Timing it Right: How (and When) to Plan a Phoenix Bankruptcy to Work in Your Favor

They say that timing is everything, and in the case of filing for bankruptcy in Arizona, the saying really does hold true. While many people assume that waiting as long as possible to file for bankruptcy is the right move, still others “jump the gun” and rush into bankruptcy quickly in an effort to hold off aggressive creditors. There is no one “right” time to file; for every person and every financial situation, there is a strategy that may yield maximum results.

Slow it Down: When Waiting to File Makes Sense

There are two primary factors behind each bankruptcy: bills and income. Sudden changes in either could significantly impact how effective your bankruptcy will be. For instance, if you have just received a serious medical diagnosis and expect several large medical bills in your future, it may make sense to wait to file for bankruptcy until you have been billed in full. The reason for this is that when you file for bankruptcy, only your existing debt is discharged—any new debt you incur during your bankruptcy will be your responsibility.

If you have recently made a big purchase on credit, it may also be wise to delay your petition. Bankruptcy courts are on the lookout for people who take out debts without intending to repay, and while fraud may be the furthest thing from your mind, it will certainly be the first thing on your creditors’ minds should you file for bankruptcy. Having a “buffer zone” between your purchase and filing for bankruptcy can help protect you from claims of fraudulence.

One of the most common reasons that you may want to postpone filing for bankruptcy is a sudden drop in income. While this may seem counterintuitive, remember that the means test measures your average income over the last six months to determine your eligibility. The longer you wait, the lower your six-month average becomes, leaving you with greater odds of a successful petition.         

Hop to It: When Filing Now is Better

Filing for a Phoenix area bankruptcy is never a knee-jerk reaction, but there are times when filing immediately can help. In situations when time is of the essence—like a foreclosure—a well-timed bankruptcy petition can buy you time and block lenders from selling your home. An impending lawsuit against you can also be a good reason to file for bankruptcy in a timely manner, as it can protect you from costly judgments.

Before You Act (…or Wait to Act)

If you are exploring bankruptcy as a financial option, speaking with an experienced bankruptcy lawyer can help you determine a plan that is right for you. At Curry, Pearson & Wooten, our Arizona bankruptcy attorneys can help you make the right moves at the right time. Call us today at 602-258-1000 to get started on your financial future.