For Bankruptcy In Indiana, Is It Better To File Late Or Early In The Game?

Admin February-10-2010 No Comments »

Suffering from the worst financial troubles you’ve ever faced? You’re not alone. “There are several million families in situations not too different from your own,” says bankruptcy expert Elizabeth Warren (I quoted her book The Two-Income Trap earlier this week in my Indiana bankruptcy blog.

Should you end up reading the book yourself, you’ll find lots of valuable information. But, as an Indianapolis bankruptcy attorney and debt consolidation lawyer, I believe there’s one point discussed in Warren and Tyagi’s book that needs clarifying:

If you’re going to file bankruptcy, what is the best timing?

The authors suggest: “If at all possible, wait until the crisis has passed before filing bankruptcy. If you are out of work, wait until you have found a new job. If you have a child who is seriously ill, wait until he is better and the health insurance has paid what it owes.”

The reasoning: “If you wait, you minimize the risk that you will once again find yourself buried in debt after you file for bankruptcy… If you wait to file until the worst of your problems are over, you give yourself the best odds of getting exactly what you need from the bankruptcy judge – a fresh start.”

Along with the Anderson, Bloomington, Indianapolis, and Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices, I’ve been offering bankruptcy services in Indiana for almost twenty-five years. I can certainly agree that filing bankruptcy is not something anyone is in a hurry to embrace. At the same time, after working with tens of thousands of individuals and families over the years, I see people waiting too long to deal with their financial problems.

Instead of seeking expert help with mortgage modification to help stop foreclosure, I see people taking out subprime second mortgages or falling prey to foreclosure prevention scams. Rather than reviewing their assets and debts with a legal expert, too many are taken in by debt consolidation scams or rapid refund tax scams.

Often, prior to coming to see me, folks cash out life insurance policies and withdraw money from their retirement accounts (types of assets they might have preserved because they’re exempt from creditors under the new bankruptcy laws in Indiana). Then, as bankruptcy begins to seem inevitable, people splurge on luxury items or transfer assets to family members or friends, hurting their chances of having their bankruptcy case approved by the court when they finally file.

Meanwhile, harassment by creditors increases the pressure, so that, with every passing day it becomes more difficult for debtors to make calm, reasoned decisions when it comes to bankruptcy in Indiana.

So I guess I disagree with the Warren/Tyagi advice about timing. My own advice is for people to take the first step (a no-obligation frank talk with a board certified consumer bankruptcy specialist) at the first signs (of financial distress). The old saying about “Better late than never” might contain a grain of truth, but when it comes to bankruptcy in Indiana, early is best of all!

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