Consider the following questions so that you can properly plan your bankruptcy:
1. Do you expect an inheritance within the next year or could you get a tax refund within a couple of months? Bankruptcy property includes not only the property you have at the time of filing but sometimes property that you may acquire or get later. You are allowed enough property to start over but no more. Inheritances, tax refunds, lottery tickets and personal injury lawsuits are especially property that the court looks at although you don’t have the money the day of filing. Be sure to list these as assets or you lose them.
2. Do you expect to have major medical expenses within the next year? Maybe you want to wait until after you have these expenses to file or if you had injuries from an auto accident you may want to reconsider filing. Lawsuits are an asset that the bankruptcy court may own if you can exempt it.
3. Have you paid a creditor more that the normal monthly payment or paid someone close to you anything within the last year? This is a preferential transfer which may be avoided by the court and the person you paid may have to pay the court back. Preferential transfers are when anyone gets something for less than its fair market value just before filing. This includes giving a mortgage to an unsecured creditor or paying a creditor off just before filing or giving a car or other property to a relative or friend before filing. Transferring assets just before filing into your retirement account within 6 months or into other exempt forms is also a preferential or fraudulent transfer.
4.Do you have child support, or alimony, or is there a pending dissolution of marriage? Overdue alimony and child support can only be repaid in a Chapter 13. It is never discharged. You must be current on support or a spouse may object to the discharge and have your case dismissed or get other sanctions. You can’t fall further behind with your child support if you are in a Chapter 13.
5. Do your have old tax debts? Some debts like taxes are dischargeable if you wait the proper period of time (3 years after filing the taxes). The statute of limitations for tax collection is 10 years. Also if you went crazy and charged up your credit cards just before filing they won’t be dischargeable unless you wait 90 or more days. Such credit card charges are looked at as fraud.
6. Are you unable to keep payments current on secured property? If so, a Chapter 13 is never the long term answer. You will eventually lose property that you can’t keep up the payments on. You will eventually have to file a Chapter 7, and/or surrender the property or repay the deficiency. You have to live within your budget.
7. Do you have regular income or valuable non exempt assets? If you have regular income you may have to file a Chapter 13 unless your expenses exceed your income. If you have valuable assets that you can’t exempt, you may have to file a Chapter 13 or lose them.
8. Are you able to produce a list of your debts and financial records? You need to know who you owe, how much you owe, and the addresses of your debts. Fail to list a debt or tell your attorney about it and you may have to pay it. You may also have to provide bank and tax records and copies of deeds mortgages and titles.
9. Have you filed bankruptcy within the last 8 years or had a prior bankruptcy dismissed. You may not be able to file a Chapter 7 just yet then.
10. Have you charged large amounts, sold property and not paid the lender or obtained a loan by fraud such as overvaluing assets or giving property as security that you don’t own? If you charged a large amount within 90 days prior to filing you may not be able to obtain a discharge but such a lawsuit (adversary proceeding) against you is hard to prove and win.
11. If you have bought or sold property, was the lien or mortgage properly recorded? If a mortgage or lien was not properly recorded the bankruptcy court may own it. For that reason we need the mortgages and titles of property you own or that you bought and sold within the prior 2 years.
Stephen M. Dunne, Esq.
Dunne Law Offices, P.C.
1500 JFK Blvd, Two Penn Center, Suite 200
Philadelphia, PA 19102