Navigating a legal trial is a stressful challenge for most Americans. But if you struggle with debt at the same time, you may face a doubly difficult situation. Should you file for bankruptcy protection during your civil or criminal trial? Or should you claim bankruptcy before or after the trial instead? To help you find the right timing, here are a few things to know about each choice.
1. Filing Before a Trial Starts
If you have some time before the actual proceedings of a trial, you may have time to declare and complete a simple bankruptcy in advance. Chapter 7, or liquidation, bankruptcy can be done in as little as a few months in some cases.
Filing bankruptcy now may allow you to get rid of debt-related problems that could distract you from an important trial. And if few or none of any resulting damages or fines would be dischargeable, there may not be a lot of reason to wait.
2. Filing During a Trial
In general, starting a bankruptcy case while you have another major life event going on isn't recommended. Both a bankruptcy claim and a criminal or civil trial may each need your full attention.
In addition, filing your bankruptcy claim before you know the results of the trial could prevent you from including obligations to pay damages in your bankruptcy case. While not all damages are dischargeable, some are. So if there is a chance you can have these discharged, it could be worth delaying depending on your other risk factors.
3. Filing After a Trial Is Complete
The most common time to seek bankruptcy protection is after the trial has been completed. At this point, you know if you owe damages, restitution, fines, or other penalties. And you know if or how much of any damages are non-dischargeable under state law regarding malicious or intentional acts.
If your financial situation is not so dire that you must move for bankruptcy protection quickly, you may also opt to wait out an appeal as well. If you could get dischargeable damages reduced on appeal, for instance, it may change your mind about seeking either Chapter 7 or Chapter 13 bankruptcy.
Where to Learn More
Find the right timing of your bankruptcy and trial by meeting with both your trial attorney and a qualified bankruptcy law attorney in your state. With their guidance, you'll determine the right factors to ensure the best possible outcome in both legal pursuits.
For more information about bankruptcy law, contact a legal professional.