When you are preparing to file a Chapter 7 bankruptcy, your attorney will ask you if you paid any unsecured creditor more than $600.00 in the 90 days immediately preceding the filing or any family members any money in the last few years. These are considered preferential payments, that is you preferred to pay to debt over another. This is not always your fault. Often a creditor will tell you that “if you don’t make a payment today” the creditor will file an action in Court or attach your wages
You may have heard the phase “Most people keep all of their belongings in Chapter 7 bankruptcy.” The reason for this is phrase is the bankruptcy laws provide a list of exemptions for many things which allow those things to be exempt from being lost in a bankruptcy filing. The reason is that a person filing a bankruptcy could not be expected to get a fresh financial start in life without any possessions. Once the exemption for an item is compared to the fair market value of the item, there
As I outline information I need from my clients to file a bankruptcy petition, I often hear that they want to keep their home and vehicles so they don’t need to list them. The same thing happens with debts such as mortgages, car loans, certain credit cards, some doctors, taxes or student loans. The client’s financial history, things that happened in the past, must also be disclosed.
All assets and all debts must be listed in order to complete the case and obtain a discharge;
If the assets are listed, but not
Chapter 7 bankruptcy is a total liquidation where you will eliminate all of your unsecured debt, i.e. debts where assets are not held as collateral while being able to continue to pay secured debts, i.e. debts where assets are held as collateral for the repayment of the debts. Chapter 13 is a repayment plan where your secured debts may be able to be restructured and a portion of your unsecured debt is repaid. Certain forms of debt cannot be discharged, including most taxes, student loans and child or spousal support.