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Are You Waiting Too Long to File Your Philadelphia Bankruptcy?

Most people are hesitant to file for bankruptcy. They’ve been told, over and over again, that it’s only something to use as a “last resort.”

Instead, filing bankruptcy can be a savvy financial move to employ, especially after circumstances change. For example, right now thanks to Covid-19, unemployment is at an all-time high. There’s a good chance you don’t have the same income you had long ago. 

Waiting too long can mean throwing a lot of income down a black hole that doesn’t benefit you or your family at all. For example, you may be pressured into continuing to make payments on a credit card you’ll never pay off, or pressured into paying a collection agency, a move that isn’t going to help your credit improve.

Waiting too long can also harm your mental health. It puts you in what experts call the “financial sweatbox.” 

“That’s the period when people are facing asset depletion, debt collection lawsuits, and forgoing basic necessities like food to avoid filing bankruptcy.” –Nerdwallet

Staying in the sweatbox means you are more likely to face a lawsuit, your DTI is likely to be 40% higher than others, and you’re likely to have half the median assets of those who went ahead and filed when they saw the warning signs. 

If you’re thinking about taking money out of retirement accounts or selling assets to pay debts it may be time to stop and take a deep breath.

How do you know it’s time to file?

  • You already know your income isn’t covering your expenses, and this is unlikely to change in the near future.
  • You don’t have any savings.
  • You’re using your credit cards for basic necessities.
  • You’re making only minimum payments every month.
  • You can’t make even minimum payments every month.
  • You’re behind on your mortgage or rent.
  • You’re being harassed by creditors day and night.
  • You’re constantly stressed.

If worries about your credit score are stopping you, then you should consider this report from the Federal Reserve Bank of Philadelphia. Your score is likely to go up by at least 80 points after you file.

Of course, there are issues of timing when you file bankruptcy. If you’ve made a major transfer of property recently, have made a major purchase with credit, or have taken certain other steps then it would be smart to wait awhile, as you may trigger the “presumption of fraud” exemption in bankruptcy court. 

Yet nothing stops you from meeting with a bankruptcy lawyer. As long as you are open and up front about your situation your lawyer should catch these issues and help you choose your filing date with them in mind. Your lawyer can also tell you definitively which Chapter of bankruptcy you should be filing to best achieve your financial goals.

Think it might be time for you to file? Contact our office today to schedule a free consultation.

See also:

Is it a Good Idea for Bucks County Residents to Settle Debts?

Can I Keep My House if I File for Bankruptcy in Pennsylvania

When Is the Best Age to File for Bankruptcy in Pennsylvania?