Should You Wait on Bankruptcy or File Now?
The COVID-19 pandemic and the subsequent havoc that the
virus has wreaked on the economy have left many people facing difficult
financial times. If you think that bankruptcy is a good option, you have likely
also considered whether you should file for bankruptcy now or wait.
On one hand, filing for bankruptcy too early might mean
losing a property you would have otherwise been able to keep. Conversely,
waiting on bankruptcy might mean you can avoid the process entirely. To help
you decide whether to wait or file for bankruptcy now, this article reviews
some critical factors that you should consider.
When You Anticipate
New Debts
Times are financially difficult for many people. If you
expect to have new expenses sometime in the near future, you should not rush
into bankruptcy. This is because Chapter 7 bankruptcy only erases debts that
you have at the time of filing. This means that any debts that you face later
will still be yours and cannot be discharged.
When You do Not Want
to Lose Certain Property
Despite their debts, many people have valuable property they
hope to hold onto during the bankruptcy process. Many times, filing for
bankruptcy immediately means the person will lose that asset while they might
be able to retain the property if they wait to file for bankruptcy.
For example, if a person expected a large tax refund and
immediately filed for bankruptcy, they would likely end up losing this refund.
If the same person received the refund, spent it on necessities, and then filed
for bankruptcy, they would likely be able to keep the full refund.
If Your Recent Income
Has Been Higher Than Average
When a person files for Chapter 7 bankruptcy, the court will
review their income over the last few months to assess whether they are
eligible for the Chapter 7 process. If a person’s income is too high, they will
only be able to file for Chapter 13 bankruptcy, which involves a repayment plan
that a person uses to repay some of their debts.
Many people who experience economic hardships over the few
months leading up to the means tests often have no problem qualifying for
chapter 7. If your income is temporarily higher than usual, however, it might
be a good idea to wait an extended period of time for your income to drop again
so you can qualify for chapter 7.
If You Have Decided
to Modify Your Mortgage
One of the most common reasons that people file for
bankruptcy is that they want to avoid going through foreclosure. Some people,
however, end up filing so early that they are not able to secure a mortgage modification.
This is because following a bankruptcy filing, most lenders
refuse to negotiate the terms of a mortgage. Because bankruptcy cancels the
promissory note on a mortgage, there is no longer room to negotiate following
bankruptcy. Instead, it is best to pursue mortgage modification options first
before filing for bankruptcy.
Speak With an
Experienced Florida Bankruptcy Lawyer
Tony Turner bankruptcy Lawyer is a licensed and experienced
bankruptcy attorney in Jacksonville, FL. We have detailed knowledge of Florida
bankruptcy laws and exemptions in Florida, giving us the skill to fight wage
garnishment and violations of your rights.
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