What Time of Year Do People Most File for Chapter 7 or Chapter 13 Bankruptcy?

Chapter 7 or Chapter 13 Bankruptcy: Seasonal Trends in Filings


Seasonal Trends in FilingsBankruptcy filings reflect the financial health of consumers and businesses alike. Interestingly, filings are not evenly distributed throughout the year; there are peak seasons when individuals are more likely to face the daunting decision of declaring bankruptcy. 

Historically, bankruptcy filings peak at the beginning of spring, specifically in March and April. This surge is often attributed to individuals receiving tax refunds, which can be used to pay for bankruptcy filings and associated legal fees. Moreover, the financial strain of year-end expenses may leave some people with a deficit that pushes them toward finding financial relief through bankruptcy during these months.

At Cherney Law Firm, we’ve observed these filing patterns firsthand while guiding countless clients through Chapter 7 and Chapter 13 bankruptcy. 


Understanding Bankruptcy


Bankruptcy is a legal process providing financial relief to individuals and businesses overwhelmed by debt. Depending on a person’s situation, several different kinds of bankruptcy are available. Two of the most commonly used chapters are Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 Bankruptcy

Chapter 7, also known as liquidation bankruptcy, is available to individuals with limited financial resources to pay debts. The bankruptcy trustee sells nonexempt property to pay off secured debts. While it often results in the discharge of most unsecured debts, you may risk losing nonexempt property.

Chapter 13 Bankruptcy

In contrast, Chapter 13 is a financial reorganization designed for those with a disposable income. Because these individuals have a regular income, a repayment plan is created to pay creditors. The payment plan typically lasts three to five years. The debtor can keep their property but must stick to the bankruptcy court-approved payment plan. Missed payments can have serious consequences. 

Navigating the specifics of each bankruptcy chapter can be complex. Seeking legal advice from knowledgeable sources can help you better understand the particulars and differences between Chapter 7 and Chapter 13 bankruptcy.


Why Timing Matters in Filing for Bankruptcy


Why Timing Matters in Filing for BankruptcyTiming in bankruptcy is not just a procedural technicality; it’s a strategic move that can mean the difference between keeping valuable assets or losing them.

When we file for bankruptcy, the timing can influence several critical aspects of our bankruptcy case.

  • Income Review Period: The means test determines eligibility for Chapter 7 bankruptcy and assesses our income over the past six months. You will not be eligible for Chapter 7 bankruptcy if your income exceeds these limits. Therefore, filing at a time when income is lower may help to pass the means test.
  • Tax Debts:  Certain old tax obligations may become dischargeable debt if you wait to file. 
  • Non-Ordinary Income: Should a windfall like an inheritance or lottery winnings come our way shortly after filing, it might not be protected. Timing our filing after such events can safeguard these proceeds.
  • Asset Transfer: If not done correctly, transferring assets before bankruptcy can be deemed fraudulent. We must consider the look-back period to avoid complications.

Furthermore, filing at specific times of the year can impact the dischargeability and management of seasonal debts. For instance, consumer debt often spikes after the holiday season, and tax debts come to a head during tax season. A strategic filing could align with the seasonal ebb and flow of our financial life, allowing for a more comprehensive debt management strategy.

At Cherney Law Firm, we understand the importance of timing and how it works with bankruptcy law. We can analyze potential bankruptcy issues and determine a path forward. 


Trends in Bankruptcy Filings


Bankruptcy filings offer insights into the financial health of our society. It’s not merely the numbers that narrate the story, but the timing of these filings. 

Statistics and Data

Bankruptcy statistics reveal a discernible pattern in filing behavior, with variations noted across different bankruptcies. The data reflects that, typically, after a lull, a rise in bankruptcy filings can be anticipated at specific periods.

Several factors contribute to the seasonal nature of bankruptcy filings:

  • Tax returns: Debtors use their tax refunds to pay for bankruptcy attorney fees and file during spring.
  • Holidays: Post-holiday consumer debts may cause a spike in filings after the festive season.
  • Economic cycles: Periods of economic recession increase filings due to job loss and reduced income.

These factors, among many others, influence the decision to file for bankruptcy at specific times of the year. 

First Quarter Chapter 7 and Chapter 13 Filings

There is an increase in both Chapter 7 and Chapter 13 bankruptcy filings during the first quarter: 

  • Chapter 7 Filings: The first quarter often sees a swell of Chapter 7 filings influenced by individuals’ access to their tax refunds, which allows them to afford attorney fees.
  • Chapter 13 Filings: Chapter 13 filings, though less contingent on tax returns, also show a modest increase around the same period.


How Cherney Law Firm Can Help


How Cherney Law Firm Can HelpFinancial strain can be overwhelming, but understanding peak bankruptcy filing seasons may provide strategic insights. At Cherney Law Firm, our experience has shown that personal financial crises don’t follow a calendar. We aid clients in navigating whether timing impacts their choice between Chapter 7 Bankruptcy—a liquidation option when unable to repay debts—and Chapter 13, a structured repayment plan. 

Our role is not just to process bankruptcy paperwork but to tailor advice to your situation. Whether you can’t manage your mortgage payments, car loan, or medical bills, we will overview the bankruptcy basics and helping you create a debt management plan. 

  • Analysis: We analyze your financial standing (credit report, average monthly income, unsecured debt, and secured debt) to offer personalized advice and present options tailored to your unique circumstances.
  • Strategic Planning: With comprehensive knowledge of bankruptcy laws, we help you determine the most opportune time to file for bankruptcy, maximizing its potential benefits.
  • Empathetic Support: Our team understands the stress of financial hardship. We provide patient guidance, ensuring you’re informed and comfortable with every decision.

Every financial situation is unique and may benefit from an individualized approach to the timing of a bankruptcy filing. Our goal at Cherney Law Firm is to offer professional support that empowers you to make informed decisions for a more stable financial future.


Contact Us for Bankruptcy Assistance


The bankruptcy process can feel overwhelming, but for individuals seeking debt relief, it can offer financial freedom. Timing can be important when making this decision to manage outstanding debts or eliminate debt outright.

Understanding trends is not just about reading online articles. It involves applying the laws, processes, and data to your individual bankruptcy. Each case is distinct, and bankruptcy should never be a one-size-fits-all approach.

At the Cherney Law Firm, we help you make an informed decision about when it may be strategically advantageous to file for bankruptcy. We are committed to providing personalized strategies that align with your financial situation. 

Contact US

You may call us directly at 770-485-4141, or you can fill out the form and we will contact you. Feel free to ask us any questions that you might have. Make sure to indicate whether you would like an e-mail or a call back

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