Before declaring bankruptcy, how long should you wait?

Before declaring bankruptcy, how long should you wait?

A downsizing caused your wife’s recent job loss. Since you were already struggling to make ends meet, it’s obvious that filing for bankruptcy is your only viable choice for controlling your debt and putting your life back on track. However, should you file right away or wait a little while?

The response may be influenced by your other sources of income and any resources you might desire to safeguard.

Consider seeking advice from a legal firm for Bankruptcy in Orlando right away if you have questions about this subject or are having financial difficulties.

Getting to Chapter 7 requires passing a means test.

Candidates must pass what is known as a “means test” in order to qualify for Chapter 7, the most thorough type of bankruptcy and the fastest to file. This is based on the state’s median income for a household your size.

The typical family income for a couple filing for bankruptcy before March 31, 2022, for instance, was $66,748 (although this number recalculates frequently as new data is collected). You and your spouse would likely be presumed to be eligible for a Chapter 7 bankruptcy if your combined gross monthly income was $5562.33 per month.

If not, a supplementary means test that examines your costs and gives you the chance to explain where your money is going may still allow you to qualify. However, if you failed both exams, you would have to file for Chapter 13, which is more time-consuming and costly.

You may believe that since you are now totally dependent on your income, you will easily pass the means test. However, there is a catch: the court will assess your monthly average based on your income over the previous six months. Your salary over the previous six months may push you beyond the Chapter 7 means test if your wife recently lost her job.

There might be a good reason to postpone filing for bankruptcy for a few months in that situation as it might be a better decision. Having said that, the revenue estimates used by the court to decide if you receive a recovery will be changed when that happens. It might not even be an issue, but you should absolutely make sure that you get legal advice prior to taking any steps in that direction.

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