It typically takes a long time for a person to seriously consider bankruptcy. Most people attempt to get out of debt on their own for years before they take the step to contact a bankruptcy attorney. However, once a person meets with a bankruptcy attorney, it is typically a different story. After meeting with a bankruptcy attorney and having their questions answered many people decide that they would like to use bankruptcy law to help them get a much needed fresh start, and they want to do it NOW.
There is no problem with wanting to get your bankruptcy filed right away…..most people feel that way because they would like to move on with their financial lives as soon as possible without creditor calls, lawsuits and/or garnishments. In fact, Halcomb Singler, LLP, has filed many bankruptcy petitions for clients on very short notice in order to stop a sheriff sale, a lawsuit or a wage garnishment. However, it is best not to wait until the last minute to consult a bankruptcy attorney because in bankruptcy, the timing of your petition being filed is everything.
Why? Your assets in bankruptcy are measured as of the date that your petition was filed with the bankruptcy Court. There can be numerous implications to this date. One implication is filing a bankruptcy petition if someone owes you money. Examples of this include income tax refunds owed, employment bonuses owed, wages owed and personal injury claims owed. If you file a bankruptcy petition you are giving the trustee (who is the person appointed to administer your bankruptcy estate) the right to step into your shoes to take all or a portion of the amounts owed to you. So, the date on which the petition is important and must be carefully considered by your attorney.
The date of filing is also very important because one important part of your bankruptcy petition is disclosing your income. One of the income calculations that is used to determine whether you qualify for Chapter 7 or Chapter 13 bankruptcy (no payments vs. a payment plan) is based upon the 6 months prior to the month that you file. This calculation does not include the month during which you file. While this may not be of the utmost importance if you earn a set salary, it can be very important in the event you are paid on commission, work some overtime or have one particular portion of the year during which your income is higher.
Finally, your debt is measured only based upon the debt on the date that your file. This aspect can be significant in the event that a significant percentage of the debt that you have is the result of a the operation of a business or the attempt to seek profit. In the event that the majority of your debt is considered “business debt” as defined by the bankruptcy code, you are able to opt out of completion of the means test, which may mean that you qualify for Chapter 7 instead of a Chapter 13 payment plan. Sometimes it makes sense to wait a few months to file until your business debt is higher than your consumer debt to file your bankruptcy petition for that purpose.
There are other considerations regarding when you file include which exemptions apply to your bankruptcy in the event you have moved between different states within the past 2 years as well as which venue (which bankruptcy Court/division) is the proper place to file your bankruptcy petition. So, it makes sense to consult with a bankruptcy attorney in your area.
Most bankruptcy attorneys offer a free initial consultation during which they review your situation and give you advice. Be sure to contact an attorney who is located near your residence since most bankruptcy attorneys don’t drive to every bankruptcy district in the state to represent clients. For example, if you live in South Bend it’s best not to contact an attorney in New Albany. If you live in Indianapolis or any of the surrounding counties and need to file bankruptcy, Halcomb Singler, LLP, can probably help you. We offer a free consultation at our Carmel, Indiana office. If you want to schedule your appointment please contact our office at (317) 575-8222.