When Is Your Property Exempt
Will I lose my house if I file for bankruptcy, you ask? A bankruptcy trustee will not sell your property if its equity is less than or equal to the homestead exemption. The federal homestead bankruptcy exemption protects your house equity value of up to $25,150. The exemptions could be higher in some states. Lets take a look at the three most populous states in the country:
California has two systems to use in the homestead exemption. In System 1, the exemptions are as follow:
- $75,000 for single homeowners
- $100,000 if you live with family members
- $175,000 if youre senior or with disability
- $175,000 if youre aged 55 above, single and with low income
In System 2, the exemption is up to $29,275. As to which system will be more applicable to you depends on what you want to protect.
Texas is more generous, with unlimited homestead exemption for the following conditions:
- 10 acres of residence in a city, town, or village
- Up to 100 acres in the country
- Up to 200 acres for families
You can choose to liquidate your house, and the proceeds will be exempt for the next six months.
Another generous homestead exemption is in Florida. If your home is not more than half an acre in a municipality or within 160 acres in other areas, and you own it for at least 1,215 days, you have an unlimited exemption. Otherwise, youre limited to the federal homestead exemption. If you file under Chapter 13, youll pay the nonexempt equity amount in your repayment plan.
Where To Obtain Bankruptcy Forms
Internet these days makes it very easy to find almost everything intangible and tangible that you need. To file bankruptcy you need to fill out and prepare bankruptcy petition, which consists of a several different forms.
Of course, you could go to US bankruptcy court systems website and download forms from there. They are totally free.
But, there is a problem with this. The problem is that these forms are not self-filling they are just plain blank forms for you to fill out. Hard to save, etc. They are more suitable for professional who knows what he or she is doing. You are likely to have harder time with official forms.
I recommend using forms offered by a number of reputable legal forms websites online. Often those forms are specially designed to help you fill them out. Some of them are even self-populating. They are prepared by lawyers and I highly recommend to purchase and use them. It will still be cheaper for you, and you will save time and nerves this way. By the way, right now these are not affiliate links I get paid nothing for promoting these. below
US Legal Bankruptcy Forms
The Benefits Of An Automatic Stay Of Proceedings
As soon as the trustee files your paperwork, the Bankruptcy and Insolvency Act guarantees your right to an automatic stay of proceedings. This means that all collection actions and attempts to force repayment are suspended immediately while you go through the legal process of bankruptcy. This includes:
- Collection calls
No new enforcement actions can be started, and even current enforcement actions must cease. For example, if you owe back taxes to the Canada Revenue Agency and they are garnishing your wages, the garnishment will stop once you file.
This can give you some welcome breathing room if your wages are being garnished or if youre dealing with threatening calls from collectors.
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Automobiles Trucks And Motorcycles
The bankruptcy code currently protects up to $4,000 of equity in a motor vehicle per individual person filing bankruptcy. When you file Chapter 7 bankruptcy yourself, this can be confusing.
The exemption cannot be split up among several vehicles and can only be applied to one vehicle. If the vehicle is owned jointly, then the bankruptcy code presumes that each listed owner has a 50% interest in the vehicle. Properly applying the exemptions is critical to protecting your property. If you dont get this right, the trustee could ask you for the keys!
Remember, the exemption applies, of course, only to equity. If your car is worth $10,000 and you owe 10,000 or more on it, there is no equity. However, if you owe $10,000 on a $20,000 car, then you have $10,000 equity. Since your exemption is only $4,000 the car would have equity available to the trustee to take and sell. The trustee would sell the car for $20,000, pay the loan of $10,000, pay you $4,000, and then have $6,000 to apply to your debt.
These are just the highlights of the personal property issues that arise in bankruptcy. The official form lists over 20 separate categories of property that must be disclosed as well as a catchall provision for any other property not listed in a category.
Form 106 Schedules DE and F
These schedules contain a list of all of the creditors that you have the time or cases filed.
Is where you are required to list priority creditors, typically tax creditors
Take Bankruptcy Course 2
After filing your bankruptcy forms, you will need to complete a Debtor Education Course from an approved credit counseling agency. It can be completed online or by phone and typically takes at least 2 hours and costs between $10 – $50, unless youâre eligible for a waiver.
The purpose of the course is to educate you on making smart financial decisions going forward but does not provide legal advice about the bankruptcy process. Youâll learn how to prepare a budget and avoid incurring debt with high interest rates.
Youâre not eligible to receive your bankruptcy discharge and obtain a fresh start if you donât complete the course and file your certificate of completion from the credit counseling agency with the court.
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How A Bankruptcy Lawyer Can Help
Our advice is to avoid the risks of pro se filing and seek the proper legal services. After you choose a bankruptcy attorney, they help you through the filing process. An attorney can help you:
- Understand which debts can be discharged and which cant.
- Accurately fill out your bankruptcy forms.
- Know what tax consequences to expect.
- Understand which assets you can keep.
This is just a small sample of what a bankruptcy attorney can do for you. Filing without a lawyer is possible, but requires so much work on your part and leaves plenty of room for error. Letting your lawyer provide legal advice and handle the difficult stuff also gives you more time and energy to repair your credit score.
Need help starting the filing process? Were here so you can get the fresh start you need.
Attend A Financial Management Course
The list of approved debt education courses is available at the Department of Justice website. InCharge Debt Solutions is an approved agency with our own online bankruptcy course. The course must be completed within 45 days of meeting with your trustee and creditors.
Lieberman said anyone considering bankruptcy should take the important first step of using an internet search engine to find the bankruptcy court for their area. Each site has a plethora of information for consumers and filers.
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Collect Your New York Bankruptcy Documents
The first step in preparing to file is to collect your bankruptcy documents. These are the documents youâll need to fill out your bankruptcy petition. To make sure that you properly schedule all of your debts, get a copy of your credit report from each one of the three credit bureaus. Youâre entitled to a free copy of your report from each one of them every year. Additionally, you should also collect all collection notices and letters youâve received in the last 90 days from debt collectors and collection agencies as some of them may not yet appear on your credit report.
Youâll also need your two most recent income tax returns as filed with the IRS and each paycheck stub you received in the last 6 months. Since your bank statements will prove useful in creating your budget for your life after filing Chapter 7 in New York, you should collect at least the two most recent ones for each one of your accounts.
When Should A Business File Bankruptcy
There are a number of different reasons that a business might choose to file for bankruptcy, and it is usually beyond the control of the business owner. For example, a number of businesses are choosing to file for bankruptcy right now, due to the COVID-19 crisis and the shelter-in-place that has been occurring in most states across the country for the past few months. If you are a business owner struggling with financial hardships during the COVID-19 crisis, you might be reviewing your financial options and wondering when should a business file bankruptcy.
- No limit on clothing for you or your dependents all clothing is exempt from bankruptcy
- Household furnishings and appliances up to $4,000
- One motor vehicle up to $5,000 unless you are behind on child support payments, in which case the limit is $2,000
- Work tools and work-related property up to $10,000
- No limit on medical and dental aids for you or your dependents
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What Is Pro Se Bankruptcy Filing In North Carolina
In North Carolina, or anywhere else in the country, individuals dont have to hire a lawyer in order to declare and file for bankruptcy. A registered entity such as a corporation or LLC would need a lawyer. Individuals can choose pro se.
You are allowed to fill out the appropriate bankruptcy forms on your own. You then file those forms with the court by yourself. And you defend any challenges to your filing yourself.
The government provides the paperwork online for anyone to use for free. Some of the forms are quite straightforward. Youll list your personal details and disclose your financial situation. Many of the forms, however, are much more intricate.
To maximize the relief available, it may require knowledge of the United States Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the local rules of the District the case is being filed in, precedential caselaw, and North Carolina statutes.
That seems simple enough. Youve probably filled out plenty of government forms, from your taxes to the census to a voter registration card. Once you look at the full extent of the digital files youll need to download, answer accurately, and submit correctly, you may reconsider.
You should think carefully before you file bankruptcy without a lawyer. Namely, there are numerous risks to pro se bankruptcy filing and many advantages to hiring a bankruptcy attorney.
What Happens After Bankruptcy
Once your bankruptcy is discharged your debts will be cancelled . A note about your bankruptcy will remain on your credit report for a minimum of six years after the date of discharge. In most circumstances, your bankruptcy will be discharged in 9 months.
This means that for most people their debts are cancelled 9 months after filing for bankruptcy and they can start going through the process of rebuilding their credit. Your trustee can help you here as well by providing effective strategies for getting your credit back on track and helping you manage your money.
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What Happens To The Property I Own That Is Subject To A Lien
In some cases, the Bankruptcy Court can set aside or reduce a lien on your property. Additionally, individuals who want to keep the property secured by a lien can enter into reaffirmation agreements with the secured creditors. Under a reaffirmation agreement, the debtor promises in writing to continue to pay the amount owed to the creditor despite the bankruptcy and in return, the creditor agrees to not seize the secured property so long as the debtor continues to make the necessary payments. All reaffirmation agreements must be filed with the bankruptcy court. If you default on your payments under a reaffirmation agreement, the creditor can hold you liable on any deficiency and repossess the secured property accordingly.
Calculate How Much You Owe And To Whom
- 1Use your credit reports to make a list of your creditors and debt collectors.
- 2Ask your creditors or debt collectors to send you a written notice confirming the amount you owe to them.
- 3Ask secured creditors or debt collectors to disclose the status of your accounts in the written statement.
- 4Send a letter to any creditor or debt collector you cannot reach by email or phone.
- 5For court judgments, request the court to issue a written statement disclosing the current balance.
- 6If you owe alimony or child support, get the most recent copy of the court orders. Also, get the latest statement from the child support collection agency.
- 7Get the most recent statements from your creditors and debt collectors – especially ones that arent listed on your credit reports. Make sure to list all your debts accurately in the filing documents.
Dont calculate your debt amount based on the information you get from your credit reports without checking them against your most recent statements. Credit reports may not contain the latest information. Some creditors, like landlords, doctors, and utility companies do not report to credit bureaus. So it is best to calculate your debt amount based on the written statements you receive from your creditors or debt collectors.
Make sure you list any loan that you have taken out from a friend or a family member.
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Here Are Some Of The Most Common Difficulties Weve Observed When Filing Bankruptcy Without A Lawyer:
- Choosing the wrong kind of bankruptcy. Individuals can choose between Chapter 7, Chapter 13, Chapter 11, and Chapter 12 bankruptcy. Businesses that are registered entities can file for Chapter 7 or Chapter 11. If you choose the wrong kind, your creditors may be able to confiscate property that you would have been able to keep if you had made a better choice.
- Making an error in claiming your exemptions. You can exempt certain kinds of property from liquidation, but you have to list them correctly. If you dont, the asset is subject to liquidation.
- Defending yourself in court. Parties to the case such as creditors, the trustee, and the Bankruptcy Administrator can seek dismissal of the case or oppose discharge or oppose dischargability of a particular debt. This requires a hearing before the federal bankruptcy judge. Representing yourself in front of the bankruptcy judge may be challenging and stressful.
Avoid Making Credit Card Purchases Before A Chapter 7 Filing
Unless you need to incur extra credit card debt for the necessities of life, such as gas, housing, or food, you should stop using your credit cards altogether. If you buy luxury purchases on credit shortly before bankruptcy, you risk a . You can continue to use debit cards. Find out when to stop paying your credit cards.
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Bankruptcy In The United States
Like the economy, bankruptcy filings in the U.S. rise and fall. In fact, they are like dance partners where one goes, the other usually follows.
Bankruptcy peaked with just more than two million filings in 2005. That is the same year the Bankruptcy Abuse Prevention and Consumer Protection Act was passed. That law was meant to stem the tide of consumers and businesses too eager to simply walk away from their debts.
The number of filings dropped 70% in 2006, but then the Great Recession brought the economy to its knees and bankruptcy filings spiked to 1.6 million in 2010. They retreated again as the economy improved, but the COVID-19 pandemic easily could reverse the trend in 2021. It seems inevitable that many individuals and small businesses will declare bankruptcy.
Fill Out The Paperwork
Filling out the official bankruptcy forms is generally the most complicated and time-consuming task if you choose to file bankruptcy without a lawyer.
Download the bankruptcy forms package to save the time and stress involved in tracking down the necessary materials. The packages are inexpensive and provide you with all the forms you need to file for Chapter 7 bankruptcy in your state.
Once you complete the forms, attach the relevant documents and submit the paperwork with the filing fee either in person or by mail. It’s important that you promptly respond to any correspondence from the bankruptcy trustee. Failure to do so can get your case dismissed.
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Eastern District Of California Requirements
All the documents needed to file Chapter 7 bankruptcy in this district can be downloaded as a single packet from the Eastern District of California court’s website. The Eastern Bankruptcy Districtâs website also provides pro se filers a free tool to create their creditor matrix.
The Eastern District of California is broken into three divisions, Sacramento, Modesto, and Fresno, and covers 34 counties reaching from the Oregon border in the north, down to Bakersfield in the south, and from the coastal mountains in the west, to the Nevada border in the east.
When Diy Bankruptcy Is A Bad Idea
When its chapter 13. Chapter 13 bankruptcy takes 3 to 5 years to complete. Its that much more complicated than chapter 7. You will have to research complex bankruptcy laws, fill out numerous forms correctly, and make all the necessary decisions. The court will appoint a trustee for you, but the trustee cannot give you any legal advice. A single mistake could lead to the dismissal of your entire bankruptcy case.
Here are some other reasons a DIY bankruptcy may not be a feasible option:
- You may file bankruptcy under the wrong chapter.
- You may not be able to fill out the bankruptcy forms.
- You may choose inaccurate property exemptions.
- You may not be able to navigate the bankruptcy process on your own.
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