When Should I File for Bankruptcy?
December 23, 2020 | Bankruptcy
Are you thinking of filing for bankruptcy? Filing for bankruptcy isn’t something that should be taken lightly. However, there are times when filing for either Chapter 7 or Chapter 13 bankruptcy is the best option. The following are some examples.
- When the bank is going to foreclose on your home
Bankruptcy is a good option when you’re facing foreclosure on your home. Many people file for bankruptcy to stop banks and mortgage companies from foreclosing on their homes. Once you have filed for bankruptcy, there will be an automatic stay which will prohibit your creditors from taking action against you to recover their funds.
It is important to note that the relief will only be temporary when you file Chapter 7 bankruptcy. Chapter 13 will offer you the opportunity to keep your house by catching up with your mortgage payments.
- Your car is going to be repossessed
If your car is about to be repossessed, you can stop the lender by filing for bankruptcy. This can be especially beneficial if your car plays an important role in helping you earn income. You can file for Chapter 13 to stop the lender from repossessing the car and to get more time to catch up with payments on the car.
If your car has been repossessed recently, filing for bankruptcy may help you get the car back from the lender.
- If you’re facing eviction
If you’re facing eviction by your landlord, you can file for bankruptcy to stop your landlord. However, the protection bankruptcy offers is not long-term. However, it will provide you with relief and allow you time negotiate with the landlord, find a new property to rent or save up to pay.
It is important to note that filing for bankruptcy won’t help much if your landlord has already obtained an eviction order from the court.
- You’re moving to a state with more stringent laws on exemptions
When you file for bankruptcy, you won’t have to give up all of your property. Different states list different exemptions. These bankruptcy exemptions allow you to keep some property that you will need to live and work.
Nebraska is considered more liberal than most states when it comes to bankruptcy exemptions. For example, if you file for bankruptcy in Omaha, Nebraska, you can get exemptions for clothing, household goods, vehicles, tax refunds and your home. If you’re considering a move to a state with less favorable exemptions, you should consider filing for bankruptcy first to protect your property.
- You’re facing a lawsuit
If you’re being sued by someone for failure to pay a credit card debt or a medical debt or for breach of contract or car accident damages, you can file for bankruptcy to stop the suit. Legal fees can be very high. If you’re not successful in your defense, the court could order you to pay a very large sum.
It makes better sense to file for bankruptcy and have this debt discharged. However, it is important to note that this won’t work for all lawsuits.
- You are about to start a job with higher pay
If you’re about to start a job that pays you more than you were earning before, you should consider filing for bankruptcy before taking the position. You will need to pass a means test in order to quality for Chapter 7 bankruptcy. Your average income for the previous six months is assessed as part of the means test. Higher income would mean that you’re less likely to pass the means test in filing for bankruptcy.
Filing for bankruptcy sooner would mean that you have a higher chance of passing the means test. However, it is important to remember that there are also other factors that the court considers in your application for bankruptcy. If your income is higher than your monthly expenses, you should consider filing for Chapter 13 instead.
- You may be receiving property soon
Do you anticipate receiving property any time soon, for example as part of your inheritance? While property can be exempted when filing for bankruptcy, there are instances when the court may rule for it to be included. Property such as lottery winnings or property obtained as inheritance ought to be reported to the court within 180 days after filing for bankruptcy.
It is best to file for bankruptcy early to avoid putting your property at risk.
Should you consult a bankruptcy lawyer?
Whether you’re still thinking about filing for bankruptcy or have made up your mind to file for bankruptcy, you should discuss your options with an experienced bankruptcy lawyer. Bankruptcy cases can quickly become complicated. Having an experienced attorney to guide you through the bankruptcy process will help ensure your property is protected.
If you’re in Omaha, Nebraska and are thinking of filing for bankruptcy, contact High and Younes LLC to get the process started.
Bankruptcy Attorney Omaha, NE