Can These Bankruptcy Mistakes Be Corrected
The short answer is yes. How you can correct them depends on whether you caught them before or after filing for bankruptcy. If you caught them before filing for bankruptcy, then you can simply make the necessary adjustments. For example, if you have too much money in your bank account, you should wait to file for bankruptcy until after that money is spent.
But what if the mistake cannot be corrected? For example, say you have a rental property that you want to keep. Or you realize that you will get an inheritance after you file for bankruptcy. In such cases, Chapter 13 bankruptcy may be a solution. In Chapter 13 bankruptcy, the trustee will not take any of your property, and you can make payments on some of your debt. For more, see Common Question About Chapter 13 Bankruptcy. Chapter 13 bankruptcy can get complicated, so its best to talk to a bankruptcy lawyer about it.
Your Bank Account Balance
Filing a Chapter 7 bankruptcy requires you to be open and honest. As you complete your bankruptcy forms, you will want to ensure that you are transparent about your financial situation. The bankruptcy trustee assigned to your case will want to review your bank account statements before your 341 meeting to verify the information you put on your bankruptcy forms matches your bank statements. The trustee will use these statements to get a glimpse into your financial history.
Your bankruptcy trustee can ask for up to two years of bank statements. The trustee will look at your statements to verify your monthly payments to make sure they match the expenses you put on your bankruptcy forms. For example, if you listed your car loan as $500 a month, the trustee will use your bank statements to ensure that amount is being reflected on your bank statements.
Take note, the balance in your bank account is based on an âactual balance.â Any checks that you have written out to someone else, a creditor such as your real estate mortgage lender, etc. but have yet to be cashed, is considered money that is available to you and can be deemed as property of the bankruptcy estate. The bankruptcy trustee wonât care if you wrote checks to pay your mortgage on your real estate and it didnât clear. Knowing your actual balance the day of filing is vital to ensuring your money is safe.
When Should I Go Bankrupt
The simple answer is that you should go bankrupt as soon as possible after you have decided that it is the best solution for you. Not only is it best to get it over with, so that you can have a fresh start, but once you have realised that you are going to have to go bankrupt you should not borrow any more money because you know you wont be able to repay it.
Dont rush into bankruptcy. If everything might look different in a couple of years, for example when your children are at school and you can get a job, then you need a temporary solution to your debts such as a DMP. You cant change your mind about bankruptcy. But dont hang on for years hoping that things will get better if there is little chance of this happening.
Some things may delay your going bankrupt. You may need to save up the fees, see above. If both you and your partner intend to go bankrupt, it might make sense for the person with the largest debts or the most annoying creditors to go bankrupt first.
If you are paid monthly, you may prefer to time your bankruptcy so that it happens a few days after you get paid: this will let you withdraw cash for living expenses and also give time for your work to switch your next pay cheque into your new bank account.
Another good reason to delay is if you are just about to move into a rented property. Although going bankrupt will not prevent you from renting, if your move is imminent you may prefer to do it first rather than possibly complicate it.
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What Information Do You Need To Complete The Bankruptcy Forms
Most of the information you’ll need to fill out your bankruptcy paperwork will be in those documents, including asset value and income information. For example, you’ll use the income documentation to calculate your average monthly income. Similarly, you’ll look to your real estate and car documentation to fill in the parts regarding the value of these assets, your lenders, and monthly loan payments.
However, you’ll need to gather more information to fill out the rest of your bankruptcy petition, including creditor, co-debtor, expense, and pending lawsuit information. Start by finding loan statements or bills so that you can list each of your creditors in the bankruptcy. Alternatively, you can obtain a credit report that shows all your debts however, be aware that you’re required to list the creditor’s billing address, and that address rarely shows up on your credit report. So it’s best to use the credit report as a tool to verify that you’ve listed all of your debts only.
You should also look at your utility bills and other expenses to determine accurate figures for your monthly utilities and expenses, such as food, dry cleaning, and transportation to name a few. Usually, you won’t be required to send these documents to the trustee .
How Does A Chapter 7 Trustee Check Your Bank Account
The bankruptcy trustee tasked with administering your case is temporarily in charge of all your assets for the duration of your bankruptcy, including your bank accounts, which are part of the bankruptcy estate. This means the bankruptcy trustee will look at your bank account balance on the filing date.
As part of your bankruptcy petition, you will be required to disclose all cash in all bank accounts at the time of filing your schedules. You must be honest with all your disclosures, as the trustee will be granted access to your accounts to check the balances. Also, your bank account filings are court documents filed under penalty of perjury. As a general rule, you should plan to lose any amount over and above the exemption amount provided for in 11 U.S.C. §522 .
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Can Official Receiver Take My Car
Unfortunately, your car can be affected in both bankruptcy and a DRO if you own it outright. In these cases, it will be counted as an asset and will either be claimed by the official receiver or your application will be refused.
If your car is on hire purchase or you got it through a conditional sales agreement, then the official receiver may allow you to keep it. This is because it technically doesnt belong to you until youve paid it up.
However, you may still be forced to give up your car as the DRO or bankruptcy may prevent you from continuing to make the payments.
If youre looking to keep your car, you do have the option to let someone else buy it and then allow you to continue to use it. But, if you buy a new car with your own money or money given to you, then it will be taken by the official receiver to be sold towards your debts.
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Preparing For A Bank Setoff
One way to make sure you arent short on the funds youll need to pay living expenses after filing for Chapter 7 or Chapter 13 Bankruptcy is to stop all automatic drafts of payments on bills, for utilities, and similar.
If you are unable to stop auto payments before you file for bankruptcy, you can notify an important creditor yourself that you have filed for bankruptcy and ask them to stop drafting automatic payments from your bank. Your attorney can help you draft formal notices in this regard to send to your creditors and your banks.
Another strategy is to move your checking, savings, and other financial accounts to a new bank before filing for bankruptcy. Although you are required to disclose these funds, this will stop the bank from freezing them if the bank is a creditor entitled to a setoff.
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Do You Qualify For A Mortgage Loan
Bank statements are just one of many factors lenders look at when you apply for a mortgage.
Almost all areas of your personal finances will be under scrutiny including your credit score and report, your existing debts, and any source of income youll use to qualify for the loan.
These factors help determine how large of a loan you qualify for, as well as your interest rate. The cleaner your finances look across the board, the better deal youre likely to get on your new home loan or refinance.
Real Estate That Is Not Your Home
Any real estate that you own, but in which you do not reside, is not exempt in bankruptcy. This would include rentals, summer homes, or parcels of land. You have to determine if you have equityif the value of the real estate is more than the mortgages on it. If the answer is yes, the bankruptcy trustee can take the real estate, sell it, and pay the money to your creditors. If you do not have equity, i.e. the mortgages are about the same or more than the value of the property, then you should not lose the property in bankruptcy.
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File Your Chapter 13 Bankruptcy Petition And Pay The Filing Fee
When you have completely filled out and reviewed your bankruptcy forms, youâll need to print them out, sign the signature pages, and bring them to court. Donât forget to include your credit counseling certificate along with your printed bankruptcy forms.
The filing fee for a Chapter 13 case is $313. Youâll need to pay the full amount directly to the court when you go to file your forms. There is no fee waiver option when filing a Chapter 13 case like there is with a Chapter 7. Make sure to also print out the exact number of copies your local bankruptcy court requires. You can find out how many copies youâll need to bring with you by contacting your local bankruptcy court before filing.
Feb Provide Bank Statements To Your Bankruptcy Attorney
When you are filing a bankruptcy case, you have many duties. More duties than we can cover in one post. Your bankruptcy lawyer should make it easy for you.
Its important that your bankruptcy papers are true. One of the questions in your bankruptcy papers asks how much money you have in the bank and in what accounts. This should not be guess-work. You should know exactly how much you have in the bank on the day you file your case. And you should also know how much you have in any investment account, securities account, savings account, credit union account, thrift savings plan, IRA or any other financial account of any kind.
Why?
The Bankruptcy Rules require let me say that again require that you provide the bankruptcy trustee with copies of your most recent bank statement unless explicitly excused. Now, I know that not every trustee in every part of the country strictly enforces this. But I know that they can. And I know that in many parts of the country, you cant even start your creditors meeting with the trustee without first providing current bank statements.
So why ask for trouble? Give your lawyer the most up to the minute information. Make sure that the papers you sign contain accurate and up to the minute information at the time of filing. This way, you are complying with both the Bankruptcy Code and the Bankruptcy Rules. And you ll be one step closer to your fresh start in bankruptcy.
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Take Inventory Of The Property You Have
Make a list of all the property you own and how much each item is worth. This step is important because you will need to know what you have, and how much of it you can protect using bankruptcy exemption laws. Although filing a Chapter 13 bankruptcy allows you to protect and keep all your property, your Chapter 13 plan will require you to pay certain creditors an amount that is equal to the value of your unprotected property. In other words, you can expect to pay an amount equal to the amount certain creditors would be getting if you had filed a Chapter 7 case.
Bank May Freeze Account For Setoff
Many people owe money to the same institution where they have a checking, savings, or investment account. In other words, they have accounts at the same institutions they took out loans from, a fairly common practice with both Main Street and Wall Street size banking institutions.
In such cases, when you signed the loan contract for the credit card or vehicle loan, you likely agreed to a set offa contract provision that allows the bank to withdraw funds from your deposit account and apply the money to your loan balance. It is thus within the banks right to freeze your account for setoff when it becomes notified of your bankruptcy and is therefore not an advisable practice to take out loans with banks where you keep your money, particularly if your financial future is uncertain.
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The Look Back Period For Chapter 7 Or Chapter 13
Your attorney will submit your bank statements to the Trustee prior to your 341 Meeting of Creditors. The Trustees job is to find money to repay your creditors if there is any. He or she needs your bank statements to see if there have been any preferential or fraudulent transfers or luxury purchases during the look back period, which is ninety days for general creditors and one year for insiders like friends and family.
At the 341 meeting the Trustee will ask you whether you have made such transfers or purchases, as well as whether you used your credit cards in the months prior to filing. Credit card debt incurred in contemplation of bankruptcy can be deemed nondischargeable. An example of this is when you go on a spending spree in the month before filing knowing that you are going to file Bankruptcy.
What Happens To Your Bank Account During Bankruptcy Can It Be Frozen
People often ask stressful questions like can I keep my bank account if I go bankrupt? and, can you have money in the bank and file bankruptcy? While it doesnt happen very often, your bank may freeze your bank account during bankruptcy, and this experience can be both inconvenient and upsetting.
Fortunately, with a little planning, you can avoid a bank account freeze or take steps to minimize the damage and maintain access to your bank account funds.
There are two primary reasons that a bank might freeze a checking, savings, or other account. The first is that the bank is attempting to protect your money, which is under the jurisdiction of the bankruptcy court and which may be subject to an exemption that helps it remain your money. The second is that the bank is trying to protect its own right to offset your money against any debt you owe the bank.
The Houston bankruptcy lawyers at the Law Offices of Kretzer and Volberding P.C. cover more about these circumstances below.
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What To Do If The Bank Freezes Your Account
If a bank freezes your account, contact the bank as soon as possible to determine whether the bank froze your account to protect your money or to protect its right to offset. This will help you understand the full picture of whether you can free up the money or are likely to have access to it in the future.
Does A Bankruptcy Trustee Check Bank Statements
When you file for bankruptcy protection, the trustee effectively puts your life under a microscope at least any part of it that has to do with your finances. He must have a complete picture of your income, assets and debts so he can so he can manage your case. He can ask for your bank statements, and if he does, you are obligated to turn them over.
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It is the responsibility of your bankruptcy trustee to examine all relevant financial documents that can help them effectively manage your particular case. With that in mind, it is highly likely that the trustee assigned to you will review all of your bank statements in order to gain a better understanding of your financial habits
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The Paperwork The Official Receiver Will Ask For
There is now set list of paperwork that you can expect to be asked to submit to the Official Receiver. If your case is relatively simple they may not ask you to provide anything at all.
However as a rule of thumb you should expect to be asked for up to your last 12 months bank and credit card statements. You may also be aksed for recent wage slips and bank statements.
If you no longer have any of the documents you are asked for do not worry. Just explain this to the OR. They will be able to get copies of any key documents they need direct from your bank or creditors if necessary.
The OR can ask you for any paperwork they feel necessary to confirmation of the information you have provided in your appliction. You are obliged to co-operate with them.
