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Nobody really wants to file for bankruptcy. But being in financial dire straits can be a truly frightening experience for anyone, and one to be avoided at all costs. Many people who might qualify for bankruptcy try to put off filing for as long as possible, perhaps out of an innate optimism about their financial future or due to the stigma attached to declaring bankruptcy.
But putting off bankruptcy may actually be more fiscally risky than filing, so when is it too late for you to file for bankruptcy?
First off, there are certain requirements that you must meet in order to file for certain types of bankruptcies, so you'll need to determine your eligibility before you can figure out any deadlines for filing. For example, you may not be able to file for Chapter 7 bankruptcy if your income is high enough to pay off your debts through Chapter 13. Then again, if your income is too low or your debts are too high, you may not be able to file for Chapter 13 bankruptcy because you cannot show that you are able to meet your repayment plan. You'll need to assess your financial state, and take into account which kinds of debts are dischargeable under the different types of bankruptcy before determining your timeline.
Your bankruptcy filing may also depend on the kinds of actions debt collectors have taken against you. You may have had your wages garnished, been served with a lawsuit, or even had a judgment lien ordered against your property. And the timing of your bankruptcy filing may depend on your legal situation.
Generally speaking, it's never too late to file for bankruptcy. But the timing may affect which debts can be discharged. For example, bankruptcy will normally cease any wage garnishment, and you may be able to discharge personal liability for a judgment or eliminate an existing judgment lien via bankruptcy.
There are some exceptions if you lose a lawsuit, however, based on the kind of debt involved. While bankruptcy law allows you to discharge credit cards, loans, and medical bills even after there is a judgment entered for the debt, you can't escape spousal or child support obligations, tax filings, or debts created by fraud or other serious dishonesty. And those regulations aren't tied to the timing of your bankruptcy filing.
Bankruptcy can be a confusing, and at times embarrassing, process. For help with a bankruptcy filing, contact an experienced bankruptcy attorney.
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