When is the best time to file a chapter 7 case?
The answer depends on the status of the person’s dischargeable debts, the nature and status of the person’s non-exempt assets, and the actions taken or threatened to be taken by creditors. The following rules should be followed: (1) Don’t file the case until all anticipated debts have been incurred, because only debts that have been incurred when the case is filed are dischargeable and will another six years before the person is again eligible for a chapter 7 discharge. For example, a person who has incurred substantial medical expenses should not file a chapter 7 case until the illness or the injury has either been cured or covered by insurance, as it will do little good to discharge, say, $100,000 of medical debts now and then incur another $100,000 in medical debts after the case has been filed. (2) Don’t file the case until the person filing has received all non-exempt assets to which he or she may be entitled. If the person is entitled to receive an income tax refund or a similar
