Your timing to file for bankruptcy protection can have a crucial impact on your future. If you file bankruptcy too early, it is possible you can lose some of the assets that you can potentially keep. Under special situation, you might choose to delay your bankruptcy petition:
You Have Earned A Lot More Recently
Previously many people can file for Chapter 7 bankruptcy rather quickly and easily. Since the pasage of the new bankruptcy law, Chapter 7 bankruptcy has been more difficult to attain. The new bankruptcy law requires you to perform the “means test” to see if your reported income is higher or lower than the state’s median income. If your income is higher than the median income of the state you are living in, you will have no option but to file under Chapter 13 bankruptcy. Chapter 13 bankruptcy is also called the repayment plan. This is where you will be bound legally to pay a portion of the debt back to the creditors over a period of 5 years.
If you are working as a contractor and you can lower your income for the next couple of months, then your average income can fall within the state’s median income level, which also means that you can apply for Chapter 7 bankruptcy instead. Chapter 7 bankruptcy is much more optimal if you are going to be file for bankruptcy shelter because you do not have to pay back the creditors. Even if you have to wait for a few months to become eligible for Chapter 7 bankruptcy, you should still do it.
If You Transferred Property Or Have New Debt
You don’t want any of the financial transactions below to affect the outcome of your bankruptcy filing by postponing the bankruptcy filing:
There is a $550 credit card charge 90 days prior to the bankruptcy filing
A large dollar transaction can stand out in the 341 meeting and cause suspicion that you are trying to have the debt canceled following the bankruptcy process. If the bankruptcy court believes that fraud has been committed, you can still be responsible for the debt after the bankruptcy discharge. Otherwise, you can wait 90 days before filing for bankruptcy.
There is a $825 cash advance withdrawal from a single credit card 70 days prior to the bankruptcy filing
When you take cash from credit card as recent as 70 days before the bankruptcy filing, the bankruptcy court can question whether this money was withdrawn on purpose knowing you will be filing for bankruptcy. If the bankruptcy court decides that you have withdrawn the money on intent and not intend on paying it back, the bankruptcy court can make this debt survive post bankruptcy. By waiting 70 days after the money withdrawal from credit card, you will not be subjected to any disciplinary action by the bankruptcy court.
If you pay more than $600 to a single creditor within 90 days of filing or 1 year if it is a relative
The bankruptcy court has the option to take back this money to be distributed back to the creditors if the court believes this is a deceitful transaction. If you want to include this debt as part of your bankruptcy petition, and you don’t want to conjure any suspicion with the bankruptcy court, wait 90 days (or 1 year if it is a transaction with a relative) and you will be clear of any wrongdoings.
Prior to filing bankruptcy, you have sold or transferred a property in the past 24 months
The bankruptcy court might think you are trying to hide assets from the creditors by selling a property for under the market value or just blatantly transfer the property to someone else. The property in question can be taken back by the bankruptcy court to be auctioned off. The proceed from the sale of the property will be distributed to the creditors. If you can prove that the property is sold at or above market value, or if you have sold the property 2 years prior to the bankruptcy filing, you should be cleared of any wrongdoings in the eyes of the law.
You Are Having Your Mortgage Modified For Favorable Terms
Only after the loan modification has concluded, then you can think about filing for bankruptcy shelter. If you are filing for bankruptcy protection, most lenders will not likely work with you to modify your mortgage loan. You will want to delay your bankruptcy filing if you have a mortgage lender who is willing to modify your existing loan.
Some people said that if you are anticipating to incur new debt soon, you should consider postponing your bankruptcy filing so that you can wipe out or cut this payment in the bankruptcy process. I am strictly against anyone doing this. If you know you are going to be filing bankruptcy, and then you knowingly racked up $20K-$50K in medical expenses (such as plastic surgery or surgery that are only preventive and not life threatening), that to me has some kind of fraud undertone to it. Fraud to me is when you knowingly do something illegal and hoping to get away with it. In this case, you have took on more debt knowing that it can be erased through bankruptcy.
Take your time wisely to review your need to file for bankruptcy shelter. If you are facing an immediate problem such as foreclosure, car repossession, judgement lien on your house, or even wage garnishment, then filing bankruptcy immediately might be your choice. If bankruptcy is inevitable but it can wait, then you should consider doing so.
For additional information on bankruptcy, please visit our website at ToFileBankruptcyOrNot.com
Steve Sanchez has recently overcome the economic depression of 2008-2009 by declaring bankruptcy. Even though bankruptcy has devastated Steve financially and emotionally, Steve has rebuilt his businesses in the last 6 months and he has not looked back since.One of his project is to educate people on bankruptcy. Having gone through the ordeal himself, he has first hand knowledge of the pros and cons of filing for bankruptcy protection. Please visit his site http://ToFileBankruptcyOrNot.com if you want additional information regarding bankruptcy.