As you have dealt with overwhelming debt, you have likely looked at all your options. Once you have decided on filing for bankruptcy as your solution, you may next consider when to file. Does the timing of your filing make a difference in the outcome?
The answer depends on a number of factors relevant to a bankruptcy case, such as your income and debt levels.
Before or after receiving expected income
You have just received your tax refund or another source of income. Should you spend it first or file for bankruptcy? How you spend your money before filing can determine the acceptance of your case, so be careful. Using income toward the mortgage or any other life necessity is usually okay and prevents you from losing it in bankruptcy. Spending it on unsecured debts, such as credit cards, can fall under preferential transfer, which is favoring one creditor over another. Spending it on luxuries, whether for fun or to protect assets, is an absolute no-no and can flag you for fraud. Paying back loved ones can also backfire if not enough time has passed since the transaction.
If your income has decreased, consider waiting until you have enough pay stubs to qualify for Chapter 7. If your income is going to increase, it may be better to file now.
Before or after moving out of state
If you plan on moving to a new state, review Louisiana's exemption laws and the new state's laws to determine which are better for your situation. However, you also need to consider the residency requirement for the new state to see when you will be eligible to use its exemption laws.
Before or after foreclosure
You probably will gain more by filing for bankruptcy before the foreclosure of your home occurs. It buys you more time and stops the lender from being able to take certain actions.
Disclaimer - Attorney Advertising. Under Federal Law, we have been designated a Debt Relief Agency and we help people file for bankruptcy relief under the Bankruptcy Code. This information is not intended as legal advice and no attorney-client relationship is created. Results may vary. Results not guaranteed. Dramatization - not actual clients in pictures and videos. Thomas C. McBride, attorney in Alexandria, LA.