When a person no longer has the money to pay back creditors and will likely not be able to get enough money to pay back creditors, then it might be best for that person to file Chapter 7 bankruptcy. When a person files for this type of bankruptcy, all of the possessions that he or she owns, minus the possessions that are exempt under federal or state law, are listed and then liquidated in order to pay the creditors back as much as he or she can. There are two main reasons why a person might want to file for Chapter 7 bankruptcy as quickly as possible.
1. Your Utilities are About to be Shut Off
Most utility companies, especially those that provide heat, are willing to allow people to fall behind for a few months. They might charge fees, constantly call the people who are not paying their bills, or attempt to set up payment plans, but they won't shut off the utilities.
However, this goodwill will only last for so long. Eventually, utility companies will decide to cut you off as a customer and refuse to turn on utilities until you pay the sum that you owe. One way to stop them from turning off your utilities is to file Chapter 7 bankruptcy. When you file, creditors can no longer take action against you or call you for money. This means that your utilities will not be shut off.
2. You are About to Inherit Non-Exempt Items
Another reason why you might want to file for Chapter 7 bankruptcy on as short a timeline as possible is if you are about to inherit items that would not be exempt. These items could include valuable artwork, extra homes, or extra vehicles. You will probably not want to allow these items to be liquidated in order to pay back creditors. To protect these items, you can file for Chapter 7 bankruptcy before these items can be listed among your assets. If the items are not listed as assets, then it is impossible for creditors to reach them to have them liquidated. Make sure that you check the Chapter 7 exemption laws on both a federal and statewide level in order to make sure that you need to file quickly.
For more information on how to file Chapter 7 and when you would want to file quickly, or for help in the filing process, contact a bankruptcy attorney.