One benefit we can get when filing for bankruptcy is the Automatic Stay, here your creditors are notified of your filing and are asked to stop all collection efforts. Signs that indicate that you should file for bankruptcy immediately-
- If unemployed for a long period- If you are unemployed for an extended period and have debts but cannot pay the creditors because you can’t even meet your living expenses.
- If your residential property is going into foreclosure- –The main benefit as told earlier is the automatic stay; here it will also stop your property from going into foreclosure. If you want to keep your property then filing under chapter 7 will help you to make some sort of debt clearance, and filing under chapter 13, will help you restructure your debt repayment.
- If you are getting evicted- –Again the automatic stay will stop the landlord to evict you from the property but if the landlord gets a judgment for eviction then filing for bankruptcy won’t help you.
- If there is a risk of your car being repossessed- –Here the automatic stay will again stop it from being repossessed. Under chapter 7 you will have to pay the debts in lump sum amount and under chapter 13 you will be provided with a repayment plan to clear your debts.
- Garnishment of your wages- If you file for bankruptcy then the automatic stay will stop the garnishment.
- If you have a lawsuit going on for debts- The automatic stay when filing for bankruptcy will stop your lawsuit as well.
- If you have a lot of debt and have started a high-paying job recently- When filing for bankruptcy, the court will see your average monthly income for the last 6 months from the date of filing. The longer you stay in the highest paying job; your average monthly income will increase. The longer you keep from filing for bankruptcy, the less you will have a chance to file under chapter 7, and you will have to file under chapter 13.
- If you have huge debts and are about to receive property or some asset soon- If you have huge debts but you are going to get an inheritance from a severely ill aunt or some asset from divorce or employment bonus, and don’t want to give it away in debt or when filing for bankruptcy. It will be best if you file before you receive anything because after the date of filing if you receive an asset or anything of value it won’t be considered under this file and you won’t lose it.
- If you are moving to a place that does not have favorable exemptions- if you are planning to move from your state of domicile, that is your permanent residence, then it would be better for you to file in your current state before moving. Your state of domicile is the place where you have the right to vote or the address of your driver’s license.