Filing bankruptcy is painful enough for most debtors. The last thing you want to do on top of that is to make a mistake in your filing that leads to even more heartache, especially the kind of mistake that can be easily avoided. That is why after you make the decision to file the case, you have to make another important decision- when to file the case.
While there are certain things not to do before filing your case, even if you have done some of these things, they can often be corrected by picking the correct filing date.
Generally speaking, the debtor should avoid filing if he/she has:
- Charged on a credit card or received a cash advance in the last 90 days
- Paid off an unsecured debt exceeding $600 in the last 90 days
- Paid off a debt to a family member in the past year
- Given a sizeable gift to someone in the past year
- Transferred an asset for less than equivalent value in the previous two years (or even longer, if your state law anti-fraud statute reach back is longer)
- Just purchased a vehicle
The debtor might also wish to avoid filing in certain other circumstances, depending on the facts of the case. Some scenarios the debtor might not want to file in include:
- About to receive an inheritance.
- About to receive a tax refund
- Received a sizeable bonus in the previous six months which inflates the debtors income on the means test.
- In the middle of working out a home loan modification
While filing after having done some of those things might not affect the debtors case in certain circumstances, it is important to alert your attorney to these issues before filing. Even though it might not be possible to avoid filing before letting the timeline run on one of these issues (for example, you might need to file to stop a foreclosure while knowing full well this exposes you to having a debt repayment to a relative rescinded), it is critical to run the facts by your attorney so you can be given all your options.
Often times the debtor will think he/she needs to file, well before it is actually necessitated. In those circumstances, waiting to file can often lead to a smoother bankruptcy case for the debtor.