When is the Best Time to File Bankruptcy?
If you’re wondering whether bankruptcy can help or is right for you, this post is for you. Filing for bankruptcy can be a daunting decision, often accompanied by feelings of anxiety and uncertainty. However, understanding the right timing can make a significant difference in your financial future. Here are some insights to help you determine when might be the best time for you to file for bankruptcy.
Understanding Bankruptcy in Pennsylvania
Bankruptcy is a legal process designed to help individuals or businesses eliminate or repay their debts under the protection of the federal bankruptcy court. In Pennsylvania, the two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy:
This type allows individuals to discharge most of their unsecured debts, such as credit card debt and medical bills. However, it requires passing a means test, which assesses your income and expenses.
Chapter 13 Bankruptcy:
This option is for individuals with a regular income who want to create a repayment plan to pay back all or part of their debts over three to five years. It allows you to keep your property while repaying your debts.
A bankruptcy filing stops foreclosures, evictions, repossessions, utility shut-offs, wage garnishments and other collection actions in their tracks. It discharges your liability for most debts and prevents seizures of your home, car and household goods. It’s a powerful tool for folks dealing with credit problems.
Its Never Too Early to Consider Bankruptcy
While its sometimes too early to actually file bankruptcy, its never too early to find out of bankruptcy is a good option. Its helpful to have time to be ready to file. Filing might be too late after a foreclosure sale or seizure of a bank account. Bankruptcy can stop pending evictions, creditor lawsuits and foreclosures. But there are fewer rights in bankruptcy after a court has ordered the eviction.
Last Minute Filing Options
While planning in advance is best, there are options if you seek help at the last minute before a foreclosure, repossession, eviction or garnishment. Bankruptcies in an emergency can be filed with very little preparation by completing a brief petition, a statement of your social security number and a list of the names and addresses of your creditors. Additional forms must be completed shortly after the emergency filing.
When to Wait to File
If you are not facing immediate loss of your home, car or wages but its likely that you’ll incur debt you cannot repay in the near future, a bankruptcy filing should be delayed until those new debts are incurred or you’re beyond your ability to handle those debts. New debts incurred after filing bankruptcy are not discharged in that case. For example, if the source of credit problems is a medical problem and the associated bills, it is better to wait until the medical condition is resolved before filing. If you file while you’re still incurring expenses, the expenses incurred after filing will not be discharged in the bankruptcy case.
Don’t Go on a Spending Spree Before Filing
If you can discharge debts in bankruptcy, you might be tempted to go on a spending spree thinking you’ll never have to pay the bills if you file. That’s a bad plan. In a chapter 7 bankruptcy, debts incurred in this way may be declared as nondischargeable.
Deciding when to file for bankruptcy is a significant decision that should not be taken lightly. If you find yourself in a position of overwhelming debt, facing collection actions, or struggling to pay bills, it may be time to consider your options. Consulting with Fiffik Law Group’s knowledgeable bankruptcy attorneys in Pennsylvania can provide you with the guidance needed to make an informed decision about the best time to file.
Remember, bankruptcy is not a failure but rather a tool to help you regain control of your financial future. By understanding the indicators that suggest it might be time to file, you can take proactive steps toward rebuilding your financial life. If you havec questions or need assistance, don’t hesitate to reach out for a consultation. Your fresh start may be just around the corner.