Once you decide that a bankruptcy may be your best option for you and your family or for your business, you will have to provide certain information to your bankruptcy attorney. Regardless of the state you live in, the information your attorney needs to properly advise you and to file your bankruptcy petition is the same.
Do You Meet the Means Test?
Before you can file, you have to meet the means test for a Chapter 7 or certain requirements for a Chapter 13. Your attorney must know your average income for the past 6 months and compare it to the median income for whatever county you live in. Your attorney will need to see your pay stubs or wage statements for this period.
If your income is below the median, you can file under Chapter 7. If it exceeds it, you could still file depending on other factors that your attorney can discuss with you to see if you remain eligible. Otherwise, you can file under Chapter 13 though you will have to submit a reasonable repayment plan and have an adequate income to meet your obligations under the plan.
Other Information for Your Attorney
- Creditors. You will need to provide names and addresses of all creditors and the amounts owed. Copies of the latest statements are sufficient. You may not exclude any creditor, even if you want that individual or company to be paid. When the bankruptcy is over, you can choose to repay that creditor if you wish.
- Assets. List all your assets such as car, tools, home, life insurance policy, pension plan, stocks, and any other personal or real property. You will need the market value of each including amount remaining on your mortgage or car loan and the market value of your home and car to determine your equity, if any. Other possessions like a gun collection or boats need to have values assigned as well.
- Monthly expenses. To determine if you have any disposable income, you have to list your monthly expenses such as gas, transportation, utilities, insurance payments, food, entertainment, cable and phone bills and any other expense.
- Other Income Sources. You also must include other income sources such as expected tax refunds, likely inheritance from a recently deceased relative or life insurance proceeds. If you are expecting compensation from an injury lawsuit, or have one pending, that fact needs to be disclosed.
- Tax returns for the past 2 years and records of any major transactions in the past year. If you were involved in a major transaction or sold off a valuable asset prior to filing for bankruptcy, this could be voided by the trustee as a preferential transfer or an attempt to defraud the court. Disclose this to your attorney rather than have the court find out to see if steps can be taken to legitimize the transaction or to lessen the loss if the trustee decides to take action.
The most important aspect in filing a bankruptcy petition is being upfront with your attorney and being inclusive regarding all your assets and creditors. Your attorney must know everything about your estate and situation. If you fail to list a creditor, the bankruptcy trustee may want to delve more closely into other items on the petition. Failing to list an asset is serious and if it was intentional, you may be charged with criminal fraud and/or have your petition dismissed.
If you accidentally omitted something after your petition was filed, you attorney can file additional documents to include these items. If you are unsure about what property may not be exempt and subject to seizure, ask your attorney before you file. There may be alternatives that your attorney can suggest so that you may retain that property even if you do file for bankruptcy.