|Image courtesy of Stuart Miles at FreeDigitalPhotos.net|
This process provides plenty of time to assess your options, including planning your bankruptcy. This week, I had a call from someone who was thinking about bankruptcy. I could tell he was shopping attorneys but he had a couple issues that needed to be considered. I knew the answer but I always try to double check issues I haven't visited recently. Anyway, I called the client back the next afternoon to confirm my thoughts and he told me, "I had to file today because my ex-landlord told me he was going to file a lawsuit against me for $6,000."
My bad because I obviously didn't hear something that was important to him. But from everything he told me, he had no real legal reason to file that day. The client will probably be fine and it is not inappropriate to file the day you meet your attorney. My approach is a little different.
As I said above, I think of bankruptcy as a plan. Unless there is a sheriff's sale scheduled the next day, I like to pull all the client's financial data together and analyze it trying to find the potential challenges and best time to file. My personal preference is to have the bankruptcy filed sometime before judgment because a judgment can add another dimension to the case. I think many treat bankruptcy as a routine general remedy; however, I look at a bankruptcy more like a chess game. There are certain moves that need to be taken at certain times. If you miss a move or your timing is off, you jeopardize the case. With all this said, the person who called me was panicky and in reality he probably had a few months to plan if they were needed.
On the other side of the problem, I don't necessarily advocate people wait as long as possible either. I had a recent client who dodged a judgment creditor for about 12 years. He didn't own real estate so the creditor never had a lien on a home and he put off the sheriff's levy once. He, along with his family, endured more stress than necessary especially since he ended up filing anyway. Plus, he paid on other debts he didn't need to. So holding out and dodging creditors isn't always a good plan either.
The bottom-line here is don't panic if someone tells you they are planning to sue you. They usually tell you to in an effort to squeeze their money from you. Instead of a knee-jerk reaction, talk to an attorney to pull everything together to examine your options including bankruptcy. It takes time for a credit to sue a debtor. Use it to your advantage.