When is the Best Time to File for Bankruptcy?

This is Roger Ghai and I wanted to talk today about when is the best time for you to file a bankruptcy. I can tell you this from my years of experience, that you should always, if you’re thinking about filing a bankruptcy, call a lawyer as soon as that pops into your mind for the following reasons: I’ve had situations before where a couple has just got married and one of the spouses has a tremendous amount of debt and the other spouse has very little debt.
Then, the spouse that has very little debt has a high income and because of that, the other spouse who has a large amount of debt and wants to file to get rid of his or her debt can’t really qualify for Chapter 7. Sometimes I’ll get these calls and folks will be saying, “Well, my fiance wants me to file” or “I’m thinking about getting married” and I’ll say, “Well, hold up there. Don’t get married yet because it may impact your abilities to file for Chapter 7 relief.”
Another factor that can play into, when you should file a Chapter 7 Bankruptcy case or any case for that matter is going to be, whether both you, in the case of a married context, both you and your spouse have a job at the time that you’re thinking about filing a bankruptcy. Let’s say that one of you has been an unemployed for a significant period of time and then has obtained a great offer of a six-figure a year job and wants to take that job but has $300,000 in debt they’ve incurred because they’ve been unemployed for such a long time. What happens, in that case, is tragic, because basically, you’re going to take that job. You’re going to be using all of that money to pay your past two debts.
If you had just waited a little time and filed the Chapter 7 while you were not working, then you could have got rid of all that debt. You could have made a truly fresh start with the future income that you’re going to be earning from your present job. It makes a significant difference in people’s lives, sometimes I have to actually advise people, “Well, hold off on getting that job until we can actually get the case filed. Anything you do after the case within certain reason, we don’t have to account for it.” If you’ve taken that job or you’re thinking about taking that job and then wanting to file in Chapter 7 bankruptcy, you just simply may not qualify. You may have just shot yourself in the foot.
If you have questions about the timing on your bankruptcy filing, call my office at 770-792-1000.