Filing for bankruptcy is a big step, so naturally, it is a process you want to take your time to think about. However, in some instances, you do not want to take too long. There are real-life scenarios in which filing for bankruptcy is a time-critical process. Learn about some of the instances when it is better to file sooner rather than later.
Foreclosure Is Near
If the mortgage company has already sent you a notice that the next step is foreclosure, you should file as soon as possible. Filing for bankruptcy does not eliminate mortgage debt, but it does prevent the mortgage company from moving forward with removing you from your home. While you sort out your finances to determine if you can settle your other debts or whether you need to move, you will have comfort in knowing you have someplace to live.
Planning to Move Soon
Remember that bankruptcy laws are handled on the state level. Consequently, the guidelines for who can file and what protections are authorized can vary from state to state. If you plan to move in the near future and the state you currently live in offers greater protection than your future home state, it may be in your best interest to file before you move.
Facing Wage Garnishment
Tough financial situations are only made worse when a person's wages are garnished. If you are struggling to pay your bills, the process will only become harder if you have less money coming in. Similar to mortgage debt, filing for bankruptcy puts a halt to any collection activities against you, including garnishment. This protection goes into effect right away and extends throughout the bankruptcy process, so it is one less thing you have to worry about.
Starting a New Job
All states have an income threshold that determines what type of bankruptcy protection a person is afforded. Unfortunately, just because a person's income might exceed the threshold, it does not mean they are in a better financial situation. If you have plans to look for and start a better-paying job soon, you may put yourself in a better situation if you file for bankruptcy while you make less so that you can afford yourself greater protection.
If you face any of these instances, you should speak with a legal professional before you file. Sit down with a bankruptcy attorney to determine if bankruptcy is an option for you and how swiftly you need to file.