What is the Best Time to File for Bankruptcy?

There are many reasons that might push you to the ledge to find bankruptcy. In the USA, mostly medical debt is the reason for most bankruptcies. But apart from that, credit card debts, mortgages, or even failed business will lead to filing bankruptcy. But more than the why, you need to think of when you need to file bankruptcy. Yes, you need to know the best time for filing bankruptcy. Our Pittsburgh bankruptcy lawyer will help you with that.

Why It Gets Delayed – Mortgage Modification, Debts, and Income Changes

While you are filing for bankruptcy, you need to consider the following statements and delay the filing:

  • In the recent past, you had a pay cut
  • You just lost your job
  • You are changing your terms for your mortgage very soon
  • You can anticipate that there are more debts on the way
Pay Cut or Decreased Payment

This can be harmful if you are considering filing Chapter 7 bankruptcy. This type of bankruptcy is only for those who don’t have any means to realistically afford the money for repayment for the next three to five years. To be eligible for filing for Chapter 7 bankruptcy, you need to go through the Means Test that will determine your eligibility by comparing your 6 months’ average income against the median income for a household same as yours in your state.

As you have received the pay cut recently, the test will not consider it and rather focus on the past 6 months’ income. That is why to qualify in Means Test, you need to wait.

Mortgage Modification

Filing bankruptcy can help you get solid footings while giving you a financial clean slate. However, this can make your lenders wary as you are trying to wipe off your debts. This can be a problem when you are trying to modify a mortgage. While filing for bankruptcy, your promissory note will be canceled. Thus you will not be able to negotiate with the bank.

More Debts in Near Future

Are you anticipating more debts in just a few days? If yes, then you need to wait a bit longer for filing bankruptcy. Even though you have the option for filing multiple bankruptcies, yet the federal law gives strict regulations between the discharges. The followings are the waiting period:

  • After filing one chapter 7, you will need to wait for 8 years for getting another discharge for chapter 7 and 4 years for chapter 13.
  • After you file for chapter 13, you will have to wait 2 years for filing another discharge on chapter 13 and 6 for chapter 7.

The given filing will only cover the debts prior to the filing. Consult a Pittsburgh bankruptcy lawyer if you are in such a situation.

Reasons for Action – Collections, Repossessions, and Foreclosure

Even though waiting for filing bankruptcy in various situations is necessary, yet, you also think of the assets and property and consider the time accordingly.

When you are filing for bankruptcy, you will get an automatic stay that will allow you some time for taking care of your assets and properties. This time stops the creditors from taking any action for collecting the debts while bankruptcy is in the process. If you are worried about repossession of your car or foreclosure of your house, the filing can buy you some time that you can use for making alternative arrangements with the creditors. However, the automatic stay will be in effect only if repossession or foreclosure has not been initiated. To get protected, you need to act at the right time.

Filing bankruptcy is a major legal decision and that is why you need to consult us at Pittsburgh Bankruptcy Law Group. Our Pittsburgh bankruptcy lawyer will give you the right advice.

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