Are you struggling under a load of debts that are slowly pulling your credit score to the bottom and interrupting your daily life? In these serious cases, a Chapter 7 bankruptcy is often the best way to reclaim your financial stability without losing everything. However, these five common life changes can interrupt bankruptcy filing, so arrange your financial plans around these events instead.
Inheritance and Gifts
A sudden spike in income can leave you in trouble during a Chapter 7 bankruptcy filing. If a relative passes away and leaves you a sizable amount of money, this still counts as income for both tax and bankruptcy purposes. Other income spikes that merit delaying of filing include
- End of the year bonuses or high sales commissions from the past few months
- New job offers providing surprisingly higher paychecks
- A recent layoff, which will dramatically lower your income if you wait a couple of months to gather new financial records showing loss.
Of course, it's always possible to receive news of an unexpected financial windfall right after you start your filing. Work with a lawyer to understand your rights for revoking your claim if a new deposit changes your actual monthly income.
Expecting to take out a small loan for a new water well or much needed roof repairs? Wait to file your bankruptcy until 90 days after you take on additional debts if you want them included in the settlement plan without accusations of fraud. When you take out a loan or refinance your mortgage after the Chapter 7 arrangements kick in, you end up following the terms of those new contracts instead. Don't end up stuck in a harder spot because you can't file for bankruptcy multiple times in a row.
Aside from inheritances and monetary gifts, considering your incoming tax refunds when planning your bankruptcy. You also need to catch up on any income filing you missed in the past two years. The IRS will receive notification when there is a discrepancy between the money you report in the paperwork and what the organization has on file. You don't want to deal with an audit or investigation in the middle of the work for a Chapter 7 bankruptcy too.
Preparing to relocate from one state to another? Interstate moves and even some in-state relocations mean changing legal jurisdictions, which affects the rules regarding your bankruptcy. You need to spend a few months in the new location before filing for bankruptcy in that area, so consider your costs for traveling back to your former home state if you file shortly before or during a move.
Be especially wary to file for bankruptcy if you are planning to move because of a more lucrative job offer. You may be able to pay off your debts after a few months of a new career instead of filing Chapter 7 and losing your assets.
Finally, don't rush to shut down a failing business if you want to discharge some of those debts without taking personal responsibility for it. Chapter 7 bankruptcies also work for small businesses, but they come with their own sets of rules and means tests when businesses are involved. Keep in mind that filing for personal bankruptcy often involves the closure of your business and sale of related assets anyways, so it makes more sense to let the courts handle the shutdown as part of the process.
Work over the details of your case with an experienced bankruptcy lawyer from a site like http://www.morrisonmurfflaw.com to pick the perfect window of time for filing. Details like upcoming events and business ownership affect the best timing for any kind of major financial decision.