Using bankruptcy to eliminate debts is an option many people turn to each year, and Chapter 7 bankruptcy offers a way to truly receive a fresh start with your finances. Before you make the decision to file, you should speak with a bankruptcy lawyer about your personal situation. When you meet to discuss your case, your lawyer may talk to you about timing issues.
Why Timing Matters
With Chapter 7 bankruptcy, timing is a vital issue you must consider before you begin the filing process. If you time your filing too soon or too late, it could harm your case. You might lose assets you would not have lost if you had waited, or you might face bigger issues with your finances if you wait too long.
To qualify for Chapter 7, you must meet certain income requirements, and this involves a look-back period of six months. The last six months of your income will determine whether you qualify for Chapter 7 bankruptcy, and this includes all ordinary and non-ordinary income you received in the last six months.
If you want to get the most out of Chapter 7 bankruptcy, you must time it properly – your attorney can help you figure out when to file.
What Attorneys Look For
There are numerous things your attorney will evaluate relating to the timing of your case. Here are some of the most common timing issues that may arise.
If you received an inheritance or money from lottery winnings in the last six months, the extra income may push you over the threshold and prevent you from qualifying for Chapter 7 bankruptcy.
Transferring your assets to someone else simply to avoid losing them when you file bankruptcy is illegal. If you transferred assets recently, your lawyer might suggest waiting to file until you have reached a point past the look-back period.
If you are behind on your mortgage and trying to complete a loan modification, then your lawyer might suggest waiting until you complete this process. That way, you don’t risk losing your house.
Lawyers also closely examine IRS debts when evaluating the timing of a case. If you have tax debts from years ago that the IRS has not pursued, your lawyer might recommend filing right away. Your chances of getting the debts forgiven will be better if you file before the IRS starts coming after you.
If you file for Chapter 7 during a lawsuit, you might lose the proceeds you receive from the case to your bankruptcy estate. If you are about to file a lawsuit, then your lawyer might recommend filing for bankruptcy before filing your lawsuit. If you handle this correctly, then you will not lose the settlement from the case.
There are additional things the lawyer will evaluate before recommending when you should file, and you should take the lawyer’s advice seriously. Lawyers understand bankruptcy laws, and they know what to look for.
How to Choose the Right Time
Choosing the right time to file depends on your unique situation. Before you file, you should discuss the pros and cons with your lawyer, and you should make sure you fully understand the risks and rewards filing for bankruptcy offers.
Choosing to file bankruptcy is a big decision in life, and you should not rush into this without seeking professional advice first. If you would like to speak with a bankruptcy lawyer for free about your situation, then contact Lynch & Belch P.C. We offer free consultation appointments and can help you determine if and when you should file bankruptcy.