Bankruptcy To Be Filed? What About Timing?
Is there always a reason to hurry up the bankruptcy filing? Does the timing of a filing matter? Timing depends upon your objectives, and filing quickly sometimes is important when the client needs protection from creditors right away. This happens when one is trying to stop an impending foreclosure sale, a wage garnishment, or seizure of a bank account. When creditors are moving to seize assets, immediate bankruptcy protection may be needed.
But when the creditors are not threatening immediate action, waiting is something the answer. This may be the case in various circumstances:
- Tax Debts. Income taxes are generally nondischargeable in bankruptcy, but there are critical exceptions, and most depend upon timing of the bankruptcy filing. You may have to wait a short while, or as much as 3 years so that taxes may become dischargeable. It is sometimes worth the wait.
- Assets. The amount of assets that someone in bankruptcy may protect may vary from state to state. If your assets are worth substantially more than you can protect, this you may have to take the time to legitimately utilize your assets for your benefit today, rather than to lose them in a bankruptcy. As a result of doing so, you may need to wait to file bankruptcy fro a period of 1 to 10 years, depending upon the facts involved. However, with proper planning, it will be worth it.
- Asset Transfers: If you have transferred assets – your home, cash, stock, or vehicle – to a trusted friend or family member to keep it out of the hands of creditors, this creates timing issues. This frequently happens when individuals are being pursued by creditors and are afraid that the creditors will seize their property. This creates a need to wait before filing bankruptcy.
Just like all things in life, timing can be everything. It is always best to file a bankruptcy case when you and your lawyer have considered all the possibilities.
Knowledge is power. Contact us for answers to your questions.