Jun

30

Is There A Better Time To File For Bankruptcy Than Another?

Posted In: Personal Finance

Depending on when you are filing bankruptcy, it can produce a different effect on your future. Since the timing of your bankruptcy filing can dictate if you get to keep the $7,000 of tax refund or not. Under special circumstances, you might opt to postpone your bankruptcy petition:

Your Income In The Recent Months Is High

It has become harder to file for Chapter 7 bankruptcy since the passage of the 2005 bankruptcy law amendment. In order to take advantage of the Chapter 7 bankruptcy, your income has be at or below the state’s median income level as part of the “means test”. If your income is higher than the median income of the state you are living in, you will have no alternative but to file under Chapter 13 bankruptcy. Chapter 13 is not the ideal choice because you will have to repay a portion of your debt to the creditors.

If you can somehow legally lower your income over the next few months, then this is the prime example for you to postpone your bankruptcy process. Who in the right mind would want to pay back the debt with Chapter 13 bankruptcy when you have the alternative to erase the debt entirely with Chapter 7 bankruptcy filing if you can just wait a few more months?

You Have Transferred Property or Incurred New Debt

You don’t want any of the financial transactions below to impact the outcome of your bankruptcy filing by postponing the bankruptcy filing:

Charge more than $550 on a single credit card within 90 days of filing

The bankruptcy court can misconstrued this as your attempt to rake up charges on your credit card and then have the debt wiped clean in the bankruptcy process. Wait 90 days after the purchase on the credit card, and then file for bankruptcy protection. This way you can avoid raising any suspicion with the bankruptcy court.

More than $825 of cash advance was withdrawn from a single credit card 70 days before the filing

It can sometimes look suspicious to the bankruptcy court that you have withdrawn money from the credit card right before filing for bankruptcy. Once 70 days have gone by since you made that cash withdrawal, you will be able to take out this credit card debt through bankruptcy process.

There is a $600 payment to a single credit 90 days before the filing (or 1 year if it is a relative)

If this monetary transaction raises suspicion to the bankruptcy court, the court might try to retrieve the money and pay back the creditors. Wait 90 days (or 1 year if it is a transaction with a relative) and then file for bankruptcy, and you will be able to enclose this debt as part of your bankruptcy petition.

If you transferred or sold any property in the past 2 years

It can lift severe doubts inside the eyes of the bankruptcy judge that you are hiding assets from the creditors when you have sold your property for less than the market price, or if you have transferred the property to someone else. The bankruptcy court has the alternative to dismiss your bankruptcy case if they think you are fraudulently representing your assets. The best thing you can do in this case is to make sure that the property is legally disposed of (sold at the market value) or wait past the 2 year mark before filing for bankruptcy.

You Are Having Your Mortgage Modified For Favorable Terms

Only after the loan modification has concluded, then you can think about filing for bankruptcy protection. Most believed that mortgage lenders will not even consider loan modification if you are filing for bankruptcy. If you have any inkling that the mortgage lender will rework your mortgage loan, delay your bankruptcy petition till the loan modification is completed.

Some people/organization suggests that if you are expecting some new debt, you should postpone your bankruptcy filing so that it can be included in the petition. Personally I am against this school of thought. If you know you will be declaring bankruptcy, and yet you bought a used car with a car loan, this to me has some resemblance of fraud which I would not advise. You just knowingly incur additional debt so that you can have it wiped out through bankruptcy.
Bankruptcy should not be taken casually and you should take your time while you consult your lawyer. Events such as car repossession, wage garnishment and judgment lien on your house can be the “straw that broke the camel’s back” and force you to file bankruptcy now.

Bankruptcy should not be a abrupt matter. You should consider this drastic alternative carefully and make sure you have talked to bankruptcy professionals who can give you good advice.
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. 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 website at http://tofilebankruptcyornot.com

Article Source: Is There A Better Time To File For Bankruptcy Than Another?