Why Timing is Everything in Bankruptcy Part 1

Many people do not file for bankruptcy until they have almost no other option. But there is always a best time to file for bankruptcy, and understanding when to file is the most important knowledge an individual can possess when they consider bankruptcy as an option.

In both Chapter 7 and Chapter 13 bankruptcy, timing is essential to the outcome of your case. Below are some of the reasons timing makes such a difference.

(1) It determines your bankruptcy estate. Once you file for Chapter 7 bankruptcy, all your assets and earnings prior to filing become a part of the bankruptcy estate, which will be used to calculate how much, if anything, you will need to pay your creditors. If you just got a new job, or a raise, waiting until after you receive that to file for bankruptcy could be extremely detrimental to your case. If you can anticipate changes in income, and the fact that you are close to bankruptcy, knowing this can make a huge difference.

(2) It determines whether you can keep your car. In Chapter 13 bankruptcy, you can alter the amount of a car loan to the actual value of the vehicle, which for many people is much lower than the amount they actually owe. However, whether or not you can do this depends on the timing of your vehicle purchase. If you purchased your car within the 910 days before filing for bankruptcy, you may not take advantage of this. For some people, this is not something they can change, but for those on the cusp of the 910 days, they might wait a bit before filing so that they can qualify.

Additionally, timing is essential to whether you have enough debt for bankruptcy to be worth the cost of filing. Only a knowledgeable and experienced local personal bankruptcy attorney can help you take advantage of your bankruptcy timing.