Bankruptcy: Should You File Before or After the Holidays?

If financial problems have you in a quandary and you are considering filing for bankruptcy, you are not alone. In 2023 alone, nearly half a million bankruptcy filings occurred, compared to just about 390,000 filings the previous year. After decades of a decline in the number of bankruptcy cases, the numbers are inching upwards again. After making the decision that bankruptcy is the right move for you, the next question relates to the timing. After all, wouldn’t it be nice to have one more extravagant holiday before trimming all the fat? Maybe, maybe not.

Discharging Debt 

The big appeal of bankruptcy is that debtors are released from liability for much of their debt. That means creditors no longer come knocking, because there is no personal responsibility to repay. How does it work?

In a Chapter 7 liquidation, the discharge generally occurs within about four months of filing, although creditors must leave you alone as soon as you file. In a Chapter 13 filing, it occurs as soon as the repayment period ends, which is a number of years under a restructuring plan. Creditors will be notified by the court that the debt has been discharged, and that they may no longer make any attempts at collection.

Rules of Discharge 

Not all debt is discharged, however. Exemptions include certain tax claims, child support and alimony debt, most government loans, debts related to malicious property or personal injury, debts related to drunk driving, and fees to homeowners’ associations.

One More Thing… 

Another thing that may not be dischargeable is a credit purchase or cash advance that occurred within three months of filing for bankruptcy. So if you want to live it up with a lavish Christmas and expensive vacation in December thinking that the debt will all disappear when you file for bankruptcy in January, think again. You will still be responsible for all the debt you accrued, and January could turn out to be a real headache.

So When is the Best Time to File? 

As soon as you realize that you are in serious financial trouble, you should consider meeting with a knowledgeable bankruptcy attorney who can walk you through the process and timetable of bankruptcy, as well as clarifying any questions as to the type of bankruptcy best for you and the short- and long-term expectations. You may likely find that eliminating the pressure of creditors immediately is much more appealing than trying to have one final holiday season that will serve to get you further behind financially.

The Legal Guidance You Need 

The experienced Miami bankruptcy attorneys at The Law Office of Julia Kefalinos can help you get where you want to be financially. To discuss, schedule a confidential consultation in our Miami office today.

Source:

uscourts.gov/news/2024/01/26/bankruptcy-filings-rise-168-percent#:~:text=According%20to%20statistics%20released%20by,31%2C%202023.