It’s not clear what the average wait is between people getting into financial difficulty and filing for bankruptcy, with some reports suggesting 18 months to two years and others suggesting five years. However, many people wait too long.
There is nothing wrong with holding out hope that your financial situation will get better. Yet, unless you have a realistic plan to improve it, it is unlikely to get better. While well-paying job offers do sometimes appear out of the blue, generally you have to work hard to make the opportunities happen.
What is too long?
One law school professor who works for the Consumer Bankruptcy Project gives the following advice about when to file:
- Don’t reach the point where you use your pension or retirement funds to pay your debts: These are usually exempt in a filing, meaning you get to keep them if you file. If you spend them and later file, you will lose them.
- Consider waiting until your medical treatment is complete: Medical debt is one of the principal reasons people file. Waiting to include all your medical bills in the filing makes it easier to stay in budget afterward.
- Consider filing if creditors are about to seize something you need: Filing may allow you to keep a vehicle or house that you would otherwise lose. However, you may need to act fast if they are about to take them away.
- Try to wait until you have a workable plan for the future: If you know your current job won’t be enough to live on even without your debts, try to get a better-paying job first.
With legal guidance to learn more about the process and your options, you can make a more informed decision about the best time to file for bankruptcy in your unique situation.