When is the best time to file a Chapter 7 bankruptcy?

You would think that the best time to file a Chapter 7 bankruptcy is as soon as you can no longer afford to pay your bills. However, there are many different factors to consider when deciding the best time to file a Chapter 7 bankruptcy. Here are a few of the factors to consider.

1. You have tax debt for several years. Many people, accountants included, believe that tax debt cannot be wiped out or "discharged" in a Chapter 7 bankruptcy. That is not correct. After a certain period of time, taxes become dischargeable. Filing a Chapter 7 bankruptcy too soon could leave you responsible for thousands of dollars of tax debt that could have been discharged if you had waited a few months. You should talk to an experienced bankruptcy attorney if you owe several years of taxes to find out when is the best time for you to file. The attorney will need to know how much you owe for each tax year and when the tax returns were filed for each year.

2. You have anticipated receiving a large tax refund. Filing before you receive the refund could prevent you from keeping the refund. I have seen many people who filed bankruptcy, without the assistance of an experienced bankruptcy attorney, lose thousands of dollars because they filed their bankruptcy before they received their refund.

3. You are being sued over a debt. When a creditor obtains a judgment against you, they have several options for collecting on that judgment. One of the most frequently used methods is to initiate a garnishment. While bankruptcy will stop a garnishment, there are times where you need to file before the creditor can start the garnishment process.

As you can see from these three examples, the decision as to when to file a Chapter 7 bankruptcy is not always simple. Before you file a Chapter 7 bankruptcy, you need the assistance of an experienced bankruptcy attorney. Contact Hampton Roads Legal Services at 757-276-6555 to schedule a free consultation with our experienced bankruptcy attorney. 



Edrie Pfeiffer
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Edrie Pfeiffer, Bankruptcy & Divorce Attorney