Clients often ask ‘when should I file for bankruptcy?’ Is there any specific timeline to wait to declare bankruptcy or a consumer proposal? Is there anything I should consider before I file?
The first thing to do if you are in financial trouble is to talk to a bankruptcy trustee so they can help you decide that you should file for bankruptcy. Once you have made the decision to file though, you will probably want to file and get it over with to start relieving your stress.
There are, however, some considerations that may cause you to wait to file for bankruptcy protection.
Three Reasons To Wait To File For Bankruptcy
- If you are expecting a tax refund, you may want to wait until you receive your refund. That’s why relatively few people who are expecting a tax refund file bankruptcy in January or February.
- You may want to take the time to open a new bank account at a new bank, especially if you owe that same bank money for a loan your will be including in your bankruptcy. If you continue banking at a bank where you owe money they may inadvertently take a loan payment out of your bank account even though you have filed the paperwork to receive bankruptcy protection. If may take a week or two to open a new bank account and switch your payroll to your new account. That is a reason to wait to file until it is set up.
- Finally, if you cannot afford to continue making payments and are considering surrendering a house or car prior to bankruptcy, it may be prudent to find a new place to rent, or a replacement vehicle, before you file.
When Not To Wait
If your wages are being garnished, your bank account has been frozen or you are under some threat of legal proceedings to seize your assets, then timing may be of the essence.
Your bankruptcy trustee can advise you fully on when to file for bankruptcy, so be sure to ask lots of questions during your no charge initial consultation.