Want to file bankruptcy? The bankruptcy process can be very intimidating and confusing. And that’s for good reason. Bankruptcy is a critical life decision that has long-lasting implications. But at its core, the bankruptcy process is comprised of a few important areas.
1. Assets
The bankruptcy court and the bankruptcy trustee want to know about the stuff that you own. Your assets are listed in various bankruptcy schedules. Assets include things like houses, cars, household goods, bank accounts, and even your clothing! Some people make the mistake of not listing certain assets because they don’t think the asset is worth anything. The rule is that you list everything you own, no matter where it is in the world and no matter how much it is worth!
2. Debts
This should be obvious, but it isn’t always so. You need to list every single one of your debts in your bankruptcy case. This includes debts such as student loans that do not get discharged at the end of your bankruptcy. You even have to list loans from family and friends! Another area where people make mistakes is that they want to keep a particular credit card — so they don’t list it. The bankruptcy code is clear: you must list all of your debts, even ones that you want to keep!
3. Income
Your income is important in a bankruptcy because you must first qualify for bankruptcy using the Means Test. The Means Test looks at your prior six months of income to determine your eligibility. The court will also look at the “totality of the circumstances” of your case to make sure that you really do need bankruptcy assistance. By comparing your monthly income with your monthly expenses, the court will determine whether your bankruptcy would be an “abuse” of the bankruptcy process.
4. Transfers of Assets Prior to Bankruptcy
Moving property around prior to a bankruptcy can cause big problems. The bankruptcy petition tries to catch these “pre-petition transfers” using lots of different questions. The court is trying to determine whether you sold or transferred a large asset in order to make yourself appear in need of bankruptcy. Even worse, some people try to move property out of their own name because they would have lost the property in the bankruptcy proceedings. This is illegal and can wreck your bankruptcy from the very beginning.
A typical Chapter 7 bankruptcy petition can easily consist of 60 or more pages. Preparing the bankruptcy petition is very complicated, but the four areas above are where a majority of the action takes place.
If you have any questions about how to file a Bankruptcy in Sacramento, please call my office at (916) 333-2222.