The decision to file for bankruptcy is a difficult one to make. In an ironic way, it is more difficult for the person who has a lot of assets than it is for someone who has little or no assets.
This is because, if you have few assets that a creditor can have liquidated in order to repay him, you have very little risk at all. On the upside, you can possibly get all of your debts dismissed. In addition, you don't have to divest yourself of certain assets, because you have none.
On the other hand, assume that you have a number of assets such as multiple homes, a valuable coin or stamp collection, or many classic cars. In either of these cases, if you file for bankruptcy, you stand a good chance of losing them as they are sold to repay your creditors.
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That is why if you have a significant number of assets at risk, you should never file until you have had a chance to talk with a bankruptcy attorney and get his suggestions on what to do. Because the timing of your bankruptcy filing could have a tremendous impact on the value of the assets that you end up with after the filing.
Most of the time, the bankruptcy filing that you will attempt to file for is the Chapter 7 type. That is because, for the average person, this is the one most advantageous for you. Chapter 7 allows you to have the majority of your debts dismissed and gives you a chance to start your financial life over again. If, on, the other hand, you are forced to file for Chapter 13 instead, you will be put on a payment plan. Your debts may be lowered, but most likely, not dismissed. The problem, however, is that in the recent past Chapter 7 filings used to be relatively easy to get. Since the bankruptcy laws have been revised, at the urgings of the credit card industry, these type of filings have been harder to come by.
In order to file under the more advantageous Chapter 7 type of bankruptcy, there are certain state and federal income levels that you cannot exceed. If you exceed these levels, then you have to file for Chapter 13 instead.
Where timing comes into play is when you have an adequate amount of income coming in right now, but you know that income will be disappearing in a matter of months. Then your best bet would be to delay filing for bankruptcy until your income is low enough to meet the Chapter 7 requirements.
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