Bankruptcy is one of many ways to solve debt issues. For some, filing for bankruptcy may be the best option for eliminating debt, but for others, it may not be. Even if bankruptcy is the best option for you, when you file can also make a huge difference. Below are some things to consider when deciding if now is the right time to file for bankruptcy.

The Consequences Of Filing For Bankruptcy

When considering whether and when to file for bankruptcy, it’s important to first make sure you understand the potential consequences of filing for bankruptcy. Bankruptcy is a protection afforded to all citizens by the US government and it should be used if needed. However, the decision to file for bankruptcy is not one that should be taken lightly.

Both Chapter 7 and Chapter 13 bankruptcies will remain on your credit report for several years. Having a bankruptcy on your credit report could make it difficult to obtain loans, insurance, and employment from companies that require a credit report.

In addition to impacting your credit score, there are also limits on how often you can have debts discharged through bankruptcy. If you file for a Chapter 7 bankruptcy, you’ll have to wait another eight years before you’ll be able to file again. Therefore, you’ll want to file at a time when your financial situation is either improving or stable.

The First Step: Analyze Your Financial Situation

The first step to take when considering bankruptcy is to analyze your current financial situation. You’ll want to compile a list of all the debts that you owe along with the income and assets you have to pay off your debt. This exercise will help you determine if paying off your debt is within your means or not. If you don’t have enough to pay off your debt and debt continues to pile, bankruptcy may be a good fit for you.

Market Considerations

Naturally, you’ll want to wipe your slate clean and obtain a fresh start if you believe your financial position will be improving and you won’t be accumulating more debt. You don’t want to eliminate debt just to re-accumulate it again. It’s easier to stay out of debt when the economy is on the rise rather than during a recession or crash.

One thing to consider when filing for bankruptcy is the market. Is the economy growing? Are there opportunities to find better jobs or increase your take home pay? Do you feel that you have stability and security in your current job? A healthy market is one positive indicator that it may be a decent time to file for bankruptcy.

Reasons To File Bankruptcy Immediately

There are a few reasons why you may want to file bankruptcy sooner rather than later. You may want to file for bankruptcy now if:

• Your home is about to go into foreclosure (the automatic stay will prevent this)
• Your car is on the verge of being repossessed (the automatic stay will also prevent this)
• Your landlord is looking to evict you
• You’ve been unemployed for months and you don’t have the money you need to meet basic living expenses let alone pay debt.
• Your wages are being garnished
• You are about to start a new high paying job
• You will soon be moving to a state with less favorable exemptions
• You are being sued for delinquent debts

Reasons To File Bankruptcy Later

On the other hand, there are also many reasons for waiting to file for bankruptcy. You may want to delay filing if:

• You will soon be moving to a state with more favorable bankruptcy exemptions
• You are about to start a lower paying job
• You are expecting to take on more debt
• You are expecting to receive a significant tax refund in the near future (you can use this money to file for bankruptcy)
• You recently purchased luxury goods
• You have older income tax debt you’d like to try to discharge (the tax return needs to have been due at least 3 years before filing)

Consult A Bankruptcy Lawyer At No Cost

Deciding whether or not to file for bankruptcy isn’t a decision you have to make alone. Most reputable bankruptcy attorneys will honestly tell you whether or not they believe bankruptcy makes sense for your financial situation and most bankruptcy lawyers offer free consultations.

There is nothing better than being able to get expert advice at no cost. A bankruptcy lawyer can sit down with you and analyze your financial situation to help you examine the pros and cons of filing for bankruptcy in your current position. It’s worth speaking with a lawyer at no cost to see if bankruptcy may be the right choice for you. If not, there are other actions you can take to try and reduce your debt.