There are many factors that can play into your decision to want to file bankruptcy. Oftentimes creditor harassment becomes too much to handle, or you come to the realization that you are in too far over your head and need some help finding a way out. Most of the time we encourage our clients to stop waiting and take action right away to get on the fast track to debt relief.
But, there can be some instances where it is better to wait. Unfortunately there isn’t a simple checklist to determine the right moment to file bankruptcy. The easiest way to know for certain is to meet with a bankruptcy attorney to discuss your financial situation and your goals for the future.
Below is a personal story from one of my clients who I advised to wait.
I Never Thought It Would Happen To Me
Last year was a very hard chapter in my life. I lost my job and even though I had unemployment for several months, I fell extremely behind on my bills. Eventually I was able to find new employment, but no matter how hard I tried I could not catch up. A few of my creditors were willing to work with me, but a majority of the others demanded payment in full, which I just didn’t have the money for. One of those creditors then filed a lawsuit against me, and when I could not pay it, the judge granted a judgment and eventually ordered a wage garnishment. That was when I decided that it was time to call a bankruptcy attorney.
My story is a common one. I consulted a bankruptcy attorney but I did not act quickly enough to prevent the creditor from receiving money from my wages. By the time I did meet with one, I had already lost a substantial part of my paycheck for two weeks. I didn’t think it was smart to wait another moment to act, but that is exactly what my attorney advised that I do.
Meeting With an Attorney to Discuss Bankruptcy
In my initial meeting with my bankruptcy attorney, Wesley Scott explained that we could rush to file a bankruptcy case that would stop the garnishment immediately. He explained that when you file a bankruptcy case the automatic stay provisions of the Bankruptcy Code prohibits creditors from taking any actions to collect a debt, including wage garnishments. If I could stop the creditor from taking any more money out of my paycheck by filing a quick bankruptcy, that is exactly what I wanted to do!
I was ready to jump into a bankruptcy that very minute. However, Wesley then went on to say that I should wait to file bankruptcy for another two weeks to allow the creditor to take two more payments from my wages. I thought he was crazy – until he said that he could get ALL of my money back if I just waited two more weeks to file.
Waiting to File Bankruptcy
Wesley explained that under Bankruptcy Code §522(h) and §547, I could recover the money that was involuntarily taken from my pay under a wage garnishment if the money was taken within 90 days before I filed my bankruptcy petition.
In my mind, filing the bankruptcy petition quickly would stop the creditor from taking any more money from my wages. However, there was an essential element that must be met in order for me to get my money back - - the amount garnished must exceed $600. If the amount garnished is less than $600 (i.e. $559), the creditor gets to keep the money.
Now Wesley’s advice to wait two more weeks to file my bankruptcy case made perfect sense. In my case, the timing of the bankruptcy filing was crucial to stopping future wage garnishments, but also to recover all of the garnished funds.
Getting Advice from an Experienced Bankruptcy Attorney
I am thankful that I found an experienced bankruptcy attorney who truly cares about my situation and my needs. Wesley Scott could have just filed my hurried bankruptcy – I wouldn’t have known the difference. But he didn’t, he acted in my best interests even though it wouldn’t have made any difference to his bottom line. Some bankruptcy law firms are just “mills” that process bankruptcy cases as quickly as possible to earn fees by pushing clients through the process and out of the door. The bankruptcy attorneys of Kain & Scott are different.
Because Wesley had a deep understanding of bankruptcy law and cared about my case enough to advise me to wait to file bankruptcy, I am in a much better position now than if I did not wait to file. It was the best decision for me because it allowed me to get back on my feet and fully recover from the financial problems that unemployment had caused me.
Take a Step in the Right Direction
If you are in the situation of having your wages garnished or in the process of having a creditor taking you to court, a bankruptcy may be the right option for you. We do not advise you to decide to wait on your own, because waiting is most commonly not the best action plan. See an attorney who can advise whether you should wait or file right away based on their expertise and understanding of your financial situation.
