Should You Delay Your Bankruptcy Filing?

Posted on: 22 October 2015

The timing of your bankruptcy filing is important. Even if you are overwhelmed with your financial debts, delaying your bankruptcy could work in your favor. If you are considering filing for bankruptcy, here are some situations in which waiting to file might be beneficial.

Last Minute Credit Card Charges

When you file for bankruptcy, your credit card charges will be scrutinized by the bankruptcy trustee. If you have any last minute charges, there is a possibility that your bankruptcy filing could be viewed as fraudulent. 

The 90 days preceding your filing are important when it comes to credit card charges. If you have products or services charged to a single card that are more than $650, the credit card company could argue that you knew you were going to file for bankruptcy and had no intention of paying the debt. In this instance, the court could side with the creditor and consider the debt non-dischargeable, which would leave you still responsible for it. 

If you took any cash advances over $925 within the last 70 days, your filing could also be called into question. To avoid accusations of fraud, it could be best to wait to file. If you wait until the 70 and 90 day time period have passed, the debts will be treated as other debts. 

Tax Refund

When you receive a tax refund and file for bankruptcy, it automatically becomes part of your estate. As such, it can possibly be seized by the trustee to help pay down your debts. 

Depending on the state in which you live, it might be possible to keep your tax refund under an exemption. However, if you live in a state that does not allow refunds to be saved through exemption, you could lose it. 

Hiding the refund from the trustee could put you at risk for criminal charges and result in your bankruptcy being dismissed. However, you can put the refund to good use. You can use your refund to pay necessities, such as your rent and utilities. If you delay your filing until you have paid your necessities, you only have to report the remaining balance to the trustee. 

It is important to note that it is not a good idea to purchase additional assets with your refund. The assets could possibly be seized by the trustee to pay off debts. 

To ensure that you are filing your bankruptcy at the right time, consult with an attorney, such as John G Rhyne Attorney At Law