David M. Siegel answers in 37 seconds. Watch on YouTube · Read the transcript.
Short answer: If you can genuinely dig out on your own within about six months, wait. If six months from now you would be in the same position or worse, filing sooner is better — and there are situations that call for real speed: a repossession, an approaching foreclosure sale date, or an active garnishment.
The six-month test
Look honestly at where you would be six months from now. If a raise, a new job, a settlement or a sale would genuinely clear this, then waiting is the right call and I will tell you so.
If the honest answer is that you would be in the same place or deeper, waiting only spends money and options. Six months of minimum payments on a balance you cannot retire is six months of interest for nothing.
When speed actually matters
Three situations turn this from a judgment call into a deadline. A vehicle about to be repossessed — once it is gone, getting it back is difficult and brief. A foreclosure with a sale date approaching — Chapter 13 can stop that sale, but only before it happens. An active garnishment — every pay period is money gone.
In each case a date on a calendar is doing the deciding, not you.
The quiet cost of waiting
Options close gradually. An unpaid credit card becomes a lawsuit, then a judgment, then a garnishment or a lien — and each step is harder to unwind than the one before.
Retirement accounts are the version of this that hurts most. People drain a 401(k) to pay debts that a bankruptcy would have eliminated. Retirement funds are protected in bankruptcy. Spending them to postpone a filing converts protected money into money that is simply gone.
Reasons waiting can be right
Sometimes timing genuinely favors patience. Recent income taxes become dischargeable with age. A large recent purchase or cash advance is better left to season. If income has just dropped, waiting can change how the means test reads.
These are real considerations — and they are exactly why the question is worth putting to an attorney rather than answering alone. Waiting for a reason is strategy. Waiting because it is uncomfortable is just expensive.
Not sure whether to move now or wait?
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Full transcript of the video
should I wait to file for bankruptcy well it really depends on the situation if you’re able to bail yourself out of debt on your own within about six months then I don’t recommend filing however if after those six months you feel you’d be back in that same situation or worse then I would file sooner than later so that you can get on with your fresh start you also wanna file fast if you have a vehicle that’s subject to repossession if you’re in foreclosure and a sale date’s approaching or if you’re being garnished so there’s times to wait to see if you can bail yourself out and there’s other times where you really wanna file quickly to avoid future problems and stop the bleeding
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About the author. David M. Siegel has represented consumer bankruptcy clients in the Northern District of Illinois since 1991 and is the author of several books on consumer bankruptcy. The firm has offices at 790 Chaddick Drive, Wheeling, IL 60090 and 10540 S. Western Ave, Suite 202, Chicago, IL 60643, and handles cases by phone for clients throughout the Chicago area.
This article is general information about Illinois and federal bankruptcy law. It is not legal advice, and reading it does not create an attorney-client relationship. Every case turns on its own facts — speak with an attorney about yours.