File Bankruptcy Now or Later? Timing Makes All the Difference

Over the past seven years, I have seen the timing of bankruptcies get more complicated. Back in 2004, when I took my first bankruptcy cases, I mostly represented folks with an overload of credit card debt and medical bills.

Different Strategies for Different Cases

The two main reasons for them to file bankruptcy were divorce and illness. The timing on these cases mostly involved waiting just long enough to make sure the accumulation of new debt was over prior to filing. Sometimes we had to wait until the recently singled mom found a job or started getting her deserved support payments. Often we waited to allow someone to finish certain medical treatments. In a few really tough cases, I waited out a death and the spouse’s recovery prior to filing a chapter 7. Although all these cases had different reasons to wait, they were all simply waiting until all the debt had been accumulated.

Timing/Strategy vs. Bankruptcy Fraud

Now, I want to be clear, you may not accumulate debt with the intent to discharge it in a bankruptcy. All of these cases had other options of handling their debt but the decision to file a bankruptcy simply was inappropriate prior to them getting through those tough parts of their lives.

The Current Economic Situation

Now-a-days, with the complication of the mortgage crisis, things are far more complicated. My clients may be trying to buy time in their houses or may be juggling multiple properties and other assets. There are numerous bank and federal programs involved. Most of which are just garbage but some that may be useful to my clients in one way or the other. There are also issues of proper placement prior to filing a chapter 7 or a chapter 13 bankruptcy. We very often represent our clients in state court, in a foreclosure case, prior to filing the bankruptcy in federal court.

Common Mistakes in Bankruptcy Timing

There are many important issues related to timing but here are three of the biggest mistakes I see:

Filing Immediately to Stop a Foreclosure

Some clients are being sold on the idea of an immediate bankruptcy to stop a foreclosure when a defense in state court could benefit them prior to a bankruptcy. This is usually because the attorney simply does not defend foreclosures and does not understand the possible benefit.

Using Shady Attorneys or Mortgage Rescue Scams

Some clients are signing up with less than honest, usually out-of-area or out-of-state, attorneys or mortgage rescue scams. These people are convincing the home owners to give them time to work out a mortgage modification but are not properly defending them in court. Then the home owners come into my office after they have already lost all their defense rights.

Waiting TOO LONG to Consider and File Bankruptcy

Lastly, some people are waiting too long to file a bankruptcy. Sometimes an immediate chapter 13 is your best option and waiting will only hurt you.

Your timing strategy can be the difference between a healthy financial recovery or a total meltdown. I would love to talk it over with you. Come on in.