Considerations In Timing Your Bankruptcy
There are items when the need to file for bankruptcy is immediate. But in other situations, there is some flexibility when it comes to the best time to file. Timing your bankruptcy filing the right way can often mean the difference between losing or keeping valuable assets or property.
One thing to consider is your income, including income that is sitting in your bank account. This matters for two reasons.
The first is that if you make too much money, you may not be able to file for Chapter 7 bankruptcy. The other reason is that some or all of the money that is sitting in your bank account, can be considered an asset which, if it can’t be exempted, can be lost in your bankruptcy case filing.
Bankruptcy looks back and takes your average income for the 6 months prior to your filing. Therefore, lower income at the time of your case filing makes it easier to qualify for Chapter 7. This is particularly important for people whose jobs are seasonal or commission based.
For people who make a steady regular income, there is no timing issue—you make what you make, so it doesn’t matter when you file your bankruptcy.
But there are things or events that can skew your 6 month pre-bankruptcy income average artificially, up or down (which can work to your advantage, or against you). For example, maybe you received a one time bonus at work, or an inheritance, which, although a one-time event, still will adjust your 6-month average income upwards.
You may have also inadvertently done something in your life or with your finances recently that makes it harder or more problematic to file a bankruptcy.
Did you give property away to a relative, close a business or bank account, or pay off one of your creditors? These don’t automatically disqualify you from getting a bankruptcy discharge, but they can raise questions, and make your bankruptcy more difficult. You may be better served waiting some time before you file, if you can.
You may have income or funds coming to you in the future. For example, if you have outstanding accounts receivable, money from a lawsuit or settlement, the return of a security deposit, or you are anticipating a commission or bonus coming up, you may want to wait—although this money isn’t in your hands yet, they are assets that could still be taken by a bankruptcy court.
Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 today for help in the timing of your bankruptcy filing.