For most people, choosing to file for bankruptcy is a difficult decision. Before realizing it’s time to act and put debt burden behind them, people frequently battle with debt for years. Although it’s typically never too late to file for bankruptcy, waiting too long can be expensive.
Putting off filing too long may result in paying interest and late fees on debt that will eventually be discharged is a waste of money, wage garnishment that could have a negative impact on your family’s finances, loss of your home, vehicle, or other asset used as security for a secured debt, and suffering in your health, sleep, relationships, and even your performance at work.
In most cases, it is preferable to act sooner rather than later if your debt is unmanageable and having a substantial negative impact. However, there are several exceptions. In some cases, filing your claim too soon might be just as bad—if not worse—than waiting too long.
An expert bankruptcy lawyer is the best source of knowledge regarding the variables affecting the ideal time for a bankruptcy filing. Before making choices that could affect your financial future, you can investigate such topics with the help of a consultation with Law Offices of Terrence Fantauzzi at (909) 552-1238.
Recent property transactions or donations
Your previous transactions are examined when you declare bankruptcy. The bankruptcy trustee may be able to reverse any transactions and seize the property for the bankruptcy estate if you gave anything of worth away prior to filing bankruptcy or sold anything for less than its market value.
For ordinary transactions, the trustee only looks back 90 days, but for “insiders,” the lookback period is longer. Insiders for a person filing for bankruptcy are a few close relatives, business associates, and companies that the debtor has a stake in. The time frame for the lookback is one year when insiders are involved.
Recent credit transactions
Although most people don’t consider it this way, it is fraudulent to make a purchase on credit or obtain a cash advance while intending to have the debt discharged through bankruptcy. While using a credit card in the 90 days before declaring bankruptcy can be problematic, some transactions are automatically assumed to be non-dischargeable.
They include any high-end purchases made within 90 days previous to declaring bankruptcy, as well as any cash advances made within 70 days of declaring bankruptcy.
Assets that you will soon be receiving
Even though you might not consider money and other items you have yet to acquire as assets, the bankruptcy court does. In fact, some people who are anticipating a payment of some kind believe it would be wise to file for bankruptcy as soon as possible before it happens, in order to prevent losing those cash to a creditor.
A property becomes a part of your bankruptcy estate if you have a lawsuit ongoing (or merely a claim that could result in a lawsuit), a debt that someone owes you, or other property that you already have a claim to. The trustee could be able to seize the asset for the benefit of your creditors unless the item can be shielded by an exemption. So, this might not be the ideal time to declare bankruptcy.
Consecutive bankruptcy filings are limited by the U.S. Bankruptcy Law. You must wait eight years to file for Chapter 7 bankruptcy again if you previously did so and were successful in getting your debts discharged. Some combinations, like filing Chapter 13 following a Chapter 7 case, have shorter waiting periods.
Additional limitations might also be present. For instance, if you just had another bankruptcy case dismissed within the last two years, your access to the automatic stay, a potent tool for preventing collection action as soon as you file bankruptcy, may be restricted. Contact Law Offices of Terrence Fantauzzi at (909) 552-1238 so we can assess your case and determine your options.