Filing for bankruptcy is rarely a decision that feels “good,” but there are some choices that can make filing for bankruptcy a less stressful experience that will result in the most advantageous result.
Filing for bankruptcy requires much more than filling out a simple form and submitting it for approval to a judge. The process can require multiple meetings with court personnel and a lawyer, and it may take years to actually complete the proceedings.
Therefore, filing when the time is “right” can help you undertake the process with the greatest chance of success. Here are some things to remember when considering the best time to file for bankruptcy.
Examine the Types of Debts You Owe
One of the biggest misconceptions people have about bankruptcy is that the process is a swift elimination of all debts in exchange for the sale of one’s possessions and assets. The process may indeed result in the sale of assets to cover debts incurred, but the court cannot eliminate all debts.
However, there are some debts that bankruptcy may not eliminate, and if your main source of debt is something like a student loan, you might not receive many benefits from the bankruptcy process. It’s particularly difficult to discharge student loan debt.
Financial magazine Forbes reveals that discharging student loans requires meeting the following conditions:
“the borrower has extenuating circumstances creating a hardship;
those circumstances are likely to continue for a term of the loan; and
the borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments – such as try to find a workable payment plan.)”
Interestingly, former students with loan debt could have their loans discharged in bankruptcy prior to 1976. After that date, Congress began making changes to bankruptcy laws that would eventually make it almost impossible to have the loans discharged in bankruptcy.
Think About the Impact of Bankruptcy
Filing for bankruptcy is a last resort for families, companies, and individuals who can see no alternative. The process can relieve a family of many debts, but it can also result in a black mark on the family’s credit report that can last a full decade for Chapter 7 bankruptcy or seven years for Chapter 13 bankruptcy.
You may wish to consult with a lawyer or financial expert before deciding to file for bankruptcy. Some creditors will agree to let you make lower monthly payments for months or years. While you may end up paying more money to your creditors in the long run, you may be able to avoid bankruptcy with a special payment plan.
Remember: Be careful when dealing with credit counseling services. Not all credit counseling companies operate as non-profit entities, and you could end up paying more to the service than to your creditors.
When is the Best Time to File for Bankruptcy?
Truthfully, there is no “best” time to file for bankruptcy, but meeting with a lawyer to discuss the feasibility of filing and the likelihood of success can help a debtor make a smart and informed decision.
It’s also important to remember that bankruptcy isn’t a solution that’s available to absolutely everyone.
Legal advice website Nolo reveals:
“You may be prevented from filing for Chapter 7 bankruptcy if you have enough income to repay your debts in a Chapter 13 plan. Or you may not qualify for Chapter 13 bankruptcy if your debts are too high or your income too low.”
Even if your debts are the kind that bankruptcy can cancel, other factors impact whether the process may even be available.
Do You Need Assistance from a Bankruptcy Lawyer in Illinois?
Are you considering bankruptcy? Do you have questions about filing for Chapter 7 bankruptcy or the requirements for filing for Chapter 13 bankruptcy? Contact Suburban Legal Group for expert legal assistance from experienced bankruptcy attorneys.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.