In the alphabet of bankruptcy, W stands for wait. This is not the literal meaning of waiting. Here, wait means to have patience and not to file the Bankruptcy petition with haste. Sometimes the bankruptcy process starts with a brief wait rather than a hurried trip to the courts. Why wait once you’ve taken the decision to pay off your debt?
There are many reasons, but the most have to do with how much of your assets you get to keep or how much hassle you may avoid by waiting to file.
Delays in filing for bankruptcy include:
- Stop using credit cards frequently and wait a while.
- Let the tax debt mature until it may be discharged.
- Make insider preferential transfers a non-issue.
- Spend effort maximising exemptions.
- To include the current year in Chapter 13, wait until the conclusion of the tax year.
The difficulty might arise from the passage of time between a financial historical occurrence and your bankruptcy filing.
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If done within 90 days of filing, transfers to ordinary creditors may be reclaimed by the bankruptcy trustee. If the transfer is to a member of the same family, the recapture time is one year.
You should wait to file for bankruptcy until at least 241 days have elapsed since taxes imposed within 240 days of filing bankruptcy are not dischargeable. In other situations, you need time to collect information, make purchases, create new accounts, and stop automated transfers.
There are other deadlines that don’t depend on when bankruptcy is filed:
- Wait until the statute of limitations expires to be exempt from the Chapter 13 debt restrictions. The statute of limitations establishes when a debt is no longer recoverable.
- Even though the return isn’t due until April 15th, taxes must be paid on January 1st. You could choose to use the Chapter 13 debt limits to pay off the taxes as a debt.
- In California, homeowners who are 65 years of age and older receive a mortgage exception that is about twice as large as that received by a married couple who are younger. It makes sense to hold off until your 65th birthday.
You must not wait more and take action now
Sometimes the price of waiting is too high for you to bear: a foreclosure is imminent, the automobile may be impounded, or your pay-checks are being withheld. The benefits and drawbacks of the timing concerns can be seen by competent bankruptcy counsel. You must consult a knowledgeable bankruptcy lawyer right now.