owed on or before the date you filed for bankruptcy. If you file and then rack up a new bill tomorrow, you most likely will not be able to include it in your bankruptcy.

Planning Accordingly If You Received A Large Sum of Money

Finally, if you received a large sum of money from a lawsuit settlement, inheritance, or lottery, you should wait at least six months to file for bankruptcy. By waiting, this money will not be included in your income when running the means test. The only way to get around this is to take the money you receive and spend it all on necessary items. This could include car repairs, tuition payments, utility bills, or medical bills.

Timing is important for these reasons and many more when filing for bankruptcy. To learn more, schedule an appointment with a family attorney in your area today, such as Sanoba Karie L Attorney.