Filing for Bankruptcy Protection—How Long Should You Wait?

Is It Better to File Right Away or Try Other Options?

If you’re struggling to make mortgage or rent payments because of the economic downturn caused by the coronavirus, you’re not alone. According to a recent report in The Washington Post, more than 12 million Americans are at least $5,000 behind in rent payments. You’re likely weary of the phone calls and letters from creditors, of trying to figure out how you’ll get caught up. You may have considered filing for bankruptcy protection but worry about the negative perceptions and potential long-term impact on your credit. Should you bite the bullet and file or hold off on the chance things will improve once a vaccine arrives?

Reasons to File Sooner Rather Than Later

In nearly all circumstances, if you can’t meet your monthly obligations and have no firm prospects for increasing income or reducing debt, it’s better to file right away. Chances are your credit rating has already taken a hit, and postponing bankruptcy is likely to make matters worse because your debts will continue to increase. When you file for bankruptcy, you can expect an immediate drop in your credit rating, but typically it will rebound within six months, often to a level higher than before you filed.

Additionally, though it may seem counterintuitive, you actually might be considered a better credit risk after filing for bankruptcy. If you file under Chapter 7 and discharge some of your debts, you’ll have more disposable income, and potential creditors will view you as someone willing to resolve your financial problems, rather than ignore them and let them get worse.

Of course, once you file, you immediately get the benefit of the automatic stay, which means you’ll no longer face all those calls and letters.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we work closely with people in New Jersey in personal bankruptcy filings. Contact our office online or call us at 856-424-6400 to set up a free initial consultation (on selected cases). We are currently available by phone, text message, or videoconference only. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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