Many people who are thinking about filing for bankruptcy are also apprehensive about whether they might be making the move too quickly. Any bankruptcy lawyer will tell you there is no perfect time to file. However, there are a few things you can look at to determine if the time is right.
Have You Previously Filed for Bankruptcy?
One of the simplest ways to decide if it's too soon is to consider how long you may go between filings if you have filed before. If you haven't filed before, then you will be eligible to have your petition heard. Those who have filed must wait 8 years from the time they filed their last Chapter 7 petition or two years since their last Chapter 13 petition. People filing under Chapter 11 or 12 must wait four years between petitions. Notably, if you must file Chapter 7 after a failed debt restructuring under Chapter 13, you will be able to do that.
Do You Expect to Ever Pay Down Your Debts?
Presuming you're eligible to file, the next question is whether your circumstances are bad enough that you have no hope of paying your debts in the foreseeable future. If you're in a situation where interest is accumulating faster than you can pay it down, a bankruptcy attorney will tell you it's probably time to file.
Have You Explored Other Options?
Restructuring your debts doesn't have to go through the court system. Some creditors may be willing to reconfigure your payment arrangements to accommodate your situation. Bear in mind, this is only worth doing if the new arrangement helps you pay off your debts. Delaying the inevitable isn't a good idea. If you'll never be able to pay, it might be worth considering bankruptcy even if creditors are willing to negotiate.
Do You Make Less Than Half of Your State's Median Income?
The standard for assuming someone has the right to seek bankruptcy relief is based on a state's median income. Specifically, the court will look at whether you make less than half that amount. If so, you won't have to prove your financial eligibility.
However, you may still be able to file even if you make more. You will have to document that your financial circumstances justify the court providing relief, though.
Have You Talked With a Lawyer?
You should speak with a bankruptcy attorney and learn about your options. Don't rush into the process without talking with a professional. They will help you check eligibility guidelines and determine which form of bankruptcy to file.
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