There is a multitude of reasons that you may sit back and wait on filing for bankruptcy. One of the more common reasons for people delaying filing for bankruptcy is that they believe their financial situation will improve.
Sometimes, this is the case; however, more often, it simply is not the case. Other factors that might be causing you to delay include bad assumptions about how the bankruptcy process works, fear of bad news in regard to what you might have to give up, and general embarrassment about your finances.
The truth is that you should never be embarrassed about turning to bankruptcy, as it is a viable solution to getting your finances back on track. Furthermore, delaying your filing for bankruptcy comes with a handful of disadvantages.
Waiting and Selling Instead of Filing for Bankruptcy Can Hurt
Often, when people try to leave bankruptcy as the last option, they will try to do things to improve their financial situation. You might choose to sell a valuable property for money to pay off some of your debts, or you might give away things because you are worried that you would lose them to creditors or in bankruptcy court.
As it turns out, with bankruptcy there are plenty of exemptions available that can help you legally protect what is important to you. This means if you file for bankruptcy, you may not even have needed to sell that vehicle you owned because it might have been protected under an exemption and the debt could have been written off.
Many people who try to sell or give away property or even dip into important funds like their 401(K) or IRA end up regretting it. Paying for it over time to creditors would have been a much more sensible option.
Waiting and Improving Your Financial Situation Can Cause Ineligibility for Bankruptcy
Sometimes, you could delay filing for bankruptcy and manage to see your situation improve. It might not get you back to a viable standard of living, but you will be in a better spot than you were in before.
Unfortunately, this could still negatively impact filing for bankruptcy if you still end up needing to do so. For instance, it might make you ineligible to file for Chapter 7 bankruptcy, which is often a great option for those with consumer debts.
You need to pass a “means test” to qualify, which focuses on your income. Maybe you scored a better job or more hours of work, but it could make it so that Chapter 7 is not an option anymore.
You might get stuck with Chapter 13 bankruptcy, which will leave you with a payment plan that lasts either three years or five years. Over that time, you will be paying money instead of writing off all or most of your debts within about 100 days, as is the case with Chapter 7.
If Chapter 13 bankruptcy is actually a more viable option for you, delaying a bankruptcy filing could still impact that option. Instead of being eligible for a three-year plan, you might be forced into a five-year plan. This could mean paying more each month over that period of time.
At the end of the day, an experienced bankruptcy attorney will be key in providing you with sound legal advice. But waiting too long to reach out to an attorney could end up hurting you in the long run.
Cherry Hill Bankruptcy Attorney Provides Sound Advice About Managing Your Debt in New Jersey
It is advisable that you not delay filing for bankruptcy because you want to leave yourself with as many options as possible. In New Jersey, the Law Office of Joel R. Spivack will be able to provide you with the option that works best for you and help you get the fresh financial start you deserve.
We represent clients throughout New Jersey, including Camden, Gloucester Township, Winslow, and Pennsauken, NJ. Call (856) 488-1200 or fill out the online contact form to begin discussing your options today. Our office is located at 1415 Marlton Pike East, Suite 302, Cherry Hill, NJ 08034.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.