It would seem that the best time to file a Chapter 7 bankruptcy is when you have bills that you cannot afford to pay any longer. However, there are several factors that may come into play in deciding when is the best time to file the case.
You are being sued over a debt and you are concerned about being garnished.
In Virginia, a creditor must wait 10 calendar days after they have obtained a judgment against you before they can file for a garnishment. While filing a bankruptcy can stop a garnishment, you may want to file before the creditor can even put a garnishment into place.
You have just filed your tax returns and you are due a large refund.
When you file a Chapter 7 bankruptcy, any assets that you have or may be entitled to, such as a tax refund, are part of what is called the bankruptcy estate and you are not allowed to spend that money. If you are scheduled to receive a large refund, it may be better to wait until after the refund is received and spent to file the Chapter 7 bankruptcy. Of course, you can also use part of that refund to pay your bankruptcy attorney.
You are currently unemployed and cannot pay your bills.
I normally advise individuals to wait until they have a job before they file for bankruptcy. While you are unemployed, your creditors have limited options for collecting from you and you may have to incur further debt while you are unemployed. Once you file a bankruptcy, you cannot add debts incurred after the case was filed so it may be better to wait until you have a job to file.
You need to clean up your credit.
The sooner you file a Chapter 7 bankruptcy, the sooner you can start rebuilding your credit. This may be the exception to number 3 as many employers now look at credit reports before offering someone a job. If you think that your current credit report may be effecting some aspect of your life from obtaining credit to obtaining employment, you may need to file a Chapter 7 as soon as possible so you can begin to rebuild your credit.
You can no longer afford your house and want to surrender it.
This is one situation that you need to talk to an experienced bankruptcy attorney about. Your long term goals will affect when the best time is to file a bankruptcy and surrender a house. Even if you indicate that you intend to surrender your house in a Chapter 7 bankruptcy, you may still have financial obligations related to that house. You will need guidance from an experienced bankruptcy attorney as to the best time to file a Chapter 7 bankruptcy when you are surrendering a house.
If you are thinking about filing a Chapter 7 bankruptcy, you need to find out the facts before you file. Contact Hampton Roads Legal Services today at 757-320-2010 for a free consultation on what is best for you.