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When is the best time to consider bankruptcy?

No one really wants to file for bankruptcy, it’s like admitting you’ve failed. Still, if you find yourself in a situation where you’re borrowing more money just to eat and survive and, at the same time, borrowing more money to pay off previous debts, filing for bankruptcy might be a prudent path to follow. If you can’t juggle all of your current debt and have no prospect of increasing your income anytime soon, then it’s time to at least consider the concept.

Going deeper and deeper into debt won’t do you any good, nor is it fair to your current creditors or those you might go after in an attempt to “take Peter away to pay Paul.” If you keep juggling too long, you’ll see the whole thing come crashing down. It is much better to go bankrupt with a plan. If you do it right, you may find that the whole experience is much less painful than you might have imagined.

Filing bankruptcy will give you a fresh start.

Just think how wonderful it will be to get out from under all that debt. The debt that prevents you from moving forward and does not allow you to go back, stuck in the routine. Imagine all that financial stress instantly disappearing. Maybe it’s time you consider filing for bankruptcy.

It is not a decision you should take lightly, nor is it a move to stop paying legitimate debt you owe. It’s just that sometimes people get into bad situations. Generally, it is a series of events, the accumulation of which leads down a path that ends in a cliff.

There will be some assets you won’t be able to keep and some debts you won’t be able to pay off. There will be tough decisions to be made, but if you plan it right, it could be the smartest move you’ll ever make.

Why it is important to hire a bankruptcy attorney

There are some things we might be able to do ourselves, but without the right prior experience it could lead to disaster. Filing for bankruptcy can be one of those things. The best bankruptcy attorneys will typically allow you a brief free consultation to explain the basics of bankruptcy, usually 30 minutes or so.

You should take advantage of this. Bring your list of questions and a list of all your debts and sources of income. You need to be honest with the reality of your situation to get the right answers and ask the right follow-up questions.

If you file for bankruptcy on your own, that’s it. You are on your own. Bankruptcy courts, judges, and trustees cannot advise you, and be careful about getting advice online. A bankruptcy attorney can review your exact situation and all of your assets and advise you which assets you can keep and which you may have to surrender to the court or your creditors.

A bankruptcy attorney can also advise you on which creditors you should continue to pay and which you should stop paying while you go through the process. Also, any tax ramifications you are dealing with or may incur.

An attorney on your side can also help you as a powerful negotiator who is on your side and on your team. Perhaps he can reach an agreement with his main creditors; car loans, home loans, credit cards and the IRS, and give up bankruptcy? You won’t know until you ask. Remember that filing for bankruptcy has consequences, but also benefits. Make sure you know the facts.

When is the best time to file for bankruptcy?

Once you have consulted with a bankruptcy attorney and know all the relevant information, you will want to strategically plan when to file. It matters. Why does that matter? Well, depending on the type of bankruptcy you choose, you may be using an “average income” format, in which case it matters when the average begins and ends.

Perhaps you have real estate that is about to be foreclosed on, if so, you’ll want to present it before foreclosure. If you’re preparing for a mortgage payment modification, that could also change the optimal time to file for bankruptcy.

If you are going through divorce proceedings, filing for bankruptcy can be more complicated and costly. Perhaps, on the other hand, it makes more sense to you. This is yet another reason why you need an experienced bankruptcy attorney to help you through the process from start to finish.

Do you have big expenses coming up, unavoidable costs that you will incur? Do you have future costs that you are already obligated to that are about to require payment?

Are you being bombarded by credit collection agencies demanding money you owe but can’t pay? Have you stopped paying the rent or the house? Are you using your retirement money to pay living expenses and bills? Generally speaking, retirement accounts are safe, so you may want to file for bankruptcy before you empty your retirement account, obviously you’ll need it later.

In conclusion

Did you know that the most common time people file for bankruptcy is in the first quarter, after Christmas expenses and before taxes are paid? Did you know that most people use their tax refunds to partially pay for their bankruptcy filing? Some people file bankruptcy in the first quarter as a New Year’s Resolution to get out of debt in the new year.

These may seem like good reasons for choosing the first trimester to file, but they are certainly not the most important reasons for choosing the best time. Call a law firm to talk and figure this out together. You need a plan, one that makes sense to you.

Why not talk to a bankruptcy attorney about your specific situation, and then have them help you design a plan? You know what they say; “Sometimes timing is everything!”


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