5 Factors to Consider Before Filing Bankruptcy

by John Skiba

bankruptcy Skiba LawOften when clients come in for a bankruptcy consultation they will tell me their situation and ask whether bankruptcy would be appropriate in their case.

The answer to this question varies from person to person.  However, there are common factors among most of my bankruptcy cases that I believe can help give you some guidance as to whether you should make the plunge and file for bankruptcy.  Here they are, in no particular order:

Wage Garnishment/Foreclosure

This is the crisis factor.  If you are facing a wage garnishment or you are at risk of losing your home bankruptcy can stop the bleeding on this problem very quickly.  In fact, we can file what is known as an emergency bankruptcy where we are only required to file some initial paperwork with the bankruptcy court and will be able to stop the garnishment or foreclosure sale.

If this is your situation, and you need it stopped…now.  Then bankruptcy is a good option.

Pending Lawsuit

Similar to the garnishment or the foreclosure sale if you have recently been served with a collection law suit bankruptcy may be a good option.  Here in Arizona you only have twenty (20) days to file a written response to the lawsuit or you risk a default judgment being entered against you.

By filing for bankruptcy you will stop the lawsuit dead in its tracks.  In fact, if you file your bankruptcy before the twenty (20) days is up you won’t even need to spend the time and money responding to the lawsuit.  It will simply stop because of your bankruptcy filing.

You Anticipate an Increase in Income

Back in 2005 they changed the bankruptcy code.  Now, if you want to file chapter 7 bankruptcy you have to qualify for it.  They base this upon the number of people living in your home and the income coming into your home.  When we look at income, the court has me take an average of the last six (6) months.

If you have been unemployed (or under employed) over the last six months it will likely be very easy to qualify you for a chapter 7 bankruptcy.  But what if you just got a job or a better paying job?  How will that impact your qualifying?  In the short term it won’t.  However, if you need to file bankruptcy and wait, your higher income will have to be taken into account and could make it so that you no longer qualify for a chapter 7 bankruptcy.

Medical Bills

Many bankruptcy cases are filed due to outrageous medical bills.  It is important to understand that generally medical bills are eliminated in a chapter 7 bankruptcy.  And if you recently have gone through a difficult medical issue and now owe way more than you could ever pay, bankruptcy may not be a bad option.

However, if you anticipate needing additional medical care you may want to hold off on the filing of your bankruptcy.  Contrary to what many people believe, if you owe a doctor money, and then you file bankruptcy and don’t pay that doctor back, he/she doesn’t have to continue to see you as a patient.

This often comes up with my clients who have children with braces.  If you want that orthodontist to take off the braces one day, you will likely have to pay him or come up with some sort of arrangement.

You Simply Can’t Pay What You Owe

A question I get often is whether a person has enough debt to file for bankruptcy.  There really isn’t any magic number when it comes to the amount of debt  you need to have to file a bankruptcy case.  What it really comes down to is do you have enough income to pay off your unsecured (i.e., credit cards, medical bills, store cards, etc.) debts within the next five (5) years.

If you are only paying the minimums each month and have been doing that for years, you either need to increase your income so that you can increase your monthly payment, or you need to look into the possibility of bankruptcy.

If you continue down the path you are now in – without making any changes – then you really can’t expect any real improvement in your situation.

There are many other factors that go into making the decision to file for bankruptcy.  Most bankruptcy lawyers in Arizona offer a free consultation so that you can go over the specifics of your situation and get a good idea of what the process is like.

In the end, it is up to you.  But these factors may push you one way or the other.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© John Skiba, Arizona Consumer Law Group, PLC | Attorney Advertising

Written by:

John Skiba

Arizona Consumer Law Group, PLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.