subject: The Optimal Time To File For Bankruptcy [print this page] In the practice at John Carter Morgan, JrIn the practice at John Carter Morgan, Jr. PLLC, John Morgan is a bankruptcy attorney in Fairfax, Virginia, with a proven track record of helping people filing for Chapter 7 and Chapter 13 bankruptcies. According to Morgan, while there are differing opinions about when the optimal time to file for bankruptcy is, there is no harm in contacting a bankruptcy lawyer for guidance as soon as you foresee a problem with your personal finances.
The most common reason why people will file for bankruptcy immediately after financial hardship sets in is because they are facing some other emergency situation that can be helped by filing. Either they have got a foreclosure coming, they are being sued and the court date is next week, or they have a garnishment of their wages. When someone is fighting to get a repossessed car back or to stop creditors from garnishing his wages, filing for bankruptcy can be one way to do it.
What I Suggest
At my office, when someone comes in to see me and talk about filing for bankruptcy, I will typically tell him to hold off. Most of the people that I see would be better off waiting four or five months before filing for a Chapter 13 or Chapter 7 bankruptcy in Fairfax, VA. During that time, I would let clients know which options are available.
While my No. 1 rule in bankruptcy is that people must be sure that they are listing all of their debts, my second rule applies more to this particular scenario. I advise people not to pay anyone they dont have to in their months leading up their bankruptcy filings. Pay your mortgage, pay your rent, pay your electricity, put gas in your car, put food on your table, but do not pay your credit cards. Do not pay your doctors bills as wellnot even $5 or $15. People think that a small payment will get the collectors to shut up, but it wont. They are just going to keep bugging you.
For those who are planning on filing for bankruptcy, I suggest that they tell any debt collectors who call four simple things:
a) Tell them you have an attorney.
b) Give them your attorneys phone number.
c) Tell them you are filing for bankruptcy.
d) Tell them not to call you again.
Advantages to Waiting to File
One of the reasons I advise people to take four or five months before filing for bankruptcy is because it usually takes people that long to save up enough money to actually file. Bankruptcy fees and attorney costs can add up quickly, but most people can save up enough money over the period of five months to be able to afford it.
Additionally, there are other advantages to waiting to file, especially for anyone who owns a home and might possibly be entering into a foreclosure sale. Virginia is what is known as gavel state, which means that it is a non-judicial state where there is no court process necessary for foreclosure. Instead, all a bank needs to do to foreclose on a home is to publicize an auction in a newspaper for four consecutive weeks, and then hold the auction on the courthouse steps, the church steps, or another public location.
If your bank has yet to schedule your actual foreclosure sale, then my best advice is simply to wait for a while. In the meantime, I recommend that people consider not paying their mortgages and just live in their houses for free. Take that money that you would be paying to your mortgage and stick it in a coffee can to pay your attorney. You can also use the saved money to get caught up on necessary bills like car payments, and to pay for necessities like gas and food. Then, when the bank does choose a day and schedules the foreclosure sale, its at that point when I would advise a client to officially file for bankruptcy.
In my experience, filing for bankruptcy usually gives a person anywhere from six to 18 months of additional time in his house. Rather than rushing into a filing, I recommend that clients in Fairfax, VA, contact a bankruptcy attorney to determine their options in a bankruptcy case. With the help of the attorney they trust, people can use the time before filing for bankruptcy to save as much money as possible to use for paying off other fees and debts down the road.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
