Five Common Las Vegas Bankruptcy Mistakes to Avoid

I hope you enjoy reading this blog post. If you want to hire a personal injury lawyer, click here.

Case Trustee vs U.S. Trustee

Table of Contents

The federal bankruptcy laws promise a fresh financial start for the honest but unfortunate debtor. Bankruptcy balances the interests of the debtor to obtain his fresh start and the interests of the creditor to see that the debtor pays whatever he can afford. In some circumstances the debtor can complicate his bankruptcy case before he files.

Mistake #1: Paying an Insider Creditor

The bankruptcy laws attempt to ensure that all creditors receive fair treatment during the bankruptcy process. One concern is that the debtor will pay loans to family or friends before filing bankruptcy, and therefore deprive other creditors from receiving payment. Family, friends, business partners, and other creditors who have close relationships with the debtor are called “insider creditors” and transfers to insider creditors can be avoided by the bankruptcy trustee if the transfer occurred within one year before the bankruptcy filing. For instance, if you gave your mother $1,000 from your income tax refund as payment for a debt, and then filed bankruptcy two months later, the bankruptcy trustee can sue your mother to recover the $1,000. To make matters worse, often the debtor could have protected the cash money during the bankruptcy and paid the debt without difficulty after the case was filed.

Mistake #2: Incurring Debt After Deciding to File

Some people decide to charge up credit cards or take payday loans just before filing bankruptcy. If you have decided to file bankruptcy, do not incur additional debt. Taking loans with no intention to repay the creditor could be fraud. It could also be a criminal act.

Mistake #3: Transferring Property

Some people fear that they will lose property when they file bankruptcy. Some will give away or sell property to avoid losing it. In most cases your bankruptcy attorney can protect your property and you will not lose anything. However, once you have transferred an item it is no longer eligible for legal protections. For instance, a car worth $2,000 is likely entirely protected from turnover during your bankruptcy. If you transfer title of this vehicle to your brother before the bankruptcy, the trustee can avoid the transfer, take the car, and sell it to pay your creditors.

Mistake #4: Cashing out Retirement

Most retirement accounts are entirely protected during bankruptcy. Unfortunately, some people are unaware of these broad protections and cash out their retirement savings out of fear that it will be taken during the bankruptcy. Sometimes the money is spent to pay off loans which can create preference issues. In other cases the debtor converts an exempt asset (retirement funds) to a non-exempt asset (e.g. a paid off car).

Mistake #5: Failing to Be Honest

This is the worst mistake of all because the bankruptcy laws do not protect a dishonest debtor. Failure to truthfully list all of your assets, debts, income and expenses is grounds for dismissal of your case, or you may have to answer allegations of bankruptcy fraud (a federal crime).

If you are experiencing financial difficulty and are considering bankruptcy, discuss your case with an experienced bankruptcy attorney. The bankruptcy attorneys at Freedom Law Firm can advise you on the best actions to take before bankruptcy and how to avoid common mistakes. Contact us today for a free consultation and use the federal bankruptcy laws to protect your property in Las Vegas.

If you need any assistance from Las Vegas Bankruptcy Attorneys, Las Vegas Chapter 7 Bankruptcy, or Las Vegas Chapter 13 Bankruptcy, please call the offices of Freedom Law Firm at 702-803-9251 today.

About the Author
George Haines

In the late 2000s, Southern Nevada was hit especially hard by the last Great Recession. The real estate market crashed, unemployment rates soared, there were a record number of bankruptcy filings and wages were stagnate. But, we made it through it and we learned how to survive in these types of downturns. Are we going to see something similar to the Great Recession in the coming months or years due to the Covid Pandemic?…… it’s tough to say, but if we do, we’ll get through it. In order to save homes, vehicles, feed families and pay living expenses, many may need to consider bankruptcy or other loss mitigation options. However, just like we did after the Great Recession, we will rebound and grow stronger.

George Haines

Owner and Managing Attorney

you also might be interested in

Our Locations

8985 S Eastern Ave Suite 100 Las Vegas, NV 89123
1180 N. Town Center Dr., Suite 100 Las Vegas, NV 89144​
8985 S Eastern Ave Suite 100 Las Vegas, NV 89123
Schedule Today!

    Free Consultation

    Speak To An Attorney

    Find a time to meet that is convenient for you

    Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

    Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

    Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.