Suffering Ongoing Financial Crises? 2 Factors In Timing A Bankruptcy Claim

Are you considering bankruptcy due to an ongoing and extreme financial problem? Some bankruptcies come as a result of a single event, such as divorce or a natural disaster, but other causes drag on much longer. If yours falls into the second category, how does this affect the timing of your claim? Here are two of the biggest factors to consider. 

How Much Future Debt You'll Have

The timing of a bankruptcy case is crucial when the source of financial problems is still happening. This is because once you pull the trigger and file your case, you're protected only from debts already in existence. A future debt will be outside the case's purview.

The most common situation in which this occurs is during a medical crisis. Medical bills may take weeks or months to arrive. Many patients receive unexpected bills from providers they may not have even been aware of. So if you file bankruptcy too soon, these unexpected future debts may not be included. 

When making this decision, do your best to research and understand how much this future debt is likely to be. If it's a smaller, manageable portion of the overall debt load, it's possible that you can move forward with discharge now and risk having to pay a little that shows up later. 

The Timing of Collections Actions

Bankruptcy filing stops collections actions via a legal tool known as the automatic stay. This stay prevents creditors from serious collections actions like taking a debtor to court, foreclosing, obtaining garnishments, and repossessing assets. 

If you face the loss of any of your important assets through these permanent measures, you may need to file bankruptcy to protect them. This includes your primary home, the vehicle you need to get to work, or your paycheck. Stopping these losses may be more important than capturing any future debts that may come up.

However, you should honestly assess whether or not you should focus on keeping them. If you file to prevent foreclosure of your house, can you realistically afford to keep it long-term? If you can't pay the mortgage and upkeep, you may be better off letting it go and instead ensuring you get discharge for all unsecured debts that may still come. 

Where to Start

Clearly, this is a big decision for any debtor still dealing with ongoing debt struggles. And there's no one right or wrong answer about the timing of your case. Waiting may benefit some while filing sooner benefits others. Find out which is right for you by meeting with a bankruptcy attorney in your state today.