What is an Emergency Bankruptcy Filing and When is an Emergency Filing a Good Idea?

Here’s a common problem a bankruptcy attorney encounters regularly: A potential client comes in and desperately needs relief from her debts, but is also losing 25% of her paycheck to a creditor who received a judgment against her and who’s now garnishing her wages. She wants to file bankruptcy, but she can’t bear another garnishment and wants to know if she can file bankruptcy today or tomorrow.

Can she be helped?

The short answer is YES! While someone filing for bankruptcy will need to file several documents with the Court comprising 60 so pages, and will need to disclose A LOT about their debts, and overall financial situation, it is quite simple to file an “emergency” or “deficient” case.

In fact, in order to file for bankruptcy relief, you must only provide your social security or TIN number, file the simple “voluntary petition”, a verified list of the names and addresses of any creditor you do or may owe money, and a certificate of completion of a course in credit counseling. If possible, the entire court filing fee (currently $335) should be paid when a case is filed, but if this is not possible, in Colorado you may request up to 14 days to pay at least $125, and up to 3 or so months more to pay the remaining fee. The credit counseling course itself usually only takes 90 minutes, so yes, if you are able to gather this information and take a course in credit counseling in a day or two, you can file an emergency bankruptcy case that easily! The filing of a chapter 7 or 13 bankruptcy creates an “automatic stay” that applies to your creditors, and in general, wage garnishments and other “acts to collect a debt” must cease immediately.

Great, I filed an emergency case and stopped the garnishment. Now what?!

While an emergency case filing will stop a garnishment, it is really only the first step in the process. If you have filed an emergency case, you will in general only have 14 days in which to file everything else in your case, including your Statement of Financial Affairs, Schedules detailing your property, debts, expected income & expenses, and your “means test” showing your eligibility for chapter 7 or your disposable income in chapter 13. Preparing a bankruptcy case is generally a detailed and time-consuming process, so if you’re considering an emergency filing, you should be confident that you can meet your other legal responsibilities within a week or so of filing.

Should I consider an Emergency Filing?

Whether to file an emergency case really depends on your particular situation. Less than 20% of my clients file their cases “deficient”, because they rarely need to get the debt collectors off their back immediately. In most cases, my clients and I can work together over the span of 2 weeks or more to carefully prepare a case so that my client knows exactly what to expect when we file, and so that we can plan as straight-forward case as possible that gets the client the biggest benefit for their money. But when needed, an emergency filing can be a life-saver, stopping wage garnishments, vehicle repossessions, and home foreclosures immediately.  The key is to hire an attorney who can properly advise you on which route is better for you, and who will be able to carefully review your situation to ensure you’re making the wisest choice possible, whether you’re filing tomorrow or in 3 months.