If you were to ask a bankruptcy attorney when it’s best to file, most lawyers would say that it should be done as soon as possible. Waiting to file for bankruptcy can increase your chance of wage garnishment, repossession, lawsuits and foreclosure. Below are some reasons to file bankruptcy at the beginning of the new year.
You are not legally obligated to pay income tax debts until January 1 of the following year. Many opt for Chapter 13 to pay significant tax debt; if this seems like an option, you should delay filing until the first of January so last year’s tax debts are left in the pre-petition category.
Getting Rid of Holiday Debt
It’s estimated that Americans spend $10 more per day during December than they do in the other 11 months of the year. When it is multiplied by the 31 days in the month, this means an additional $310 spending increase that many people put on a credit card. This is just one reason it is sensible to seek a bankruptcy during the New Year.
As you might assume, getting rid of credit card debt comes with some stipulations. Card companies often notice extra spending right before a bankruptcy filing, but some pre-filing purchases are legitimate. The bankruptcy court examines a borrower’s intent when it determines whether or not to eliminate credit card debt. By keeping debt below $650, you can prevent the need to explain charges to the bankruptcy court.
Think Before Filing
Once you decide to hire a bankruptcy lawyer, you should stop using credit cards right away. Accrual of credit card debt during a bankruptcy case can indicate that you have no intent of repaying the debt. This is considered fraudulent, and you can face criminal charges for doing so. If you need help getting out from under a mountain of debt, contact us for help and legal advice.