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Usually, filing for bankruptcy protection is an event that is years in the making. Debts slowly pile up while the money to pay for those bills doesn’t.
Collection calls, lawsuits, or even wage garnishments could be on the horizon for people struggling with their debts.
Bankruptcy cases involve careful planning and part of that planning is deciding when to file.
There are several reasons why filing for bankruptcy sooner rather than later might make more sense now:
- Home Values are increasing.
This has could affect your case in one of two ways. First, rising home values could exceed the homestead amount we can protect, thus leaving your home exposed. Second, if you were thinking of getting rid of that second mortgage or line of credit, rising home values could ruin those plans.
- Things are improving, professionally speaking.
You are expecting a raise or expecting a new job, higher paying job.
- Things are getting worse, personally speaking.
You expect to get a divorce and want to file bankruptcy now.
- Collection calls and lawsuits.
You are behind on your bills and the collection calls are starting. They will not stop until you take some action. You are really behind on the bills and it’s only a matter of time before a lawsuit or wage garnishment is around the corner.
- You are about to lose your car because of a repossession.
While a chapter 7 bankruptcy will not wipe out the debt if you want to keep the car, it will give you additional time to catch up on the payments. There may even be a way to reduce the amount you owe toward the vehicle if you qualify.
- You are about to lose your house due to a foreclosure.
It has been months (maybe a year) since you have made a mortgage payment. The bank is refusing to modify your mortgage and now there is a sale date to auction off your house. Filing for bankruptcy protection, regardless of the chapter will give you and your family more time and options. It could give you more time to catch up on payments or, in some cases, there may be a way to get rid of a second mortgage or line of credit. Filing a bankruptcy case could save your house.
Deciding to file for bankruptcy protection is a serious decision. The normal stresses of everyday life are compounded by the additional stress of debts piling up. Take a step back and discuss whether bankruptcy is an option with a seasoned professional. Discussing your financial situation with an experienced bankruptcy attorney will help you decide on the timing of your bankruptcy filing.
In a follow-up post, we’ll discuss when you should wait to file your bankruptcy case.