People contact me, and they tell me they need to file for bankruptcy; and frequently, they tell me that they need to file for bankruptcy NOW. So, I ask, why? Why now? Why not last month or next month — what is it that has you calling me now?
The most common response? Crickets.
Very few people have a ready answer to that question, and it is an important question. Bankruptcy eliminates your personal liability for debt you incurred prior to the time that the bankruptcy was filed. As a general rule, it doesn’t effect debt that you incur after the bankruptcy is filed. So, ideally you should file when you have reached bottom and are headed back up. Now, that isn’t always possible.
Regardless, I understand the impulse to want to file NOW when something bad happens — you lose your job, you incur significant health problems, your income drops. I get that deciding to file for bankruptcy is DOING something, and it addresses the rising stress and panic levels. But NOW may not be the right time.
There are lots of reasons why now might not be the right time. You just lost your job and have no idea when you will find another one, you have just been diagnosed with a major health problem, and you don’t know how you will manage with that and your existing debt. You can’t make the minimum payments on all your cards this month. You just missed your mortgage payment, and they are already calling.
A blog post can’t begin to tell you when the right time to file will be, but don’t be afraid to call and ask. Just don’t be surprised when I ask, why now?