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When should you file for bankruptcy?

Often people wait  until the creditors have filed suit or are foreclosing on their property to file for bankruptcy protection.  I refer to the cases that are reacting to creditor action as  “the hounds chasing you to the court house” cases.  You can beat the hounds to the court house but it’s better to be proactive through pre bankruptcy planning then to react.

Pre Bankruptcy Planning

Bankruptcy is an option that should not be entered into without careful planning.

Bankruptcy is a fresh start.  In order to maximize the benefit of a fresh start you need to plan before you file. There are many issues that determine the timing of your petition.  Income history, creditor lawsuits, foreclosures and creditor harassment are some of the factors that govern when you should file for bankruptcy protection.

Bankruptcy planning is ethical and proper.   However improper bankruptcy planning can be fraudulent and cause your case to be dismissed, or worse. 

There are no "bright lines"; fraud must be determined on a case-by-case basis. Each step in planning must be examined on its own in light of the facts specific to that particular case.   

Be proactive not reactive.