Making sure it's the right time to file bankruptcy | Reed Law Firm, P.A.

Making sure it’s the right time to file bankruptcy

On Behalf of | Sep 16, 2022 | Bankruptcy |

If you’ve been struggling to make ends meet, you are no doubt not the only person in South Carolina to currently facing financial distress. In fact, data shows that many families, whether single or dual income, are having trouble making ends meet. You might be considering filing for bankruptcy, which can be a valuable financial tool to alleviate debt and start afresh toward a stronger financial future.

Timing is a key factor when it comes to determining if you should file a bankruptcy petition in court. In conjunction with timing, your expenditures and other financial information from recent months can make right now either a good time or bad time to request bankruptcy.

Have you made recent payments to creditors?

If you have recently sent payments to lenders, then it might be best to delay filing for bankruptcy. The term "preferential transfer" refers to giving certain creditors or lenders preferential treatment before filing for bankruptcy. In such cases, the trustee appointed to oversee a bankruptcy might submit a request to get that money back.

In other words, if a family member, friend or creditor has loaned you money, and you may a payment to the lender within a certain amount of time before filing for bankruptcy, the trustee would be acting in accordance with the law to request a return of those funds.

Filing for bankruptcy creates an automatic stay against collections

If you are worried about losing your home to foreclosure or have been dealing with creditor harassment, it might be a good time to file for bankruptcy. If you file under Chaper 7 or Chapter 13 programs, for instance, it activates automatic stay against attempts to collect debt or to sue you.

In this way, filing for bankruptcy might protect a person from losing a home or from being dragged into court in a lawsuit over a debt.

Make informed decisions when it comes to filing for bankruptcy

Each bankruptcy program carries its own eligibility requirements. You might not qualify for one but could be eligible for another. It’s important to learn as much as you can about each option in order to determine which one would be best to help you accomplish your goals regarding debt relief and other financial issues.

Learning more about state laws and eligibility requirements might also help you determine if the timing is right to file a particular petition. You don’t want to file too soon or too late. Someone who is experienced in navigating the U.S. bankruptcy system can provide guidance and support as you execute a new financial relief plan.

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