Technically, most individuals experiencing financial hardship can file for bankruptcy at any time. However, many people want to avoid bankruptcy if at all possible. They might try to find other debt solutions, such as negotiating with creditors or partnering with a private company for a consolidation loan.
Some people try so hard to avoid bankruptcy that they let their financial circumstances slowly deteriorate when bankruptcy might be the best option available to them. Choosing the right time to file for personal bankruptcy can be as important as selecting the right type of bankruptcy to pursue.
When is the best time to initiate a personal bankruptcy filing?
After creditors take legal action
Receiving notice of a pending creditor lawsuit can be a reason to file for personal bankruptcy. Creditor lawsuits can result in the loss of assets or in wage garnishment. Either of those scenarios can significantly worsen an individual’s financial circumstances. The automatic stay provided when a person files for bankruptcy halts all collection activity, including lawsuits. A bankruptcy filing before a creditor lawsuit goes to court can result in the dismissal of the pending lawsuit. People can avoid judgments that could result in worse financial hardship.
After missing payments on secured debts
Many people turn to bankruptcy to protect specific assets. Typically, people use loans to purchase vehicles. Buying a home with a mortgage is also common practice. Individuals who have missed payments on vehicle loans or mortgages are at risk of the bank taking action against the collateral property. Filing for bankruptcy can help people protect their homes and vehicles from aggressive collection efforts.
After the end of a specific personal hardship
For some people, the end of particularly difficult circumstances might be a sign that it is time to file for bankruptcy. Someone who recently completed months of aggressive medical care might benefit from bankruptcy as a way of eliminating medical debt that they incurred when they were unable to work. Recognizing the warning signs that it might be time to consider filing for bankruptcy can help people avoid worsening financial hardship. People who eliminate their debts and prevent more aggressive collection activity through bankruptcy can then work to improve their financial circumstances.
Those considering a bankruptcy filing can reach out to the Quinn Law Firm to discuss their options by clicking here or calling our office at 814-833-2222.
