You must weigh carefully the consequences of fling for bankruptcy protection. A bankruptcy filing can have a permanent impact on your credit and may affect property rights of both you and others.
Rights in bankruptcy will also be affected by the time or date of filing. Careful consideration must be given to events outside of bankruptcy, which may have an impact on rights arising from bankruptcy. In deciding whether to file a bankruptcy petition, the debtor may give consideration to a number of issues, including, but not limited to, the following:
1. Can any property be converted from a nonexempt asset that will be administered by the bankruptcy trustee into an exempt asset to be retained by the debtor?
2. What bills should be paid prior to filing? Should money or other assets be used to satisfy any nondischargeable obligation?
3. Should the bankruptcy be delayed until after receipt of a tax refund or insurance claim?
4. Should a debtor delay filing until after arrangements are completed to change inheritance rights? Keep in mind that a bankruptcy trustee has a right to claim any inheritance received within six months of the filing for bankruptcy.
5. Should the bankruptcy be delayed until after the time limits for reversing transfers or payments made prior to the filing of the bankruptcy petition?
Say that you decide that the filing for bankruptcy is the correct choice for your situation, what information should you gather together for your attorney?
During a first appointment, I review with a potential client their debts, assets, as well as their monthly income and expense situation.
During the first appointment I also discuss with a potential client what the procedure for filing bankruptcy is, the effects of filing bankruptcy on their credit history, the types of bankruptcy avaliable, including Chapter 7 and Chapter 13, and other possible options available short of filing bankruptcy. I also go over my fee schedule and answer any other questions that they might still have. I also give them a list of information that I need them to gather together for a second appointment.
The information that I tell a client to gather for their second appointment (information that they usually don't know in their heads), includes: (1) a list of all liabilities (which usually is mostly creditors but also includes all claims that might be made by any person or entity-- including debts where they are a co-signer, current and potential personal injury claims or other legal claims against them, as well as government tax claims against them), (2) a list of all creditors including their names, account numbers, addresses and the date the debt was incurred. If the debt is a credit card, I need to know the date of the last purchase or cash advance, (3) their gross year to date income (this is shown on their most recent pay stub), (4) their gross income amounts for the two previous years (usually contained on their W-2 forms filed with their taxes for the proceeding two years); and, (5) a recent typical paystub.
During the second appointment I get a detailed list of all the client's assets and their "quick sale" value, but most people know most of this information in their heads. Assets include real property and personal property, including residences, household furnishings, jewelry, cars, boats, bank accounts, insurance policies, stocks and bonds, etc.
I use this information to complete the bankruptcy schedules.
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