Most of the time, people who face filing Las Vegas bankruptcy do not have time on their side. Collectors are calling, debts are unpayable, jobs are lost, foreclosures loom, and credit needs to be rebuilt sooner rather than later. However, there are circumstances when delaying a bankruptcy filing can save more money in the long run for those who can count time as an asset. Here are five reasons to not file bankruptcy as soon as possible:
(1) Preventing creditors from contesting your debts’ dischargeability. One of the changes to the bankruptcy code in 2005 made it harder for debtors to discharge recently accumulated debts. Specifically, Section 523(2)(a) limits the dischargeability of recently incurred credit card and “luxury” debts. More than $500 in credit card debt to one creditor taken within 90 days of filing is presumed nondishcargeable, as are cash advances from a credit card exceeding $750 within 70 days of filing. Ceasing use of credit cards in these time periods makes it harder, though not impossible, for creditors to challenge the dischargeability of these debts in adversary proceedings.
(2) Similarly, preventing “preferences” is another reason to delay bankruptcy. The bankruptcy code frowns upon debtors choosing to pay some creditors over others within certain periods before filing, usually 90 days. For “insiders” such as family members and business partners, the period is a year. If you’ve made a transfer to these individuals, it’s necessary to wait to file bankruptcy to prevent the trustee from attempting to “avoid” the claim against the creditor, which will force the creditor (who might be a family member) to refund the money to the bankruptcy estate.
(3) Ensuring tax debts are dischargeable. Some people who file bankruptcy owe taxes to the government. These are not readily dischargeable. For instance, the tax debt must be at least three years older than the tax deadline for which it was due. That means it might be worthwhile to wait even years to file bankruptcy.
(4) Keeping as many assets as can be exempted. A hasty bankruptcy filing means the debtor risks losing assets to the trustee that could have been kept out of the bankruptcy estate. Careful planning can save everything from electronics to jewelry to houses, in the right circumstances.
(5) Ensuring that your debts are dischargeable after a previous filing. Debtors who have filed bankruptcy in the past might be seeking relief other than a discharge, but it’s one of the primary benefits. Those who filed in Chapter 7 cannot discharge their debts in that chapter for eight years after filing, but the number is four years for those filing in Chapter 13.
There may be other reasons to delay bankruptcy, but they depend on your unique financial situation. An experienced Las Vegas bankruptcy lawyer can help you decide on the best course of action.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.