Adam Law Group Blog

Should You Wait on Bankruptcy or File Now?


The COVID-19 pandemic and the subsequent havoc that the virus has wreaked on the economy have left many people facing difficult financial times. If you think that bankruptcy is a good option, you have likely also considered whether you should file for bankruptcy now or wait. 

On one hand, filing for bankruptcy too early might mean losing a property you would have otherwise been able to keep. Conversely, waiting on bankruptcy might mean you can avoid the process entirely. To help you decide whether to wait or file for bankruptcy now, this article reviews some critical factors that you should consider.

When You Anticipate New Debts

Times are financially difficult for many people. If you expect to have new expenses sometime in the near future, you should not rush into bankruptcy. This is because Chapter 7 bankruptcy only erases debts that you have at the time of filing. This means that any debts that you face later will still be yours and cannot be discharged.

When You do Not Want to Lose Certain Property

Despite their debts, many people have valuable property they hope to hold onto during the bankruptcy process. Many times, filing for bankruptcy immediately means the person will lose that asset while they might be able to retain the property if they wait to file for bankruptcy. 

For example, if a person expected a large tax refund and immediately filed for bankruptcy, they would likely end up losing this refund. If the same person received the refund, spent it on necessities, and then filed for bankruptcy, they would likely be able to keep the full refund.

If Your Recent Income Has Been Higher Than Average

When a person files for Chapter 7 bankruptcy, the court will review their income over the last few months to assess whether they are eligible for the Chapter 7 process. If a person’s income is too high, they will only be able to file for Chapter 13 bankruptcy, which involves a repayment plan that a person uses to repay some of their debts. 

Many people who experience economic hardships over the few months leading up to the means test often have no problem qualifying for chapter 7. If your income is temporarily higher than usual, however, it might be a good idea to wait an extended period of time for your income to drop again so you can qualify for chapter 7.

If You Have Decided to Modify Your Mortgage

One of the most common reasons that people file for bankruptcy is that they want to avoid going through foreclosure. Some people, however, end up filing so early that they are not able to secure a mortgage modification. 

This is because following a bankruptcy filing, most lenders refuse to negotiate the terms of a mortgage. Because bankruptcy cancels the promissory note on a mortgage, there is no longer room to negotiate following bankruptcy. Instead, it is best to pursue mortgage modification options first before filing for bankruptcy. 

Speak With an Experienced Florida Bankruptcy Lawyer

Bankruptcy is a challenging process, but a skilled bankruptcy attorney can make this process much easier. Contact Adam Law Group today to schedule a free case evaluation.