SCHEDULES

A debtor fills out the bankruptcy paperwork and forms when filing a bankruptcy case.  These forms are the Bankruptcy Schedules.   Bankruptcy schedules list all of the assets a debtor owns.  These schedules also list all of the debts that the filer has.  Also, they list down the monthly income and monthly expenses of the debtor too.   Today, however, we will talk about -Assets.

Assets are the things that a bankruptcy debtor owns, such as real estate, vehicles, furniture, jewelry and such.  It also includes items like cash, bank accounts, retirement plans, life insurance and others, such as a workers compensation claim, or a personal injury case.

A debtor lists (or schedules) these belongings on Schedule A and Schedule B of the bankruptcy petition.    Schedule A is where the debtor lists the real estate and property they own.   Things scheduled on Bankruptcy Petition Schedule A are: homes, vacant land, timeshares, mobile homes and the like.   Schedule B contains everything else owned by the debtor.    These assets would include a debtor’s car, bank account, cash, household goods, electronics, furniture, interests in businesses, animals, jewelry, insurance policies, retirement plans, investments, inheritances, claims against third parties.   Assets that also must be listed are sporting equipment, clothing, savings bonds, luxury items like boats, planes, collectibles, antiques, tax refunds, money owed to the debtor, and any other possible thing that you own, or is owed to you.   The list above is not exhaustive.

UNLISTED ITEMS

Many debtors I speak to ask me questions about what they need to list on their schedules of assets.   In short, I tell them to list everything.   Often, debtors ‘forget’ about assets that are not tangible.  For example, when a loved one dies a debtor may inherit their home.   A debtor says “this house isn’t mine” when they have not transferred title yet.    A debtor lists this home on schedule A.   Unpaid personal loans also fit this bill.   Just because they haven’t paid you back yet, doesn’t mean you don’t have the right to that money, now or sometime in the future.  The loan belongs on Schedule B.

EXEMPTIONS

Debtor’s also often want to avoid listing stuff that they ‘don’t want to lose.’  This is completely understandable.  Good news, though.  Bankruptcy attorneys can protect (or exempt) the stuff that you have.   Schedule C is where the bankruptcy lawyer will list down these exemptions and protections for your assets, granted either by the state (here are the Illinois Bankruptcy exemptions), or by the bankruptcy code, depending on where you live, and how long you have lived there.   These are often broad, and vary by state to state.  I’ll talk more about bankruptcy exemptions at a later date.

Assets that are exempt, are not part of the the bankruptcy estate, and aren’t sold by the bankruptcy trustee.  Only unexempted assets are available to the bankruptcy trustee.  The trustee’s job is to determine if there is enough value in the unexempt belongings to make a beneficial payout to the creditors of the debtor in bankruptcy.  The US Bankruptcy Code requires a debtor to schedule all assets, regardless if they are exempt or not.

BANKRUPTCY TRUSTEE

The good news for bankruptcy filers is that chapter 7 bankruptcy trustees liquidate very few belongings.  However, when a trustee finds assets that have not on schedule A or B, the trustee can liquidates them.    If you have assets, tell your lawyer.  Your lawyer can usually protect them.  The goal for a chapter 7 case is for the bankruptcy trustee to file a ‘No-Asset Report.’

A good bankruptcy attorney would recommend chapter 13 if they see a debtor has assets that are worth more than can be exempted, and would review that process with the bankruptcy client if they wish to protect the assets while getting debt relief.    This is why it is important to tell your bankruptcy lawyer about all of the assets you have.  Their are protections for most, and it’s better to know sooner than later, especially since filing false documents in bankruptcy is a crime, and a debtor could be denied a bankruptcy discharge, or worse, be charged with a crime subject to fines and jail time if convicted!

The post Bankruptcy – A is for Assets appeared first on Chicago Bankruptcy Lawyer.

Do you save your old returns?  If so, good.  Experts say to hold on to your tax returns for 10 years. That’s a lot of paper if you don’t scan them in or get digital copies of your returns from your accountant, tax lawyer or tax preparer.

Luckily, if you did not save your copies, the IRS can get these to you.

Good news!  You can order the last 4 years of tax returns directly from the IRS. Your trustee will not usually want to see your state tax returns.

The best part about it? IT’S FREE!

Order your returns from the IRS here

First off, tax returns are needed to properly fill out your chapter 7 and chapter 13 bankruptcy petition.   Get these to your bankruptcy lawyer before you file your bankruptcy.  They will forward these to the trustee in your case.

Next, be sure to list any income tax liability on schedule E of your bankruptcy petition schedules if you owe back taxes. Some income tax is dischargeable in bankruptcy, if you can meet several of the US Bankruptcy code’s loopholes. As always, contact your bankruptcy attorney (hopefully it’s me!) to review the dischargeability rules for income taxes that you may owe. Timing is everything. Thankfully, we have tools to help you determine the best time to file your bankruptcy petition.   You must schedule income tax liability if you hope to discharge it.

Furthermore, if you haven’t filed returns, you should discuss this with your lawyer too. Most likely, your bankruptcy attorney will tell you to file your tax returns.  Likewise, if you are not required to file for a certain year, your lawyer should prepare an affidavit for you to get notarized.   The affidavit states that you are exempt from filing for the tax year.

Finally, I do not practice tax law;  I only focus on bankruptcy law.  For that reason,  be sure to talk with a tax attorney to properly advise you if you have to file a tax return in any given year.

The post Tax returns – How to order tax returns from the IRS for your bankruptcy case appeared first on Chicago Bankruptcy Lawyer.

Sessions will include discussion on the proposed National Chapter 13 plan, the best practices in client advocacy, evidentiary hearings, social media to name a few.  This continuing legal educational conference is focused entirely to consumer bankruptcy professionals -debtor attorneys, creditor attorneys, judges, and bankruptcy trustees who will put on presentations and lead discussions on hot bankruptcy topics for the debtors’ and creditors’ bankruptcy practice.

 Distinguished Faculty members who will provide valuable insight include:

• Bankruptcy Judge Janet S. Baer 
• Bankruptcy Judge Donald R. Cassling 
• Bankruptcy Judge Catherine J. Furay 
• Bankruptcy Judge Thomas M. Lynch 
• Bankruptcy Judge Eugene R. Wedoff 

Numerous local creditor and debtor attorneys will share their viewpoints and experience, as will local Chapter 7 and Chapter 13 Trustees and staff attorneys, the United States Trustee office, as well as the Illinois Attorney Registration & Disciplinary Commission. 

Here are the scheduled topics for discussion:

• Timing of Credit counseling received on the petition date: the requirements of section 109(h)(1). 
• Potential Student loan dischargeability in bankruptcy.
• “Fee jumping” in chapter 13 cases. 
• Collateral Disposition Issues Best Practices in Client Advocacy 
• The Evidentiary Hearing: A Demonstrative Exhibit on Direct and Cross Examination, Foundation and Hearsay 
• The Ethics of Social Media: How to Avoid Acting Like a Tweet — and Other Good Advice Your Mother Did Not Teach You

Looks to be quite informative and should be engaging as always. Look for follow-up posts after the conference.

The post Continuing bankruptcy education this Fall at the American Bankruptcy Institute Chicago Consumer Conference appeared first on Chicago Bankruptcy Lawyer.

A no asset report by the standing bankruptcy trustee means there are no assets to administer in the bankruptcy case for the benefit of creditors. It’s either because your exemptions are great enough to protect all of your belongings, or that there is no significant value that the trustee would receive if they tried to liquidate the unexempt asset. (The trustee does not want to sell your used VHS cassette tapes at a flea market to make $11)

The no asset report is filed shortly after the 341 meeting of creditors. If everything is proceeding as planned, the chapter 7 discharge should come about 2 months later.

The post N is for a no asset report in bankruptcy appeared first on Chicago Bankruptcy Lawyer.

DO:
Pay the balance of attorney’s fees & court costs
Spend on necessities (rent, car note, food, utilities etc.) Pay with cash and debit cards.
Prepare and electronically file your taxes early
Tell your lawyer what you expect to get back & make a copy of the return before sending it in

DO NOT:
Take rapid refunds
Pay family or friends
Buy luxury goods
Do not charge on your credit cards, even small amounts
Pay small debts or debts you want to discharge
Wait until April to file your taxes

We may be able to protect a portion of your refund from seizure by the bankruptcy trustee, but we will need to see your tax return and discuss it with you over the phone.

The Illinois exemption is $4000 for wildcard, which is used to protect your household goods, money in the bank as well as the refund, so there could be some timing issues here. Any earned income credit portion will automatically be protected in addition to the wildcard amount we may use for the rest.

We can help you keep your refund, but you must retain our services for us to review your case and assist you. As always, feel free to give us a call and we’d be happy to discuss it with you. We would rather advise you on how to keep your tax refund than see the bankruptcy trustee take it from you! Remember each case is different, so you should rely on your attorneys advice once they know all of the facts of your case. Good luck and happy new year.

The post Tax refunds in Illinois bankruptcy cases appeared first on Chicago Bankruptcy Lawyer.

From the UST website:

NOTICE REGARDING DEBTOR AUDITS

January 14, 2008
As mandated in Section 603(a) of Public Law 109-8, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the United States Trustee Program (USTP) established procedures for independent audit firms to audit petitions, schedules, and other information in consumer bankruptcy cases filed on or after October 20, 2006. Pursuant to 28 U.S.C. § 586(f), the USTP contracted with independent accounting firms to perform audits in cases designated by the USTP.

The FY 2008 Consolidated Appropriations Act, Public Law 110-161, provided no funding for debtor audits. As a result, the USTP has suspended its designation of cases subject to audit and has notified the independent accounting firms performing the audits. The Program is pursuing alternative sources of funding to permit it to resume the designation of cases subject to audit and, if successful, intends to reinstate the audits.

Pursuant to Section 603(a) of BAPCPA and 28 U.S.C. § 586(a)(6), in the spring, the USTP will make public information concerning the aggregate results of the debtor audits performed during fiscal year 2007.

The post Bankruptcy Audit’s suspended appeared first on Chicago Bankruptcy Lawyer.

Subject: What does reach back mean?

Question: I was doing fine financially until I went to commission sales. I kept thinking I was going to make a lot more money than I did. In June 07 I took a cash transfer from my bank credit card to my checking (they offered to me) of 15,000.00. A week later I transferred 14,000.00 to my daughter for lap band surgery. That credit card is now up to 22K and part of about 40K I am in debt and thinking about filing Chapter 7 on. Do I need to wait one or two years before filing so they wont go after her. I did not know I was going to be in such a financial pit and don’t want my bad decisions to effect her.

Answer: Transfers/payments/gifts to insiders must be disclosed for a year in your bankruptcy paperwork.

Subject: repo
Question: Is there a law that clears you from being sued after a certain amount of years. I co-signed 8 years ago for someone on a car and now the bank is just trying to sue me for the difference.

Answer: Bankruptcy will discharge your responsibility for the debt.

Subject: chapter 7
Question: Hello. Thank you for your time. I filed a chapter 7 in October of 2005, discharged in February of 2006. I have a residence and a rental home (has already gone to sheriff’s sale) which both were listed assets on the bankruptcy filing. Both mortgages had ARM’s which adjusted after the discharge, and the loans were never reaffirmed. Although I kept the payments current until July/August 2007, the values dropped, I could not rewrite the mortgages and have decided to “walk-away.” Is my understanding correct that, since these assets were discharged in my bankruptcy and not reaffirmed, I cannot be held responsible for any deficiencies? Thank you

Answer: True. If you did not reaffirm, you are not responsible for the mortgage balance and can walk away from the home.

Subject: Getting out of Bankruptcy
Question: I need to know how can refinance my home loan and get out of bankruptcy.

Answer: I assume you are in chapter 13 bankruptcy. You will need to seek out a lender and get a proposed refinance contract. Then get that to your attorney to draft a motion to permit you to refinance. You should also order a payoff statement from the trustee. Once the motion is granted, (court will look to see if it is reasonable and necessary, comparing costs before and after etc.) then you can close on the loan and turn the proceeds over to the trustee to distribute to your creditors. You should allow about 30 days for the motion to be heard and granted.

Subject: Filing taxes post bankruptcy discharge
Question: I have completed a Chapter 7 bankruptcy during 2007. I am unsure how, or if, I am required to report that to the IRS. I owe no back taxes, and taxes were not apart of my bankruptcy. All of the debt that was discharged was consumer credit debt. I maintained my home, car and personal belongings.

Answer: As far as I know, there are no special deductions or exemptions to list when filing your taxes in regards to your bankruptcy. You should mention it to your tax preparer just in case, since I am not a tax expert, and the tax code is as big as the bankruptcy code!

Subject: Can debt be discharged?
Question: I am a primary card holder on a credit card. My wife was put on as a authorized user only. She rang up 10,000 in debt on this card. She admits its all her debt. She plans on filing Bankruptcy alone{I am not filing}. Can this debt be discharged?

Answer: This would still be your debt, since you ‘authorized’ her to use your account. So, they could still collect on this, despite her bankruptcy.

Subject: Chapter 7
Question: I live in Vancouver Wa but work in Oregon. I file for chapter 7 bankruptcy in Nov 2007 but the trustee is waiting to close /discharge the debt until I file taxes so he can garnish them. My question is can he garnish my child tax credit and/or my earned incom credit?

Answer: Each jurisdiction may be different, but in Illinois, we use one of the Illinois exemptions to protect Earned Income Credit. Talk to your attorney about the available exemptions for your refund.

The post More Bankruptcy Q&A appeared first on Chicago Bankruptcy Lawyer.

Question
My daughter applied for SSDI over 2 1/2 years ago. Her husband left her 2 years ago. Their divorce comes up in March. She just received a lump sum payment from Social Security for her disability. She has not paid any of her credit cards, etc. for the past two years however I have been paying her car payment; titled jointly. I have been paying all her expenses the past two years with the agreement she pay me back when she got her settlement. She is planning on filing Chapter 7. Does she have to disclose the lump sum payment of social security disability? She owes me $8k of the $15k she received. What effect will that have on her filing? Also what happens to the car since it is in her husband’s name also? She would like to keep it. Thank you.

Answer
Yes, she would disclose it. Her attorney will use state exemptions to protect it. She should not pay you, as the trustee in the case can then come after you for the funds.
For a cosigned debt, she can choose to reaffirm the debt so she can keep the car, and should continue to make the regular payments on it.
She should talk to a local bankruptcy attorney to get state specific advice.

Subject: Motion for Deficiency

Question
I live in Ohio. Filed Ch.7. Surrendered our condo to the trustee, he abandoned the property, it went into foreclose and sold at auction. I recently received a notice for motion of deficiency filed by the condo association, which by the way was listed in the original filing. Do I owe this money? What happens if I don’t go to the hearing?
Thank you
Answer
If you listed the debt in bankruptcy, then the bankruptcy discharged your obligation for this debt. I assume this is a state court motion, where they may be asking for $ from the lender, as they usually have a condo association lien on the property.
IF it is a bankruptcy motion, you should speak to your attorney.

Subject: chapter 7 and tax refund

Question
I live in Wisconsin a few years back I was involved in a car accident. the women’s attorneys sued for 85,000 and it was granted. i want to file chapter 7 since I really have no assets at all to get rid of this judgment. I still desperately need my tax refund which should be significant w/2 children.is it better for me to file my taxes before or after I file for bankruptcy? should I anticipate them taking a portion or all? I am extremely stressed about this due to having to pay for child care. thank you very much.
Answer
Each state has exemptions to protect assets. You should meet with a local bankruptcy attorney to advise you how to protect your assets and when is the best time to file a case. Car accident debts are normally dischargeable, unless there was DUI/DWI or intentional injury.

Subject: Filing taxes post bankruptcy discharge

Question
I have completed a Chapter 7 bankruptcy during 2007. I am unsure how, or if, I am required to report that to the IRS. I owe no back taxes, and taxes were not apart of my bankruptcy. All of the debt that was discharged was consumer credit debt. I maintained my home, car and personal belongings.
Answer
As far as I know, there are no special deductions or exemptions to list when filing your taxes in regards to your bankruptcy. You should mention it to your tax preparer just in case, since I am not a tax expert, and the tax code is as big as the bankruptcy code!

Subject: Getting out of Bankruptcy

Question
I need to know how can refinance my home loan and get out of bankruptcy.
Answer
I assume you are in chapter 13 bankruptcy. You will need to seek out a lender and get a proposed refinance contract. Then get that to your attorney to draft a motion to permit you to refinance. You should also order a payoff statement from the trustee. Once the motion is granted, (court will look to see if it is reasonable and necessary, comparing costs before and after etc.) then you can close on the loan and turn the proceeds over to the trustee to distribute to your creditors. You should allow about 30 days for the motion to be heard and granted.

Subject: chapter 7 questions

Question
My wife and I recently filed chapter 7(with an atty).I would like to know if I can talk to a lender about the terms of my loan. To be more specific ,We own an RV and wish to keep it. However, I/we are not going to “reaffirm”. The main reason is I know that the bank doesn’t want it and I don’t want to be responsible in the future if I cant continue to pay. At the present time we are current on our payments and are continuing to pay. Is it reasonable to ask them to reduce the loan amount or interest rate to help us as long as we continue to pay?………….more important,……..Is it legal?

Thank you in advance for your time and help. Please be advised that your answer may generate more questions. I/we have talked with our attorney about a lot, however he is on his honeymoon at this time and unavailable.
Answer
If you do not reaffirm, then there is no negotiation with the lender. The reaf may have better terms for you. if not reaffirmed, the lender has the right to the items back. IF you pay for them, it would be up to the lender if they will agree to let you keep the items if you are current. Since the RV may have some resale value, you need to speak to them directly about the options available if you do not want to reaffirm. They are under no obligation to let you keep the RV, even if you are current, if you don’t sign the reaffirmation.

Subject: Chapter 7

Question
Went in for a consultation for chapter 7 but new questions arise after the consultation.
1. Been in SC for a year now planning on moving back to GA in a couple of months. Should I go ahead and file it now in SC or wait?
2. The lawyer told me to list my assets. Do I have to list my furniture/TV(I do not want to lose it)?
3. The lawyer also told me something about Chapter 722(something about car loan) do you know what kind of car I can get?
4. Should I file taxes before or after I file?
5. If I do list assets will a trustee actually come out to see it?
Answer
1. You would need to still file in SC for 90 days after you move.
2. List all assets, and your attorney will use the state exemptions to protect your assets so that you can keep them.
3. 722 is where you can buy your car for fair market value as opposed to paying off the balance of the loan. They can help you finance something after bankruptcy too.
4. Check with your attorney to see what portion of the refund may be protected.
5. Rarely does a trustee investigate assets. You sign the papers under oath, so be sure to list all of your assets.

Subject: chapter 13

Question
I have about 22,000 in unsecured debt. All very high interest rates (cc’s and 3 personal loans). I tried consolidating part of my debt into a personal loan of 10,000 6 months ago. The consolidated loan is 24% revolving and in 6 months i only managed to bring down the total 100.00 dollars, and now I am even farther in debt and can’t make ends meet. My minimum payments are 700 dollars monthly. I make 37,000 a year and own my home and don’t want to lose it. I will need a care within 3-5 years. If I take the chapter 13 route, what would I expect to lower my payments too monthly and will the recent 10,000 unsecured loan (it was deposited in my account, however no luxuries were purchased with it, it was used for repayment of personal debt), affect my filing. I can’t go on like this, I can not even barely make these payments of 700.00. I live in PA.
Answer
With Chapter 13, you would pay back anywhere from 10-100% depending on your income, and depending on your assets. You would pay this debt back with little to no interest. Speak with a local PA bankruptcy attorney to find out the exact percentage of repayment based on your individual situation.

Subject: Chapter 7

Question
Hello,

I have filed Chapter 7 and included my home (in Georgia). The mortgage attorney has a court date of January 31, 2008 for a motion of relief from stay. Will I be notified as to how soon I need to vacate the property or approximately how long will I have left to remain on property? I asked my attorney and was told 2-3 months after filing date. I just wanted to see if I could get a more definite time frame. Thank you in advance.
Answer
Once the stay is modified, the lender will start the foreclosure process. Foreclosures can be up to 9 months, depending on the case and the jurisdiction you live in. You would have a bit of time to stay in the property and to find alternate living arrangements. The bankruptcy will eliminate the balance owed on the mortgage.

The post Bankruptcy Questions and answers appeared first on Chicago Bankruptcy Lawyer.

While the tax refund is an asset, you should schedule the estimated amount in the case.
Your lawyer will then exempt what they can to protect as much as possible.
In Illinois, you have a $4000 wildcard per debtor to use towards cash, bank accounts, personal household goods and tax refunds. Your Illinois bankruptcy attorney can also exempt the portion attributed to Earned Income Credit.

You will need to file your taxes as soon as possible to work with your lawyer so they can best advise you when is the best time to file your case as well.

The post Tax refunds and bankruptcy appeared first on Chicago Bankruptcy Lawyer.