When to File Bankruptcy? - Timing Your Bankruptcy Filing

by John Skiba

Properly determining when to file your bankruptcy can help you maximize the benefit of filing bankruptcy. Because of this, it helpful to meet with a bankruptcy lawyer early in the decision process of determining whether to file for bankruptcy or not. I offer a free bankruptcy consultation for this purpose, so we can sit down, go over your situation, and determine if bankruptcy is a good option and if so when we should file the bankruptcy to maximize its benefit. The following are a few scenarios that are associated with bankruptcy and how they can impact the timeline of when to file your case:


In Arizona the foreclosure process is not a quick one. Generally, once you have missed four payments or so the bank will send you a Notice of Trustee’s Sale, which is the document that has the date on which the bank intends to auction off your home. The soonest the bank can sell your home is 90 days from the day they give you that notice.

Filing bankruptcy will stop the foreclosure of your home. As soon as your bankruptcy case is filed the court will issue an order stopping any collection efforts against you or any of your property. This means that the trustee’s sale set on your home will be vacated. It is important to note that stopping the foreclosure sale happens immediately upon filing of the bankruptcy case. This means that is your house is set to be auctioned off at noon, you could literally file your bankruptcy case at 10:00 a.m. that morning and it would stop the sale (although your bankruptcy lawyer will highly appreciate it if you don’t’ wait until the last minute!).

Wage Garnishment

Often wage garnishment is the last straw for many people when determining when to file their bankruptcy case. In Arizona once your creditors obtain a judgment against you, they can garnish 25% of each paycheck and all but $150 in your bank account. A bankruptcy filing will stop wage garnishment immediately. If you are facing a wage garnishment it is important to file the case quickly so that you don’t risk losing those funds. It is important to know how far in advance your employer processes payroll, because often employers will process payroll several days in advance of payday, meaning that your bankruptcy case would need to be filed well before pay day to stop a garnishment from occurring.


Once you have been served with a lawsuit, meaning that a process server has actually appeared at your door and handed you the complaint and summons, you have 20 days to submit a written response to the lawsuit. If you fail to do this, the creditor will be able to get a default judgment against you and then you will be dealing with the garnishment situation described above.

As soon as your bankruptcy case is filed the lawsuit against you must stop. This means that if you filed your bankruptcy prior to the expiration of the 20 days, you would not need to file a written response because the lawsuit would stop. Also, if the lawsuit has progressed to the point where a judgment has been entered against you, chapter 7 bankruptcy will void the judgment and eliminate the underlying debt.

Credit Card Use

I recently wrote an article on the dangers of credit card use immediately prior to your bankruptcy filing. Basically these fall into two categories, (1) using credit cards to buy luxury items within 90 days prior to filing your bankruptcy case, and (2) taking cash advances on your credit card within 70 days prior to your bankruptcy filing.

Basically, if you buy luxury items that total more than $550 within the 90 days before you file bankruptcy, or if you take a cash advance of more than $825 within the 70 days prior to your bankruptcy, those debts may not go away through the bankruptcy process. If you have significant purchases or cash advances on your credit card, it may be better to wait an additional 90 days prior to filing your bankruptcy case.

Fraudulent Transfers/Preferences

Another fairly common issue that I deal with is transfers of assets to relatives. If you have given away a significant asset to a family member within the year before your bankruptcy filing it may be better to wait to file your bankruptcy until it has been more than a year since that transfer. The reason being is that in effort to stop bankruptcy debtors from simply transferring all of their assets to family members and then filing for bankruptcy, they have a rule in place that allows the bankruptcy trustee to go back and get that asset from whomever you gave it to and then sell it and pay the money to your creditors.

This also applies to the repayment of loans to family members. If you borrowed $5,000 from a family member to keep the bills paid, and now have been paying this family member back over the last few months, it may be necessary to wait to file your bankruptcy case, otherwise you may have to pay back the amounts that you paid to the family member to the bankruptcy trustee.

If you are thinking that a bankruptcy filing is going to be necessary, it is important to meet with an Arizona bankruptcy attorney to discuss what the options are and when the appropriate time to file your case would be. Most people can file in a relatively short period of time while for others it may benefit them great to wait.

I offer a free bankruptcy consultation where we can discuss your specific situation and help you put a plan together to get back on track.

Arizona bankruptcy lawyer John Skiba can be reached at (480) 420-4028 or via email at john@skibalaw.com .

LOADING PDF: If there are any problems, click here to download the file.

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.