When is the best time to file for bankruptcy? It’s really a broad topic which does not get enough notice. Sometimes filing quickly can save valuable assets and property, not to mention headaches. Sometimes delaying your bankruptcy may be the best decision you can make. This guide focuses on helping our Texas readers with filing for personal bankruptcy, but it applies to filers across all states.
Why file quickly?
Most commonly, you want to file quickly in order to use the automatic stay to protect yourself. The automatic stay stops all collection and repossession activities against you, stops any utility shut offs, while also stopping Texas court cases. The delay is only temporary, but it takes only a matter of months to decide on your next steps. There are other cases where you might want to file quickly, including if you plan on acquiring a property which won’t be protected (because it’s nonexempt); by filing sooner you can keep it.
Why delay filing?
The biggest reason to delay filing is to protect your property from being taken. If you transferred money or property to someone else, then went ahead and filed for bankruptcy, it will rarely work out. You need to delay this decision. What happens is the trustee can void this step. If you transfer property within one year of filing in order to protect it from creditors, by law this can be stopped. It makes sense: if you could just transfer a home or car to another person, then file bankruptcy, it would be loophole in the system.
There are some other reasons to delay your filing, namely if you expect some new bills to arrive. You may be expecting a large hospital bill, for example, and want to have this discharged along with your bankruptcy. This, when within the laws, is allowed.
In either case, you should consult with your bankruptcy lawyer.
What about exemptions?
You want as much of your property to be exempt from the bankruptcy as possible. This is logical, but not always easy. However, it’s more than worth investing the time into learning. Many of your assets will in fact be exempt from being part of your discharge. You want to ensure you can claim the homestead exemption, for example, which can help you keep your property. If you are not eligible for a homestead exemption, it’s possible you may lose your home. State laws differ on this. Texas laws are in fact some of the best in protecting your home; you have no dollar amount limit,and your property can be quite large and still be eligible.
What if you have questions?
As you can see with the laws for the homestead exemption, this can be complex. It’s natural not to understand all of it. The good news is that these laws are designed to protect, not to take. If you are unsure of when is the best time for you to file, or on how to protect your assets, it’s time to consult with a Texas bankruptcy attorney.
