Bankruptcy Mastery

Becoming a better bankruptcy lawyer

  • Home
  • About Cathy
  • Contact Cathy
  • Articles by Topic
    • Attorneys fees
    • Bankruptcy Practice
    • Before filing
    • Business bankruptcy
    • Cases new & significant
    • Counseling clients
    • Family Law in Bankruptcy
    • Means test
    • Opinionated
    • Real property
    • Rule 3002.1
    • Tax
  • Table of Contents
  • Start Here

When To File Bankruptcy

By Cathy Moran, Esq. Filed Under: Before filing, Start Here

When to file bankruptcy turns out to be just as important as whether to file.

I saw it playing out in a single day in my office.

All three consultations on Friday featured clients intent on filing bankruptcy IMMEDIATELY.

Each of them was  certain that they had no time before some disaster would befall them if they didn’t file bankruptcy. 

Yet, as we talked, I concluded the consequences of an immediate filing were worse than the perceived goblins chasing the clients.

Why waiting to file works

Waiting, in each case, allowed for a better bankruptcy outcome.

One client could put some time between the filing and an otherwise avoidable transfer to an insider;

For another, a final judgment in a divorce which would change the asset mix.

The third could collect and consume a stream of income worth more than the available exemption.

Hazards not really imminent

Many consumers think that the sheriff will swoop down and pluck their paycheck from their hands within days of being late on a credit card. 

They have trouble understanding that creditors will invest a lot of time and energy trying to get customers to write them a check before they resort to the courts.

The other misconception that fuels the sense of urgency is a misunderstanding of how a lawsuit works.  They imagine that filing the suit results in coercive collection on the spot.  They are relieved to learn how long is really takes to get even a default judgment.

Selling delay

There are two points you need to make as a counselor at law:

  1. Due process takes time: it requires service of a complaint & opportunity to defend.
  2. Debts reduced to judgment are just as dischargeable as they were prior to suit.

Deliver a short review of constitutional principles, civil procedure, and bankruptcy law, and your client can file bankruptcy when the time is right.

Panic should not be contagious.

More

When taxes drive the timing

More from my site

  • Bankruptcy Schedules Call For Payoff BalanceBankruptcy Schedules Call For Payoff Balance
  • The Real Truth About Bankruptcy Lawyers & ClientsThe Real Truth About Bankruptcy Lawyers & Clients
  • 2010 Tax Return Imperative in Chapter 132010 Tax Return Imperative in Chapter 13
  • Counting to 90Counting to 90
  • Means Test:  Good Enough Isn’t Good EnoughMeans Test: Good Enough Isn’t Good Enough
  • I Flunked MindreadingI Flunked Mindreading

Filed Under: Before filing, Start Here Tagged With: bankruptcy practice, client intake, collectors, counseling clients, payment default

[footer_backtotop]

Copyright © 2023 ·Prose · Genesis Framework by StudioPress · WordPress

Theme customization by Rowboat Media LLC