Filing for bankruptcy can seem like a daunting process full of loads of paperwork. Before you begin filing, it is important that you have a brief understanding of the process. An important way to ensure that you are properly prepared for bankruptcy is to hire a bankruptcy attorney. At Sacramento Bankruptcy Lawyer, we are able to provide you with top notch preparation and representation. Our team will provide you with a bankruptcy packet to help explain all that you will need to complete you filing. This will ensure that you have all necessary materials. Additionally, our team has worked with all bankruptcy trustees in the area and this experience has allowed us to know exactly what it is they are looking in a bankruptcy filing.
Upon contacting us, you will be able to set up a FREE consultation. During this time, we will be able to learn more about your case and begin creating your bankruptcy packet.
CREDIT COUNSELING
If you are considering filing for bankruptcy, you should begin by taking a Credit Counseling Course. If you do decide to file for bankruptcy, this step is required before any of your paperwork can be filed, so doing this beforehand be beneficial and allow for your filing to start as soon as possible. It is recommended to complete the course even if you are unsure as to whether or not you will be filing for bankruptcy because it can give you an idea if filing is necessary.
The United States Department of Justice provides a list of approved Credit Counseling agencies in your area. The course is brief and can be completed in as little as an hour from the comfort of your own home. Generally, courses range between $10 and $50 but you may be able to waive this fee if you fall below the poverty line. Upon completion, you will receive a certificate which will be used in your filing.
DOCUMENT CHECKLIST
Filing for bankruptcy can require a lot of documentation. While the bankruptcy packet provides the exact details of which documents you will need for your bankruptcy filing, below is a list of the most common forms used when filing a Chapter 7 or Chapter 13.
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Voluntary Petition – Form 101
Form 101 is the very first form that is filed during a bankruptcy case. It marks the start of your bankruptcy case.
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Master Address List with Verification – EDC 2-100
As the name suggests, the Master Address List documents the names and addresses of any creditors you owe money to. This will provide great importance for the Court when it comes to contacting creditors.
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Statement of Social Security Number – Form 121
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Schedule A/B – Form 106A/B
Form 106 A/B provides the Court with an idea of any property that you own or have equity in, as well as each property’s current value.
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Schedule C – Form 106C
Form 106C is the filer’s opportunity to list any exempt property. Anything not listed here is eligible for liquidation.
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Schedule D – Form 106D
Form 106D addresses secured claims, or those for which creditors have a stake in.
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Schedule E/F – Form 106 E/F
Form 106 E/F addresses unsecured claims ,or those for which creditors do not have interest in.
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Schedule G – Form 106G
Form 106G lists all of your current contractual agreements, including leases.
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Schedule H – Form 106H
If you have any codebtors, they will be listed in Form 106H, including which debts they are involved with.
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Schedule I – Form 106I
Form 106I provides the Court with information regarding your source of income, as well as all income you are currently receiving.
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Schedule J – Form 106J
If you have any reoccurring, household expenses, they must be listed in Form 106J. This includes any dependents that you are responsible for.
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Declaration About Schedules – Form 106Dec
Form 106Dec is used to confirm that the information provided is accurate. To confirm, you will sign the document.
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Summary of Assets and Liabilities – Form 106Sum
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Statements of Financial Affairs – Form 107
Form 107 documents the state of your financial affairs prior to your bankruptcy filing.
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Statement of Intention for Individuals – Form 108
If you are filing for bankruptcy as an individual, you are required to complete Form 108. If you are currently involved with any active leases, you must explain whether you wish to continue making payments toward the asset or give it up.
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Statement of Your Monthly Income
For both Chapter 7 and Chapter 13, you are required to submit documentation of your monthly income. For those filing Chapter 7, a Form 122A-1 is submitted along with Form 122A-2, the Means Test, if your income is above the median. For those filing a Chapter 13, Form 122C-1 Is filed along with Form 122C-2, Calculation of Your Disposable Income, if your monthly income is above the median.
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Attorney’s Disclosure of Compensation – Form 2030
You do not have to worry about filing Form 2030. Form 2030 will be completed by your attorney. This will document your attorney’s involvement with your case and how much you will/have already paid them.
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Chapter 13 Plan – EDC-080-12
If you are filing a Chapter 13 bankruptcy, a repayment plan is created to determine how and when you will pay your creditors over the next 3 to 5 years.
In order to complete all of this paperwork, you will need to collect all necessary documentation, including anything demonstrating that you own certain assets or their worth. Examples include, but are not limited to the following:
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Credit Report
Our office has access to an excellent database that will be able to pull a credit report on your behalf. Also, each year you have access to several free credit reports. Your credit report may not include every debt you owe but it will provide you with a solid base and help you get an idea of what you will need to include in your paperwork.
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Proof of Income
When filing for bankruptcy, your income plays a determining factor in deciding whether or not you are best suited to file a Chapter 7 or a Chapter 13 case. A Chapter 7 Bankruptcy liquidates your nonexempt assets and uses the money earned to pay back your creditors. A Chapter 13 Bankruptcy requires you to establish a Chapter 13 Repayment Plan and create a schedule, which you will follow to pay back your creditors.
Several sections of the bankruptcy filing will require you to list out your income. These amounts must remain consistent throughout so be sure to double check that no amount has been altered along the way. Pay stubs are a great way to provide proof of income.
Form Schedule I provides the Court with information regarding your income. When filing a Chapter 7, this will provide creditors and the Court with an idea as to whether or not you can afford to pay any outstanding debts. In the first part of the form, you will describe your employment. If you are only employed part-time, you are still required to fill this portion out. Part 2 goes into detail about your monthly income. First, you will write your entire monthly income before deductions. As you continue through the form, you will begin listing your deductions, as well as any other income you receive. This includes the following:
- Net income from other owned property, including any business ventures
- Interest and dividends
- Child support and alimony
- Unemployment, Social Security and other government aid
- Pensions
After listing all income and deductions, you will calculate your total monthly income. Lastly, the form will ask you to disclose whether or not you are projected a change in your income within the next year.
Form 107, Statement of Financial Affairs, is designed to learn more about where your money comes from. In Part 1, you will indicate whether or not you are married or have lived anywhere else within the last 3 years. Part 2 will take a look at where your income comes from. This will require you to list all income received in that past 2 years. To verify these amounts, you must include proof of incomes. To verify current income, you may provide the Court with paystubs or any other monthly documentation. However, you may not use bank statements as proof of income. Additionally, tax returns may be used to verify past income. Part 3 begins to tackle your debts. You will list any debts that you currently have and/or have already been paying. Part 4 will look into if any actions have been taking against you, such as lawsuits or foreclosure. Part 5 will require that you list any “gifts” in the last 2 years. A gift is considered to be anything greater than $600. Sections 6 through 9 continue with identifying different properties and accounts you may have. The document concludes by gathering info about either your own business or any business you are affiliated with.
Additionally, proof of income is very important when it comes to completing the Means Test. The Means Test is used to determine whether or not your situation is best suited for relief under Chapter 7 or Chapter 13 of the Bankruptcy Code. It is required of all filers. If you pass the Means Test, you may be eligible for a Chapter 7 filing. If you are unable to pass the Means Test, you will not qualify for a Chapter 7 and may continue your filing as a Chapter 13. To complete the Means Test, you must disclose all income you have received over the last 6 months.
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Tax Returns
As previously mentioned, tax returns may be used to verify past income. Additionally, a bankruptcy filing requires that your last 2 tax returns are included with your filing. If filing for a Chapter 13, you may need to include tax returns for the last 4 years instead of only 2.
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Debt
Since outstanding debts are usually the driving force for filing for bankruptcy, you will be required to list out every debt that you currently owe. Debts include, but are not limited, to the following:
- Credit Card Debt
- Loans
- Medical Bills
- Taxes
While credit reports do not always include every creditor you are indebted to, they can provide a general idea of who you will be paying back through your bankruptcy relief.
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Financial Accounts
Many of us have several different types of accounts. When filing for bankruptcy, you will be required to list each account that you have, as well as the current balance of each. Account statements can provide proof of the reported balances. For accounts, like insurance policies, where you do not necessarily have a balance, you a copy of your policy will suffice.
COMMON MISTAKES
When filing for bankruptcy, you will want to make sure that there are no errors that may delay your case. In addition to making your paperwork is accurate and amounts are reported consistently, you will want to avoid the following:
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Transferring Property:
If the Court sees that you recently transferred money or other assets into someone else’s account, including a spouse or other family member, you could risk being accused of committing bankruptcy fraud. Bankruptcy fraud is often committed by those who are looking to take advantage of the bankruptcy system. For example, a wealthy entrepreneur who can afford to pay off his debts without assistance from the Bankruptcy Court transfers his assets to his son’s account in an attempt to receive bankruptcy relief.
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Inconsistent Payments:
In an attempt to clear up some debts prior to your bankruptcy filing, you should not disregard paying one debt in order to clear out another.
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Luxury Purchases:
If you are behind on your debt payments and nearing a bankruptcy filing, do not make any unnecessary purchases. This includes, but is not limited to, buying a new sports car or going on vacation.
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Filing the for Relief Under the Wrong Chapter:
The Means Test is designed to prevent filers from filing for relief under a chapter that is not best suited for their case. It is important to consult with your attorney to ensure that you are filing the correct chapter for your situation.
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Missing/Wrong Paperwork:
As previously mentioned, your paperwork is one of the most important parts of the entire bankruptcy process. Filing the wrong documents or failing to include even just one document can create major delays in your filing. In order to prevent this, be sure to review your paperwork along with your attorney.
COMPLETING YOUR BANKRUPTCY FILING
Once you have finished gathering all of your documents and completed your paperwork, you can then file your case. When filing, the court will charge you a filing fee. If you cannot afford to pay the fee, you may ask the Court to establish a repayment system, allowing you to make monthly payments. In some situations, you may be able to have this fee waived.
Once the clerk has processed all of your paperwork, you will issued your case number, contact information for your trustee, and information regarding the 341 Meeting of Creditors. This will signify the beginning of your bankruptcy filing and allow for the process to continue.
HOW CAN WE HELP?
Sacramento Bankruptcy Lawyer is designed to prepare you for the bankruptcy process and assist you throughout. Contact us today to set up a FREE consultation with attorney Pauldeep Bains. Mr. Bains has spent years helping clients receive bankruptcy relief and will work to ensure that you are prepared for you initial bankruptcy filing.
We help clients in the following areas: Sacramento, Elk Grove, South Sacramento, West Sacramento, Natomas, Citrus Heights, Antelope, Fair Oaks, Gold River, Rancho Cordova, Roseville, Rocklin, Lincoln, Wheatland, Yuba City, Marysville, Woodland, Davis, and Lodi.
