New Year Bankruptcy Filing: Is January the Time to Declare Bankruptcy?

January 11, 2013

If you are struggling with an oppressive debt load, you may want to consider getting your financial life back on track as a New Year's resolution. This particular resolution is one you can -- and probably should -- tackle immediately in the New Year.

There are several advantages to filing for bankruptcy early in 2013. From tax planning to the Fiscal Cliff, many considerations make January an attractive time to plot a way out of debt through bankruptcy.

Holiday debt, Fiscal Cliff, tax refund considerations pertinent to bankruptcy filers

Many unexpected events can create a need to file for bankruptcy; medical bills, a divorce, a death in the family or even just day-to-day spending that gets out of control can put you in a hole that it is impossible to dig out of without bankruptcy. Sometimes, all it takes is a little extra expense to push you over the edge.

Over the holidays, it is common to incur extra debt as you purchase gifts for loved ones, travel and host or attend holiday parties. When you start the New Year burdened with this extra holiday debt, bankruptcy can begin to look all the more responsible.

Another reason 2013 could be a particularly good year to file for bankruptcy in January is the looming Fiscal Cliff. If lawmakers fail to act by January 1, a number of automatic tax hikes and social program cuts will kick in. Higher taxes and fewer government programs to help you out means you could be facing financial difficulties you did not have to face in 2012, making the beginning of the New Year a good time to free up income that is now going to pay creditors.

Tax refund considerations are also best to take into account right away in the New Year. If you are expecting a tax refund, even before you receive your check, the expected refund is considered an asset that could be designated to creditors in your bankruptcy case. Thus, you may be wise not to take as many tax exemptions in the New Year if you are planning to file for bankruptcy. That way, you can spend the extra money as it comes in on exempt property that is untouchable by creditors in bankruptcy -- things like food, clothing and household goods.

Speak with a bankruptcy attorney to learn more

Is a January bankruptcy right for you in 2013? Only you and your bankruptcy attorney can come to a collaborative decision about the best time to file for bankruptcy. But, there are many indicators that early 2013 could be a particularly good time to start a new financial life. To explore whether bankruptcy is right for you, call a bankruptcy attorney today to discuss you individual circumstances.

Article provided by Lawrence Law Office
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