Timing in Bankruptcy Cases

As in lots of things, timing can be everything. And the same is true in bankruptcy cases.

There are multiple reasons for filing for bankruptcy sooner as opposed to later. Yet, there are good reasons for delaying a bankruptcy claim, too. The main point of this article is that, whether you file for bankruptcy now or later, it is imperative to talk to an experienced bankruptcy attorney to find out if there are any timing issues in your specific situation.

Apart from the typical reasons for urgency—house foreclosure or car repossession—there are other timing issues that can be very important. In most states, if a creditor gets a court judgment, your wages can be garnished. In Florida, a creditor can garnish 25% of your disposable income or the amount by which your disposable income exceeds 30 times federal minimum wage, whichever is less. If your wages are garnished, it may make it harder for you to get your money together to file for bankruptcy protection. If you know a lawsuit is coming, filing sooner rather than later may be the optimum choice.

Further, a judgment lien can be avoided to the extent that exempt property is impaired. If you have a mortgage on your land and you do not have more equity in the property that you can exempt, having a judgment entered against you may not be a huge problem. But, if you are close to the maximum amount of equity that you can exempt, as you pay down your mortgage, more and more equity becomes available to that judgment lien creditor. Filing a bankruptcy case sooner as opposed to later may make sense because you may be able to avoid the judgment lien in its entirety.

Just as there are good reasons for filing bankruptcy sooner, there can be very good reasons for waiting to file bankruptcy. If you have filed all your tax returns, some taxes can be discharged if they are of a certain age. The requirements for determining the discharge ability of taxes can be daunting but it can be accomplished. If you owe state or federal taxes, it may be to your benefit to delay a bankruptcy filing so that the necessary time period passes. This can mean the difference in discharging potentially thousands of dollars in taxes or getting stuck with continuing to pay these claims.

Typically, a mortgage on your house cannot be modified in bankruptcy. You either pay it or risk the creditor foreclosing (at some point). But, if you do not have much equity in your home for the second mortgage to attach, you potentially could delay a filing and delay payments on the first mortgage so that as the first mortgage debt rises, it eats up the equity that the second mortgage can allocate.  This could mean that, in a Chapter 13 case, you could treat your second mortgage as unsecured debts.

In conclusion, timing can be important. This is not an exclusive list of timing issues, but only an example. If you are facing a financial crisis, the Law Firm of Hoskins, Turco, Lloyd & Lloyd helps individuals and businesses find the right solution to your money problems. We have the experience to solve the most complicated bankruptcy issues, and regardless of your circumstances, we will work hard on your behalf to give you a fresh start and a new financial life.

Don’t hesitate to speak with one of our attorneys today. Call us now to schedule your free consultation. Call 1-866-460-1990.

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