As an Asheville attorney practicing bankruptcy law, the thing I like best about my job is interacting with clients. I represent debtors who have worked hard, maybe made some honest mistakes, but have set their egos aside in order to provide more for their families. They have decided to file a bankruptcy case.
Bankruptcy cases provide tremendous amounts of relief for folks struggling to make ends meet month after month. By eliminating unsecured debts, and at times reorganizing required payments on mortgages or car loans, people have more money in their budgets. That money can be used for essentials such as necessary health care or dental services, better food for their children, and safer housing for their loved ones.
What is the price for this relief? Honesty.
A big part of my job is to explain to my clients that the bankruptcy code gives them the right to huge relief in exchange for honesty about the property they own or have owned, their previous and future income, and the creditors they owe money to. If I can help a client disclose those three things well, a successful outcome in their case is very likely. Here are some common, careless errors people make innocently when filing a bankruptcy case.
Omitted Assets. We need to disclose all of your property on the schedules. Sure, this means the house or car you are going to keep, the couch in your living room, and the clothes on your back. No problem there. But it also means all of your intangible assets including a potential personal injury claim from a car wreck which has not been settled yet, last year’s tax refund that you have not received yet, and the thousand dollars your cousin owes you. Generally, the penalty for failing to list an asset is that you are not allowed to claim it as exempt. The best way to protect your property is to list it on your bankruptcy schedules!
Reporting income. Your pay stubs reflect your monthly income, and are frequently all we need to report income. Business owners need to produce a 6 month profit and loss statement for the same information. But we also must disclose to the court money you have received for renting out a room in your house, cashing in a retirement account, or what you receive from social security each month. The best rule of thumb is to try and think of any source of income, my clients have usually been pinching pennies for months before seeing me, and talk about it with your bankruptcy attorney.
Not Listing Creditors. The bankruptcy code demands filers list all the people they owe money to. This can be a challenge, but with the help of a person’s credit report, we can usually get a good list together. Most of the time, in a simple, no-asset Chapter 7 case, creditors are discharged whether they are listed or not. However, in Chapter 13, a creditor is not bound by the discharge unless they receive notice of the case. The best way to list all of your creditors is to cross-reference your credit report with your bankruptcy petition, and be thoughtful about creditors not listed on the credit report who you have borrowed money from (frequently friends or family or business partners).
Beyond the critical relief in your bankruptcy case, honesty feels good. If you are prepared to tell the truth, and want to figure out the best financial options for your family, I would be pleased to speak with you during a free, initial bankruptcy consultation.
*The information contained on this website is not intended and does not constitute the providing of any legal advice or any legal opinions or services to any user thereof. The information available on or through this web page is not intended and shall not be used as a substitute for the advice and consultation provided by an attorney. Any factual examples used to illustrate concepts are hypothetical and do not depict actual events or real persons.