Jan 04, · The bankruptcy code pulls in any inheritances (and a few other things) received or to which you become entitled in the days following the filing of your bankruptcy petition. It does not include post-petition (after filing date) lottery winnings as long as the ticket was bought with money you earned after the filing of your Ch7 (this does. The idea is fairness among creditors, looking out for the creditors who didn’t get paid back before filing. It’s also to take the profit, if you wish, out of aggressive collect tactics by some creditors: no point in levying the debtor’s account if it triggers a bankruptcy filing and a lawsuit to get the money back. Gifts . The Bankruptcy and Insolvency Act says that all gifts need to be given to the trustee. They are like an asset that is recoverable if you receive it before you are discharged (the date you are released from the obligation to pay your creditors).
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By Ryan C. After meeting with hundreds and hundreds of potential clients during our free consultations the same issues arise over and over again. The following are the top ten most common issues that should be addressed or followed prior to filing either a chapter 7 bankruptcy or chapter 13 bankruptcy case. Even if you are not ready to file bankruptcy speaking with an experienced bankruptcy attorney will give you the information you need to make educated decisions.
To determine if you are speaking with an experienced bankruptcy attorney, ask the attorney how many other areas of law they practice, how long they have practiced bankruptcy law, how many bankruptcy cases have they filed and to name the trustees in the jurisdiction and what document requirements each trustee requires. If the attorney does not know who the trustees are and what each of them requires they do not regularly file bankruptcy cases. One the most common problems we face is meeting with potential clients when it is already too late.
If you have been served with a summons and complaint you need to speak with an bankruptcy attorney. If you owe taxes and the IRS or FTB has indicated they are going to garnish your wages you need to speak with a bankruptcy lawyer. All consumer bankruptcy petitions include Schedule J. Schedule J is the estimate of the average or projected monthly expenses for your household at the time the bankruptcy case is filed.
Prior to scheduling a free consultation with an experienced bankruptcy attorney take a few minutes and review your bank account statements and get a better idea of where your money is going each month.
This will help to determine if you have any disposable income available to creditors. If you file for bankruptcy you will need to provide your tax return for the previous year, or the current year if requested. If you fail to file your return that becomes due after you file for bankruptcy the IRS can request dismissal of your bankruptcy case. Section of the Bankruptcy Code requires filers of chapter 13 bankruptcy cases to have filed all of their tax returns for the previous four years before the filing of the bankruptcy petition.
This is one of the standard questions asked by the standing chapter 13 trustee at the meeting of the creditors. If you are self-employed or receive income it is essential that you know what your income is and what your expenses are for each of the six-months prior to filing for bankruptcy. Just like in Number 6 below, the Means Test uses a six-month average of your income to determine if you have disposable income available to creditors each month.
Determining what your take home pay is when self-employed or receiving income is always more time consuming, but absolutely necessary prior to filing bankruptcy. The Means Test is based upon local and national standards for expenses.
The Means Test also uses the six-month average of your gross income extrapolated to a twelve months. You will need all six months of your pay statements or other proof of income. Taking a cash advance close in time to filing bankruptcy can be a huge problem.
This can be a problem for the same reasons detailed in Number 4 listed below. An adversary alleging fraud could be the likely result. The transfer can be an outright gift or it can be a sale in which the asset is sold for much less than its value. See Section a 1 A of the Bankruptcy Code. Very importantly, with a constructive fraudulent transfer the debtor does NOT need to intend to defraud anybody, and yet the transfer can be undone if the required circumstances are present.
They generally need most everything they have. The Bankruptcy Code does not refer to that threshold amount. Accordingly, even when the same form also asks a question about transfers other than gifts which does NOT have a stated dollar threshold, in most cases a trustee would not pursue a transfer unless the anticipated money from undoing the transfer would outweigh the anticipated costs.
This question without a threshold dollar amount 18 asks:. Within 2 years before you filed for bankruptcy, did you sell, trade, or otherwise transfer any property to anyone, other than property transferred in the ordinary course of your business or financial affairs?
Every applicable transfer must be listed here, but again the trustee would generally not do anything about it unless its value made the effort worthwhile. That does depend on the circumstances. For example, if the trustee already had non-exempt assets to liquidate and distribute among the creditors, he or she may be more inclined to pursue a gift or transfer. The point is that modest gifts and transfers are not the target of this law.
So fraudulent transfers are not an issue in most consumer and small business bankruptcy cases.