Individuals often seek chapter 7 bankruptcy relief to obtain a “fresh start” to discharge debts they have difficulty satisfying. In most chapter 7 cases “eligible” debtors discharge most if not all of their debts and keep most if not all of their property. If they do not properly plan however, they could be shut out of chapter 7, where debts can be discharged in as little as 3 months. Instead, the only alternative may be a choice between a chapter 13 bankruptcy (where creditors are paid all or a portion of their debts from the debtor’s future income over three to five years), or not filing at all. As soon as financial trouble appears on the horizon it is critical to consult with a qualified bankruptcy professional so proper planning can occur.
Timing comes into play in numerous aspects of bankruptcy planning. One example is in application of the “Means Test” for debtors with consumer debt.