When not to file · Beverly Hills
When You Should Not File Bankruptcy
You should not file bankruptcy when it will not help you or when the timing is wrong. That includes when your income and property are already safe from creditors, when your debts are small or mostly the kind bankruptcy does not erase, or when you expect money soon. Call (310) 362-9071 and we will tell you honestly if filing makes sense.
- Social Security cannot be garnished by most private creditors
- Some debts, like child support, are not wiped out by bankruptcy
- An inheritance within 180 days after filing can be pulled into the case
At a glance
When you are judgment-proof
You may not need bankruptcy if creditors cannot take anything from you. Lawyers call this being "judgment-proof."
This can apply if your only income is Social Security, SSI, disability or certain pensions, and you own little beyond exempt property. Most private creditors cannot garnish Social Security. California also protects a set amount in a bank account from levy. As of July 1, 2026, that automatic amount is $2,325 per judgment debtor. See stopping a bank levy.
A creditor may still sue and win a judgment. But if there is nothing it can collect, the judgment may not hurt you much. Keep in mind that a California judgment can be enforced for 10 years and renewed. If your income or property may grow, bankruptcy later may still make sense. See judgment debt.
When your debts are small or the wrong kind
- Small debts. If you owe an amount you could pay off in a year or two, a payment plan or settlement may cost less than bankruptcy.
- Mostly non-dischargeable debts. Bankruptcy does not erase child support, alimony, most recent taxes, most student loans, criminal fines or debts from fraud. If that is most of what you owe, Chapter 7 may do little. Chapter 13 may still help you pay some of these over time. See debts Chapter 7 will not discharge.
- Old debts past the time limit. In California, the time limit to sue on most written contracts is 4 years. After that, a collector cannot sue you on a consumer debt. If your debts are that old and no one has a judgment, you may not need to file. See your rights against debt collectors.
When the timing is wrong
- Recent transfers. If you gave away property, sold it for less than it was worth, or put it in someone else's name, the trustee may be able to undo it. The look-back can be years. Talk to us before filing.
- Recent large purchases or cash advances. Luxury purchases over $900 from one creditor within 90 days before filing, or cash advances over $1,250 within 70 days, are presumed not dischargeable (amounts effective April 1, 2025).
- Paying back family. Repaying a relative within one year before filing can be undone by the trustee.
- Money on the way. If you become entitled to an inheritance, a life insurance payout or a property settlement from a divorce within 180 days after filing, it can become part of your case. A pending lawsuit or claim you have before filing is also part of the case.
- Filed too recently. You cannot get a Chapter 7 discharge if you received one in a case filed within the past 8 years. Other time limits apply between Chapter 7 and Chapter 13. See the eight-year rule.
- Income about to drop. Because the means test looks back six months, waiting a few weeks after a job loss may open up Chapter 7.
What to do instead
- Do nothing, on purpose. If you are judgment-proof, you can tell collectors in writing to stop contacting you.
- Negotiate. Many creditors settle for less, especially on old accounts.
- Wait for the right month. A short delay can change the means test or protect a car loan from the 910-day rule.
- Keep records. If you file later, clean records make the case go smoothly.
If filing does make sense, start with Chapter 7 or Chapter 13 to see which fits.
What to watch for
- Moving money before you get advice. Transfers right before filing can cause serious problems.
- Paying old debts that are past the time limit. A payment may restart contact from the collector. Ask first.
- Ignoring a lawsuit. Even if you plan not to file, a summons must be answered within 30 days in California.
- Waiting too long. Delay makes sense only with a plan. If a garnishment or foreclosure is coming, act now.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on choosing a chapter
- Chapter 7 or Chapter 13: Which One Fits You
- When You Should Not File Bankruptcy
- What Goes Wrong in a Cheap Bankruptcy Filing
- Rebuilding credit after bankruptcy
Questions about when not to file
Should I file bankruptcy if I only get Social Security?
If you only get Social Security and own little else, you may not need to file bankruptcy. Most private creditors cannot garnish Social Security. We look at your full picture before advising you.
Should I file bankruptcy if I am about to inherit money?
If you are about to inherit money, wait and talk to us before you file bankruptcy. An inheritance you become entitled to within 180 days after filing can go to your creditors.
Will you tell me if I should not file?
Yes, we will tell you if we think you should not file. The free consultation is for finding the right answer, and sometimes that answer is to wait or not file at all.
Can bankruptcy wipe out child support?
No, bankruptcy cannot wipe out child support or alimony. Chapter 13 can give you time to pay past-due support through a plan.
Free consultation
Get an honest answer first
Call (310) 362-9071 or send the form. We will tell you if bankruptcy makes sense or if you are better off waiting.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.