To the surprise of many debtors, the Bankruptcy Code is full of provisions that relate to the timing of a personal bankruptcy. For instance, if you file too soon, you might have to divest yourself of certain Christmas or birthday gifts. Some debtors have had the embarrassment of having to ask for a few gifts back – or face civil and criminal allegations of violating the Code’s preferential transfer provisions.
Waiting too long can have even more dire consequences. The powerful automatic stay provision of the Bankruptcy Code stops debt collection efforts from virtually all of your creditors. Moreover, the automatic stay can help you keep particular assets, such as your car and home. When you’re working to emerge from bankruptcy later, these assets will be essential to your ability to earn income and your family’s ability to function.
By waiting, you don’t get the benefits of the automatic stay. And by not getting the benefits of the automatic stay, you may lose assets that you shouldn’t have to forfeit. Unfortunately, these assets can be hard to recover after they’ve left your possession. In bankruptcy and basketball, it’s easier to play defense with a lead than to rely on your offense to play catch-up.
Finally, quick filings can have one more additional impact on timing: the future. The faster you file, the more quickly you can get through the bankruptcy process and beyond the reach of preexisting creditors. You may have your eye on some non-exempt property. Buying before bankruptcy might mean that you’re just buying that vacation home for your credit card company; buying after bankruptcy may mean that you’re buying it for your spouse and your family.
Do you have questions about the timing of your bankruptcy? The attorneys at the Dallas law firm of Fears Nachawati are prepared to talk to you about your options and your needs. Talk to our professionals today for your free consultation.