If I were making a list of things my clients are tired of hearing come out of my mouth “Timing is everything” would probably be in the top five.
But here is the thing….TIMING IS EVERYTHING.
There are many reasons to delay a bankruptcy filing and if you are sitting across the desk from me and I am telling you that we need to sit tight a little bit longer before filing, I promise there is a good reason.
Now to be fair, there are also a lot of good reasons to get on top of filing a bankruptcy case quickly, but that is an article for another day. Let’s focus on why you may be told by me at a consultation that waiting is the right thing for you.
Credit Card Usage
If you have used your credit cards for any luxury purchase, like taking the kids to Disney World or a really fancy dinner to try to win back your ex-wife, we have to wait to file your case.
Any purchase like this is considered to be running up your credit cards in anticipation of a bankruptcy case and we must overcome that presumption. This is an uphill battle that likely involves litigation that you do not want or need in your life. It is better to simply wait it out and make the payments on the card.
The general rule on this is ninety days. No activity on the credit cards for ninety days prior to the filing of a bankruptcy. This means you are looking at waiting three months and paying the card. Depending on the specifics of your situation we may wait a little bit longer. I like to see the statements on these cases to truly gauge what should and should not happen based on the types of purchases, so don’t be surprised if I ask for six months of your credit card statements here. I am not being mean, I am protecting you the fine fine lawyers that represent American Express.
Did You Transfer Property
There is so much bad information out there about when and how you can transfer property prior to a bankruptcy case. The bottom line is that an ordinary course transfer may be a real problem in a bankruptcy case. Before you transfer ANY property you MUST MUST MUST call your bankruptcy attorney.
The reason is two words that are a nasty bad thing in a bankruptcy: FRAUDULENT TRANSFER.
This means that any transfer of any property to an insider or not for value was done for the purposes of avoiding creditors. Again, it is incumbent upon you, the Debtor, to overcome this assumption. So while your transfer may have been perfectly legitimate and a total non-issues, that doesn’t mean that you should file a bankruptcy today and invite litigation when you can simply wait or make sure all your papers are in order to deal with a trustee or creditor that wants answers.
So the answer to your question is no you can’t transfer that Porsche to your cousin tomorrow and file bankruptcy in two weeks and I don’t care that Google Esq says that you can. Just don’t. Call me first.
Income - Too Much or Not Enough
Income and timing is so critical to a bankruptcy case. When you work, when you get a bonus, are you paid on a ten month schedule, do you have a less busy time/more busy time of year that affects your income. This is information that matters and can change the actual cost of a bankruptcy and your trustee payment.
How much money you make or don’t make can establish the type of case you file and if/how much you pay the Chapter 13 trustee. It is absolutely essential that you see a bankruptcy attorney to establish if right now is the right time to file your case. It may not be. Waiting two months may be the difference between a Chapter 7 and a Chapter 13. It may be the difference between a 100% plan and a minimum payment plan. It may be the difference between a feasible plan that saves your home and a case that the Trustee knocks down because it just doesn’t work.
This is your wallet and how much you pay out of it to your creditors that is on the line here so know that if I tell you that we need to wait to file that you understand I am telling you this for a reason and that reason is your bank account.
The Bottom Line
These are just a few reasons that we may discuss in the timing your case. As I said, there may be reasons you can't wait and we need to hurry up. When you come into discuss your case, we will go over all aspects of a filing and make sure that your individual needs and your individual case is addressed. Every case is different. Your case may not look like your brother's case.
Need help filing a bankruptcy case? Questions? Give us a call at 201-533-1100 or request a consultation via our online chat service and one of the attorneys from our firm will call you.
Image courtesy of Sira Anamwong at FreeDigitalPhotos.net