Timing Your Bankruptcy Filing

September 2nd, 2009 by Reed Allmand

There are a few situations that help determine if you should delay your bankruptcy filing.

If you are considering filing for bankruptcy, there are a small number of special circumstances where your best option would be to delay filing for bankruptcy.  Of course it would be best to speak to a bankruptcy attorney as soon as possible, but there are a few general situations that an attorney might mention as reasons to delay your filing.

The first is if you owe taxes that might become dischargeable in the near future, but are not currently dischargeable.  If the tax bill is high, this could end up saving you a lot of money.

Second, if you are filing for divorce and are considering bankruptcy, timing is everything.  As a general rule, if you are going to have a very simple bankruptcy case (you have no joint-delinquent accounts, you do not have a lot of assets that need split up, and there are not kids in the picture) you need to file for bankruptcy before your divorce, because it will be a joint case and it will be cheaper.  If you have some of the items listed above, that make your case more complicated, you will probably want to get divorced first and then file for bankruptcy.  Again, bankruptcy and divorce timing is complicated, so you should speak with a bankruptcy attorney before doing anything.

Next, if you are expecting a huge tax refund, you should consult with your Bankruptcy attorney on timing to see if it will be yours or taken.

In a Chapter 7, if you repaid debts to any family members within the last year (over $600), you might wait until a year passes since you paid them.  If you do not the trustee might force your family member to pay the money back.

Another common thing that creditors check is if you racked up a large amount of debt leading up to the bankruptcy.  Creditors could claim fraud and could ask the court to not discharge those debts.  Waiting for a while will help keep creditors from claiming that you are trying to scam the court. Your attorney is very familiar with these timing issues.

A final reason to delay your filing is if you have large medical bills coming up.  The reason behind this is you will have to wait six more years to have any debts wiped out.  If you just wait till the bills are due and then file, they can be eliminated.

In conclusion, these are just a few reasons you should consider delaying your filing, but they are not the only ones.  Also, the above examples are not golden rules either.  You need to speak to a bankruptcy attorney and they will be able to tell you what the best plan is for your situation.