Is There A New Year’s Rush To File Bankruptcy?
Our Nevada bankruptcy lawyers discuss quickly filing as close to the new year as possible versus taking your time.
Once gifts are exchanged and holidays are celebrated, many of us hardly have any energy left to stay up until midnight on New Year’s Eve. But that doesn’t mean that creditors will be idling by, waiting until it is “polite” to begin attempts to collect on debts. Bankruptcy provides a protection called the “automatic stay,” which can protect against vehicle repossession, home foreclosure, wage garnishment, and more. But a debtor is only protected by the automatic stay when their petition is filed with the court, and bankruptcy petitions are lengthy documents that could take several days, or even weeks, to complete. If you’re finding yourself wondering whether it would be better to rush to file or take your time until after the New Year, read on and call (702) 842-0700 with any additional questions.
How Can the Automatic Stay Help Me?
The automatic stay pauses or completely stops several types of creditor actions. The way that some actions are affected will depend on the chapter of bankruptcy filed. If you are facing any of the following creditor collection methods, you probably have far less time to contemplate bankruptcy than someone whose debts aren’t in collections and who doesn’t have judgments against them.
- Stop wage garnishments in general
- Student loans- resume after bankruptcy unless paid off during bankruptcy
- Child support- does not stop for Chapter 7 bankruptcy. Only stops for a Chapter 13 bankruptcy that arranges for full repayment of the child support balance
- Stop repossessions of vehicles and other assets
- Stop home foreclosures
- Stop wage garnishments
- Stop lawsuits
- Stop bank account levies
- Stop utility shut offs
- Stop evictions before the writ of possession phase
Filing Fast With a Skeleton Petition
Clearly, the automatic stay offers tremendous benefits that can greatly benefit someone who is struggling with debt. If a foreclosure is looming, or an auto lender is making threats to repossess, there may not be much time to ponder about bankruptcy. For those who don’t have weeks or months to gather documents, draft their petitions, etc., the court offers an option known as a skeleton filing. Also known as an emergency bankruptcy, this type of petition requires far less detail than a typical bankruptcy petition. A debtor who files for emergency bankruptcy will still eventually need documentation like tax returns, family law orders, vehicle registrations, and more, but emergency petitions only require a few items.
- Six months of household income information. This will usually be paystubs, but debtors who work for themselves will need to provide profit and loss statements or similar documentation for the previous 6 months. This needs to be from all household members, like a spouse and children, but won’t include roommates.
- Driver’s license. Another photo identification, like a passport, will suffice. This will be necessary at the 341 Meeting of Creditors to verify your identity, so we advise having it ready at filing because of how long a request for a new one can take.
- Social security card. An original W-2 can be used in place of a social security card as it should also contain the debtor’s name and social security number.
- Information packet or check that you qualify for your chapter of bankruptcy. Even if your income qualifies you for bankruptcy, you could have prior bankruptcy filings or assets that aren’t protected in Chapter 7. It is always best to at least file your bankruptcy under the correct chapter, even if it is just a skeleton petition.
- Filing fee. $313 for Chapter 13, $338 for Chapter 7
After filing a skeleton petition, the debtor will only have 2 weeks to complete and file the standard bankruptcy petition. If you file a skeleton petition with a bankruptcy attorney, they may have an earlier deadline for you to submit your documents than 2 weeks.
Tax Refunds and Bankruptcy
With all that’s going on during a bankruptcy filing, many debtors don’t stop to think about what filing bankruptcy will do to their tax refunds. Nevada allows exemptions for federal and state tax refunds in bankruptcy. In other states, debtors may have to worry about spending their tax refunds before bankruptcy or filing earlier in the year so the trustee isn’t entitled to as much of the tax refund. However, as long as the debtor applies exemptions to their tax refunds in their bankruptcy petition, they should be protected from seizure by the trustee. If you are a Nevada resident but need to file bankruptcy in a different state, be sure to check that state’s exemptions, and if any of them can be used to protect your tax refund. Otherwise, a simple way to protect your tax refund in bankruptcy is by spending it before you file.
Credit Card Debts & Chapter 7 Bankruptcy
Many families feel the urge to turn to bankruptcy around the New Year at least in part due to the remaining stress from holiday spending. If the family qualifies for Chapter 7, this can be a great way to clear debts and start the new year off with a clean slate. However, there are some limitations to discharging credit card debt in Chapter 7 bankruptcy. Without these precautions, it would be easier for people to open up several credit cards, run them all up on unnecessary purchases, and discharge them in bankruptcy without ever paying back a dime. Therefore, the debtor should avoid luxury purchases of more than $800 in the 90 days before filing, and cash advances of more than $1,100 in the 70 days before filing. The credit card company can file an adversary proceeding to dispute the discharge of any debts that exceed these limits.
The line between “luxury” and “necessity” can become blurred when it comes to pre-bankruptcy credit card spending. For example, it may be perfectly reasonable for your child to need a new pair of sneakers for gym class. But if you’re on the brink of bankruptcy, name-brand sneakers that cost several hundred dollars would be likely be found to be a luxury considering all of the affordable alternatives available. New tires for your vehicle could definitely be necessary, but rims and other aesthetic items would be considered luxury purchases. Clearly, cash advances are more clear-cut than the analysis between luxury and necessary spending. If you want to file bankruptcy but aren’t sure about your credit card debt’s dischargeability, call our firm for your free consultation at (702) 842-0700.
Quality Bankruptcy Representation For Our Nevada Clients
We know that for our clients, unbeatable service is just as important as affordable price. Debtors face enough pressure under debt burden without adding in the stress of choosing a bankruptcy attorney. It can be hard to discern fly-by-night opportunists from attorneys who are truly experienced and passionate about bankruptcy. Our firm offers free consultations so you have an opportunity to get a feel for what filing bankruptcy with us will feel like with no risk or obligation to you. We can help you make a variety of bankruptcy-related decisions and counsel you throughout the process. At Zero Down Bankruptcy Lawyers of Nevada, we have convenient office locations in Las Vegas, Henderson, and Reno. Get started today for free by calling (702) 842-0700 to schedule your phone consultation.
Las Vegas Office
5552 Ashley Creek St
Las Vegas, NV 89135
North Las Vegas Office
7251 W Lake Mead Blvd
Las Vegas, NV 89128
1489 W Warm Springs Rd #110
Henderson, NV 89014