In order to resolve debts, many people choose bankruptcy. Filing bankruptcy is not an easy task. Moreover, plenty of legal formalities are associated with it. In case you are considering bankruptcy as an ideal option, it is important to understand that timing of filing can have a huge impact on the case.
Reasons to Delay Filing Bankruptcy
Filing bankruptcy at the wrong time or too early diminishes the benefits or sometimes even makes it impossible to complete the case. In some situations, it is wise to wait a while before you discharge debts or file to keep more property. Different factors influence the case, therefore, ensure talk with an experienced bankruptcy attorney to know the best time to file bankruptcy. Here is a list of a few reasons why it is beneficial to delay the bankruptcy filing
- You Sold the Property at Less than Fair Market Value
The circumstances can change rapidly. It might mean that not long before you considered bankruptcy, you sold a used boat or a car to a relative for an amount that is quite less than market value. In either case, the bankruptcy trustee might help you “unwind” that transfer as well as take the property back from a relative or friend. In case the property has been transferred again, it can be messy.
- You Moved to a State with Favorable Exemptions
It is important to understand that the legislature does not wish people to relocate to another state simply to take advantage of generous bankruptcy exemptions. Therefore, you need to live in a state for at least two years before you apply for the exemptions in a bankruptcy case in that state. Therefore, it makes sense to wait for that period.
- You are Expecting Large Tax Refund
In case you are expecting a large tax refund and you are unable to protect it with an exemption, you would need to turn that to the bankruptcy trustee. In such a condition, making a delay in filing bankruptcy and spending the tax refund on necessities is a wise decision. You can use that tax refund for car repairs or a child’s college tuition.
- You Purchase a House Recently
In comparison to federal exemption and other exemptions allowed in several other states, Las Vegas has generous homestead exemption. However, U.S. Bankruptcy Code limits the exemption in case the house was purchased during 1,215 days leading up to the filing of the bankruptcy petition. In case you bought a house during that period as well as have equity over the federal exemption limit, you can opt to hold off on filing until the window of 1,215-days closes.
Apart from these, in case you are expecting more debt soon, it is advised to wait. Any debt that incurs after filing would not be discharged. You can discharge the debt only when that exists before you file, be it debt for repairing a home furnace or medical debt for a baby that you would deliver soon. Determining the right time to file bankruptcy requires careful consideration of all the factors. Consulting a reputed and experienced bankruptcy lawyer Las Vegas can help you know the best time for filing bankruptcy.