Should You File An Emergency Bankruptcy?

When You Should File an Emergency Bankruptcy

Timing is everything when it comes to protecting your assets from creditors.  That’s why it is important that debtors not wait until it is too late to file bankruptcy.  But unfortunately, because of the pressure many debtors feel to pay debts which are clearly destroying them financially, many wait until they are literally up against the wall before they seek the advice of a bankruptcy attorney.  Knowing that this is the case, the bankruptcy system has what is known as an emergency bankruptcy filing.  An emergency bankruptcy filing allows the debtor to file bankruptcy immediately often with an incomplete petition so that they can stop creditors from seizing their assets.

Below are a few examples of when a debtor may want to file an emergency bankruptcy:

  1. Your utilities are going to be shut off and you are living in an area with extreme weather. While losing utilities is devastating in any season, losing your water or electricity during a heat wave could be deadly, especially for the elderly or sick.
  2. Your home is facing imminent foreclosure and you want to save it.  If you’re having difficulty negotiating with your mortgage lender and they are planning to foreclose on your home in days, filing an emergency bankruptcy can stop the foreclosure and give you an opportunity to save your home.
  3. A creditor has begun garnishing your wages or is trying to seize your bank account.  Filing an emergency bankruptcy will stop the creditor from getting access to your income because the automatic stay goes into effect as soon as you file.

It is important that a debtor filing an emergency bankruptcy has every intention of continuing the bankruptcy. If a debtor uses an emergency bankruptcy to manipulate creditors and has no intention of completing the paperwork so that they can go through the entire bankruptcy process they could face a dismissal of their case and may be prohibited from enjoying the protection of the automatic stay in the future.