When Should You File Your Bankruptcy Case? Timing Matters.
Do you need to file for bankruptcy? That’s often the initial question that many consumers ask who are facing financial troubles. But what about the question of when to file for bankruptcy? A large part of filing a successful bankruptcy, and eventually obtaining a bankruptcy discharge, is timing. Filing your bankruptcy at the right time can be the difference between being able to file your case or having it dismissed without a discharge.
One consideration is income. Bankruptcy (and the means test for Chapter 7 bankruptcy) looks back to your average income from the previous six months before your filing. That means that consumers need to make sure that the last six months of income are in fact representative of the consumer’s actual income.
In other words, if the consumer makes $30,000 per year, but suddenly and recently had an inheritance, a settlement, an insurance payment, or some other isolated, one-time payment that skews the income average upward, the consumer may want to wait to file the bankruptcy case. Or, if you were just laid off of work, your average income from the last six months may show more income than you actually will be making in the coming months.
This six-month timing can also be an issue for any consumers who get commissions, or bonuses, or any type of income that is not set but rather that is sporadic. Someone whose business is seasonal may do better to wait until it is out of season for them.
Do you anticipate having debt in the future that you may not be able to pay? In that case, it may be better to wait. For example, if other employees were laid off of work and you may be next, you may want to wait to file. If you were diagnosed with a medical condition and anticipate having significant medical expenses that you know you won’t be able to pay, you may want to wait to file your case.
Is there something that you did recently that may raise a bankruptcy trustee’s concern? For example, did you close a bank account or make a payment to a friend or relative? Even if you did so innocently, with no idea you were going to file for bankruptcy at the time, it may be best to let some time pass before you file. Of course, your bankruptcy attorney can tell you what issues make it best for you to wait to file.
Do you have money coming to you? Even if you don’t have the money yet, things like lawsuit settlements, insurance payments, or commissions are assets, and have to be accounted for in the bankruptcy, even if you don’t actually have the money yet. If you have these future (or contingent) assets, it may be best to wait until after you receive the money to file your case.
Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 for a bankruptcy consultation today.