I am often asked when is the right time for a person or business to file for bankruptcy protection. The short answer is that you should file as soon as possible, and unless there is a good reason for not doing so.

For example, you might want to wait for a period of time if you have recently paid a large amount of money to a creditor or made a major purchase not in the ordinary course.  If you do not wait, the bankruptcy trustee can undo that payment or transaction and take the money back.  However, if you can qualify to file bankruptcy now, and there is not a good reason for waiting, then I would generally recommend filing for bankruptcy sooner rather than later.

Individual persons can file for either chapter 7 or Chapter 13 bankruptcy. Individuals who make their living from farming or fishing have a few different options as well. Small businesses are limited to filing for Chapter 7, although businesses can also file for chapter 11 – but chapter 11 is far beyond the scope of this blog post.  Personally, I like chapter 7 better because it wipes all of your debts out at once and is a lot faster than chapter 13. However, your net income (your gross income after payroll deductions and expenses) has to be below a certain level for your family size in order for you to qualify for Chapter 7 bankruptcy.

I prefer to file for Chapter 7 bankruptcy on behalf of the debtor, unless there is a good reason for choosing chapter 13 bankruptcy. A good reason for choosing chapter 13 would be if the debtor makes too much money to qualify for Chapter 7, or if the debtor has a lot of equity in a house.  Your bankruptcy attorney will be able to explain to you the differences between chapter 7 and Chapter 13, and which one is a better option for you.

Baland Law Office, P.L.L.C. represents consumer and small business debtors in both Chapter 7 and Chapter 13 bankruptcy proceedings. Please note that only individual debtors can file for Chapter 13 bankruptcy relief, not businesses.  Please call (763) 450-9494 to schedule an appointment to discuss your situation today and find out whether declaring bankruptcy is the right option for you!

DISCLAIMER: Baland Law Office, P.L.L.C. is a debt-relief agency, and Timothy H. Baland, Esq. is a debt-relief agent.  We help people like you to obtain bankruptcy relief.

WARNING: The information contained in this article does not constitute legal advice and may not be applicable to your situation.  Reading this blog post does not create an attorney-client relationship between you and Baland Law Office, P.L.L.C.  You should always discuss your situation with an attorney before taking any action based on what you may read in this blog.  To that end, please call (763) 450-9494 to set up an appointment to discuss your situation.



06/03/2016 3:33pm

You have nicely answered the question related to the file for bankruptcy. It is always a tough decision to make and there is always a need of an attorney who can help the business owner in solving these issues.

02/02/2017 5:54am

You should always have a back up plan. This is what I'm talking about.


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