Life often throws curveballs, and sometimes those curveballs lead us into financial troubles. If you’re feeling overwhelmed by bills and the fear of losing your home, there’s a legal tool called “bankruptcy” that can serve as your lifeline. Think of it as a special “Get Out of Debt Free” card in the game of life, but playing it at the right moment is crucial. Here are some insights I’ve gathered over the years on timing your bankruptcy filing wisely:
Before You Play the Card
Let’s take a step back and figure out what you want your life to look like in the next year or two. Are you picturing yourself in the same house, same job, same car? Maybe even a brand new ride? All this plays a part in when you should play your “Get Out of Debt Free” card.
Job Loss and a Glimmer of Hope
Say you lost your job and your income took a dive, but you’re confident you’ll find something new soon. In this case, filing for Chapter 7 bankruptcy now can wipe out your debt and give you a clean slate to find a new job and move forward. But remember, this is like playing your card in a perfect game where everything works out for you.
Be Honest and Have a Backup Plan
Always be real with yourself about what the future holds. Have a plan B in case things don’t go as expected. If finding a new job turns out tougher than you thought, filing for Chapter 7 immediately might not be the best move.
Unemployed? Wait for the Push
Sometimes, if you’re out of work, it’s better to wait for something to push you towards filing bankruptcy, like a lawsuit from a creditor, a court order asking about your stuff, or even losing your house or car. Otherwise, why use your “Get Out of Debt Free” card now and risk piling on more debt after your bankruptcy is finished?
Saving Your Home: Playing Defense
If you’re behind on your mortgage, there are usually two reasons: either your income went down or your expenses went up. Surprisingly, fixing the expense thing might be easier. Filing for Chapter 7 now can get rid of debt like credit cards and medical bills, leaving you with money to make your mortgage payments. And from what I’ve seen, even if you’re currently in foreclosure, there is plenty of time to work out a deal with the bank if you file Chapter 7.
Income Drops and the Timing Puzzle
If your income took a hit, figuring out when to file gets trickier. If it’s just a temporary thing, like fewer hours at work with a known end date, you might be able to solve your foreclosure issues by speaking with your mortgage company directly. But if you’re not sure when you’ll get back on your feet, I think its smart to hold off on filing for bankruptcy until you know more about your future. You may need to file a Chapter 13 repayment plan to fix repay your mortgage arrears, or to file Chapter 7 to stop a foreclosure auction. Remember, that “Get Out of Debt Free” card is too valuable to waste.
Foreclosure Defense: Saving the Big Guns for Last
From my experience, it’s sometimes best to file for bankruptcy right before you lose your house at auction. Why use your most powerful weapon on something the bank might delay anyway? Save it for when you’ve tried everything else, like talking to your lender about changing your loan terms or fighting the foreclosure in court. Bankruptcy is a trump card; sometimes, it’s best to treat it as such.
These are just a few tips I’ve learned over the years. If you’re feeling lost and need help figuring out your next move, don’t hesitate to reach out to my office. We offer free consultations to help folks like you understand their options and get back on track. Remember, bankruptcy is a serious decision, but with the right timing and guidance, it can be a powerful tool to get you out of debt and back on the path to financial freedom.
