Best Time to File Bankruptcy

Northridge Bankruptcy

People anguish about when it will be the best time to file bankruptcy. The best time to file bankruptcy is “before it is too late” to do you the most good. Bankruptcy stops debt collection actions that are being taken against you. This includes foreclosure, repossession, lawsuits, wage garnishment, and of course debt collection phone calls. It is intuitive that the best time to file bankruptcy is before one of those bad things happens to you.

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Best Time to File BankruptcyA true sad story about missing out on the best time to file bankruptcy.

Here is a true story about missing the best time to file bankruptcy. A few days ago I spent 45 minutes on the phone, (providing a free telephone consultation) with a prospective client. He was calling me from a hotel room because the day before he got forcibly evicted from his home. This poor guy had been in and out of foreclosure many times during the last several years. His house is now gone. He will not get it back.

Best Time to File BankruptcyHe kept putting off his bankruptcy filing. The guy was hoping for something to work out. He sat on his hands because he thought the bank “really wouldn’t do it.” The day before yesterday he was woken up early in the morning by the county sheriffs, who ordered him out of the house, and put padlocks on the doors.

Best Time to File BankruptcyBankruptcy could have stopped all of that. Now, it’s too late. That’s why he was calling me from a hotel room. He had nowhere else to go. The best time to file bankruptcy for that guy would have been before the foreclosure sale.

Everything he owns is still padlocked inside the house.


None of that had to happen. It could have been stopped.


How you know when it’s the best time to file bankruptcy

Here’s a list of things to consider about the best time to file bankruptcy. To really figure things out, you need professional advice. The best source of advice is from a bankruptcy lawyer. You can consult with one or more bankruptcy lawyers to learn about your your options. Consulting with a bankruptcy lawyer does not mean you are going to file bankruptcy. It only means you are gathering information. Here are some key considerations to help you know when it is the best time to file bankruptcy.

Best Time to File BankruptcyAre you eligible to file bankruptcy?

Most people with serious debt problems are eligible to file Chapter 7 bankruptcy. Chapter 7 bankruptcy is the most common bankruptcy case because it can get you out of most debts without the need to pay anything back. However, there are some restrictions. For example, people with above average income are going to be subject to a bankruptcy means test. High income earners are often able to file bankruptcy, but it’s complicated, and they need professional help. High income earners who are not eligible for Chapter 7 will probably be eligible for Chapter 13 bankruptcy. If you are absolutely broke with no assets of any real value, you are probably eligible to file.

Best Time to File BankruptcyHave you reached the breaking point?

You may have reached the best time to file bankruptcy if your debts have become insurmountable. This happens when the amount of your debts have grown to more than you could ever repay, even in the best of times.

Will your situation persist?

Now is the time to think about where you are financially. Are you going through a temporary hard patch, or is this going to be long term? If there is no clear end in sight, you may have reached the best time to file bankruptcy.

Best Time to File BankruptcyAre there any other reasonable alternatives that you can do on your own?

Think about ways and means to solve your financial problems. Many people have accumulated valuable toys they could sell to pay off their debts.

For example, maybe you have a hobby car or a Harley motorcycle. Many people are able to file bankruptcy and still keep things like that. Again, figuring this out is an area where you will need professional help from a bankruptcy lawyer. The bankruptcy laws are rather generous about letting you keep assets, up to a point. If you have a Harley, would you sell it to pay off your debts, or would your rather file bankruptcy if you could keep your bike?

Debt settlement plans are usually bogus. The truth is that debt settlement plans are falsely advertised, and promise you things that are simply not true. You can read more about why these plans are a poor choice for most people. 

Life after bankruptcy can be great for you

Bankruptcy is an amazing legal remedy. It can provide a fresh start, and free you from hopeless debts that you could never repay. Getting bankruptcy advice does not mean you will file bankruptcy. In my office we will never recommend bankruptcy unless you need it. But the decision is always up to you.

Cheap bankruptcy lawyer. Our fee starts as low as $775.00 + filing fee* with the Bankruptcy Law Firm of Bayer, Wishman & Leotta.





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Leon Bayer and Jeffrey Wishman are Los Angeles Bankruptcy attorneys. They have been practicing bankruptcy lawyers in Los Angeles for 37 years and are Certified Bankruptcy Specialists by the State Bar of California. These are lawyers who bring experience, skill and creativity to the highly complex area of bankruptcy law. At this Los Angeles law firm, the your initial consultation with an expert is free. Mr. Bayer is a coauthor of Nolo's The New Bankruptcy: Will It Work for You?, authors the “Ask Leon” series on Nolo’s Bankruptcy, Debt & Foreclosure blog, and writes on bankruptcy topics for Nolo’s website. In addition, Mr. Bayer devotes a significant number of hours to volunteer legal services. The State Bar of California has commended Mr. Bayer for this work every year since 2004.