When Is The Right Time To File For Personal Bankruptcy?

We’ve all heard a wide range of stories about people who have made the decision to file for personal bankruptcy to help resolve their debts and start over financially. If done correctly and at the appropriate time, bankruptcy can be the lifesaver an individual needs to get back on their feet. On the other hand, it can cause more even more problems for some people. This is usually dependent on each person’s individual situation, if they follow the terms of the agreement or plan of the bankruptcy the way they’re supposed to, and many other factors.

You may find yourself in a position to consider filing for personal bankruptcy in Florida, but before you make that choice, it’s important to take a long, hard look at your specific situation to see if this may be the right decision, and to consult an experience attorney.

Are you eligible to file for personal bankruptcy?  

Some people may be considering filing for bankruptcy only to find that they don’t actually qualify. This is important to determine early on so you’re not wasting time and resources on something you can’t actually achieve.

An individual generally has two options in terms of personal bankruptcy filing: Chapter 7 and Chapter 13 – and they each come with their own set of qualifications.

To qualify for Chapter 7, an individual must pass a “means test” to prove they are in definite need of filing and cannot sustain their debts any longer in their current financial situation.  If the person does not pass the means test, they will have to figure out their finances using a complex calculation process. If this is the case, it’s best to seek the advice of a professional or bankruptcy attorney to help navigate.

Chapter 13 works a bit different than Chapter 7 in that a person doesn’t need to pass a means test. Instead, they must prove their disposable income is high enough to pay back their debts. Secured debts like mortgages cannot exceed $1,149,525 and unsecured debts such as credit cards and medical bills cannot exceed $383,175. An individual must also have filed both state and federal taxes for the past four years to qualify for Chapter 13.

As always, it’s a great idea to seek guidance from an experienced bankruptcy attorney before making any decisions.

When is the best time to file?

Since everyone’s situation is different, the perfect time to file for personal bankruptcy also varies. Here are a few tell-tale signs that it may be time to file:

You’re about to lose your home. If you are behind in mortgage payments and creditors are threatening to foreclose on your home, filing for personal bankruptcy can give you more time to catch up and keep your property.

You’re abusing loans to pay off other bills. It’s not wise to pay bills with other bills (much like paying off one credit card with another). All this does is recycle your debt. If you’ve found yourself taking out loans to cover other expenses, bankruptcy may be a good option.

Creditors are calling nonstop. This one can be a bit tricky because creditors have their own set of rules to follow and can sometimes be a bit overboard when trying to seek repayment. Still, if this has become an everyday occurrence The mental turmoil of constant collection calls can be draining on yourself and your family.  If it has been going on for quite a while, looking into personal bankruptcy options may be a good idea.

How to file for personal bankruptcy 

Filing for personal bankruptcy can be done by an individual without representation, but seeking counsel from experienced bankruptcy attorneys may be the best option if your case is complex or you feel overwhelmed with the process.

The West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller can help you with deciding which chapter is right for your situation, sorting through your debts, paying creditors, and much more.  We help to give you peace of mind that you have made the right decision, even if that decision is to not file for bankruptcy. To set up a consultation and review your options, contact us today.

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