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Answers to Most Frequently Asked Bankruptcy Questions
Do I really Need a Bankruptcy Lawyer or other Legal Help
What is the “means test” I keep reading about ?
What Debts are NOT eliminated by a Chapter 7 Bankruptcy?
What is a Chapter 13 bankruptcy?
What forms make up the Bankruptcy Petition?
What does “reaffirming” a debt mean?
How does my property get valued by the trustee?
What are Nevada exemptions and how do they work?
Do I list an open personal injury claim or a lawsuit in which I might be a beneficiary?
Can I include back taxes in my bankruptcy?
What assets are usually not protected?
What happens if I don’t list all my assets?
What is a homestead exemption?
Most commonly used Schedules (documents filed in addition to the bankruptcy petition)
What does the mandatory credit counseling consists of?
What does the post-filing financial management course consist of?
What happens after the bankruptcy is filed?
What is the 341 meeting of creditors – what happens there?
When will I receive my discharge?
What happens to my bankruptcy case if I commit fraud and/or “forget” to list an important asset?
I filed bankruptcy before. can I file again?
What are the most common reasons for Dismissal?
Do I really Need a Bankruptcy Lawyer or other Legal Help
Filing for bankruptcy is a very complicated process. The law varies depending on where a bankruptcy is filed and also depends on which type of bankruptcy is filed. An experienced bankruptcy lawyer knows the particulars of filing for bankruptcy. It’s doubly important to retain an attorney in your own state. Bankruptcy laws and exemptions vary widely from state to state. We can recommend which chapter of bankruptcy is right for you (7 or 13 for individuals), and can ensure that your paperwork is filed correctly so that all eligible debts are discharged. James E. Smith has been representing Nevada bankruptcy clients since 1985.
When you file a Chapter 7, all of your non-exempt assets are sold and the proceeds divided between your various creditors. It totally relieves you from your debts, except for debts that are non-dischargeable. Your case is filed and completed in approximately ninety days.
Can I file a Chapter 7 more than once?
You may file a Chapter 7 bankruptcy every eight years.
What Debts are NOT eliminated by a Chapter 7?
- Student loans, except hardship cases
- Debts of most taxes owed
- Alimony, maintenance, and child support
- Debts of fines, penalties or criminal restitution
- Debts owed for personal injuries caused by driving while under the influence of alcohol or drugs
- Debts not listed on the Bankruptcy Petition
What is the “Means Test” I keep hearing about ?
The Bankruptcy Reform And Consumer Protection Act of 2005, often referred to as the “new law”, requires that you take the “Means Test” to determine if you qualify for a Chapter 7. If you do not qualify, you must file a Chapter 13 instead.
To qualify for a Chapter 7, your monthly income must be below the median income for your state. See just below for the median income in Nevada.
Nevada State Median Yearly Income
One individual in a family: 45,642
Two individuals: $57,860
Three: $65,032
Four: $67,997
Add $6,900 more per year for each individual in excess of 4
Your income is determined by averaging all of your NET income over the past six months. Even if you make zero dollars right now, the means test will show you as having some income because of this calculation. You must include ALL income in the calculation EXCEPT for social security income. If it turn out that your NET income is above that shown in the table above, you must file a Chapter 13 bankruptcy instead of a Chapter 7 “Fresh Start” bankruptcy.
What is a Chapter 13 bankruptcy?
When you file a Chapter 13, you still pay your debt though it’s now greatly reduced and completely paid off in 36 to 60 months, depending on the amount owed and your personal circumstances. Instead of paying back your creditors individually, you make one payment once a month to the bankruptcy Trustee assigned to your case who in turn pays your creditors.
A Chapter 13 is appropriate for you when you either don’t qualify for a Chapter 7 or when you owe a debt to the IRS, or other debt that cannot be eliminated under that chapter. We may advise you to file a Chapter 13 if you have owes back taxes to the IRS, if you owe back child support or alimony, or any other non-dischargeable debt. Contact Us if you’re unsure whether or not a debt is dischargeable.
What forms make up the Bankruptcy Petition?
- The Bankruptcy Petition
- The Statement of Financial Affairs
- The Statement of Intentions
- The Attorney Statement
- The Schedules (A-J) not all Schedules pertain to every case
- The Chapter 13 (repayment) Plan (when filing a Chapter 13)
BANKRUPTCY PETITION
This is a basic form that states your name(s), address, phone number, date of birth, social security number, etc.
What is the statement of financial affairs?
This is basically a history of your financial life for the bankruptcy Trustee.
What is the Statement of Intentions?
The Statement of Intentions tells the Court what you plan on doing with any property you own that is secured by a loan, like your house or vehicle(s),
You have two options here:
1) Reaffirm the debt. This calls for you to promise the creditor of a particular debt (such as your car or house payment), that you will keep making payments during and after your bankruptcy.
2) Surrender the property. You will not have to make any more payments and will not owe anything more.
What is the Attorney Statement?
This statement is a short form that states the name of the attorney who files your bankruptcy on your behalf, as well as the amount you paid us for the service.
What does “reaffirming” a debt mean?
A reaffirmation agreement consists of a new contract you sign with a creditor to whom you owe a secured debt, such as a vehicle or house. To reaffirm a debt basically means that you promise to keep paying on a debt you reaffirm after you file.
How does MY PROPERTY get valued by the trustee?
Personal property is valued at garage sale value not at replacement value. For example, a couch you paid $1,000.00 for…may only have a value on the bankruptcy schedules of $100. It is the amount that a reasonable person would pay for the property in its current condition-not new. So don’t overvalue your stuff when listing your assets.
What are Nevada chapter 7 exemptions and how do they work?
This is best answered here
Do I list an open personal injury claim or a lawsuit in which I might be a beneficiary?
If you got into an accident before you filed for bankruptcy, or you got into an accident during the process of your bankruptcy and you file a personal injury lawsuit, any proceeds coming to you that you have not yet received will be subject to the Bankruptcy Court taking them and distributing it to your creditors. This will occur even if you never filed a lawsuit yourself, such as in a class action lawsuit.
Can i include back taxes in my bankruptcy?
To be included in a bankruptcy, federal or state taxes must be at least three years old. They also must have been filed with the IRS at least two years before you filed for bankruptcy protection. These same taxes must not have become an IRS lien. The rules here are complicated. It’s best you Contact Us and ask about your particular situation.
What assets are USUALLY not protected?
- cash
- money in bank accounts
- money in joint bank accounts even if the joint holder is not filing
- stocks that are not part of a 401k or qualified retirement plan
- bonds, certificates of deposits
- annuities
- insurance policies with cash value
- jewelry
- furs
- artwork of any kind
- valuable collections
- boats and R.V’s
What happens if I don’t list all my assets?
If you “forget” to list an asset, count on the bankruptcy clerk not believing you. The bankruptcy court takes this sort of omission very seriously; you’ll find yourself behind bars sharing a small cell with people you probably won’t like…
What is a homestead exemption?
In Nevada, you have an exemption of $550,000 on the equity of the property which you own and in which you live. Equity is the difference between the value of this home and the amount you owe on its mortgage(s).
Most Commonly-used Schedules (Additions to the bankruptcy petition):
What is schedule A?
Schedule A consists of the list of real property that you own such as a house, condominium, townhome, any raw land,
and/or mobile home.
What is schedule B?
Schedule B covers any tangible property other than real estate:
- cash
- bank accounts
- household goods:
- furniture
- cars
- motorcycles
- guns
- computers
- appliances
- collections – baseball card collections, doll, stamps, art, etc.
- interests in insurance policies
- IRAS (exempt up to $500,000)
- ERISA (exempt up to $500,000)
- pension or profit sharing plans
- stocks
- bonds
- interests in corporation
- partnerships
- accounts receivables
- investments
- security deposits
- proceeds of a personal injury claim (whether or not you have received it)
What is schedule I?
Schedule I is your current income from any sources including, wages, social security, pension, disability, roommate contribution, family support, alimony, child support, etc. In this section, you also give marital status information, list of dependents, and specific employment information.
What is schedule J?
This is an itemization of your living expenses:
- mortgage or rent
- utilities
- food
- car payments
- insurance (car, home, health, disability, etc.)
- gasoline and maintenance
- clothing
- laundry expenses
- entertainment
- charitable contributions
If you’re really not sure how much you spend on those items that are not fixed, write down everything you spend for a period of about two weeks and use that as a general guideline.
It would probably not serve you right to display very high amounts here. Be as accurate as possible, but be careful. Many people overdo this one because they’re ashamed that they have so little to spend on items like food for instance so they enter larger amounts only to be questioned about it later by the Bankruptcy Trustee. Fill it out with the thought in mind that you may have to provide some sort of proof on those expenses. You might want to collect receipts for all of these items for a while just to be on the safe side and to have it handy should the Trustee ask for them.
What is schedule D?
This schedule consists of the creditors who hold loans on the tangible property you own such as your home(s), car(s) and any other vehicle(s).
It is very important for you to keep paying on these debts if you plan to keep what’s attached to the loan(s), such as your car and home mortgage. Keep proof you made the payments just to be on the safe side, in case the lien holders (creditors) try to say you did not pay them.
What is schedule E?
List of Priority Creditors. A priority creditor is one whom you must keep paying even after the bankruptcy. In other words, a debt that cannot be wiped out by the bankruptcy, such as:
- Federal taxes (subjective to your particular case)
- State taxes (subjective to your particular case)
- Student loans
- Alimony arrearages,
- Child support arrearages
What is schedule F?
List of unsecured Creditors:
- credit cards,
- personal loans,
- bank loans
- payday loans,
- medical bills,
- cell phone bills, etc.
In order to be discharged in bankruptcy, a debt MUST be listed as part of your bankruptcy. If you fail to list a debt, that particular creditor has a right to keep pursuing you after the bankruptcy. Keep in mind that if a debt has been turned over to a collection agency and you only list the creditor who sent you to collections, that collection agency has a right to pursue you for the debt, even if the original creditor does not have that same right.
What is schedule G?
This schedule lists all parties who may have co-signed on loans with you. Though your own obligation will be discharged in bankruptcy, you can expect the creditor to collect from your co-signer.
What is schedule H?
This schedule covers any leases still in effect, such as a car lease, apartment, rent-to-own furniture, etc.
What does the mandatory credit counseling consists of?
Credit counseling is a one-time session that is mandatory for everyone who files bankruptcy. At the end of the session, a certification will be provided to you. This will show that you have attended the mandatory consumer credit counseling session. We must file this certificate with the bankruptcy court. There are many ways to attend this session:
- in person
- by telephone
- internet
Only credit counseling agencies that the Office of the United States Trustee recognize are acceptable. We recommend a licensed and recognized credit counseling agency when you file using our services.
What does the mandatory financial management course consist of ?
This is a mandatory course you must take after your bankruptcy has been filed and before your debts are discharged. It’s also known as the 50-30-20 MoneyPlan.
We suggest this course because it is approved by the bankruptcy court and it is inexpensive. We do NOT recommend it, mind you; choose it at your own risk: www.nationalpersonalfinance.com
What happens after the bankruptcy is filed?
The first thing that happens is that the Trustee sets the Automatic Stay in motion. Any creditor who, after the Automatic Stay is put into effect, files a lawsuit, continues an existing one, sends you letters requesting money, or calls you on the telephone is breaking federal bankruptcy laws.
Any creditor who violates this rule could well be sanctioned by the bankruptcy Court.
That said, a creditor who has a secured debt with you (house, car, etc.) does have the right to file a motion with the Court asking permission to continue to pursue collection actions until you have reaffirmed your debt with them.
This usually happens if you are delinquent on your payments with them. The Court will assume that if you are not paying for it, you should give it back to the creditor. This rule does not apply to items purchased with a credit card. You can keep any items purchased with a credit card, unless, of course, you deliberately purchased it just before filing bankruptcy. In this case, you’ll most likely be expected for pay for the debt and will not have ot give back the item itself.
What is the 341 meeting of creditors – what happens there?
Approximately 30 days after filing you will be required to attend the 341 Meeting, also known as the Meeting of Creditors. We rarely see creditors at this meeting. Generally speaking, you, us (as your attorney) and the U.S. Trustee will be the only ones present.
The Trustee is the person assigned by the bankruptcy court to handle your bankruptcy. This Trustee “works” for your creditors, not you. The Trustee’s job is to find any property you own that does not fall under Nevada Exemptions, and to take that property from you so that it can be sold ad the proceeds distributed to your creditors.
The meeting itself only takes about five to ten minutes once your turn has come (there are usually other Plaintiffs and their attorneys there).
This is generally what happens at the meeting:
- The Trustee asks you to provide 2 pieces of identification. This can be:
- driver’s license OR
- Nevada picture identification card
- a second form of social security identification (social security card, W-2 statement, or paycheck stub.
- You are then placed under oath by the Trustee
- The Trustee asks you any number of questions pertaining to your property and, or, your bankruptcy filing.
- You are dismissed from the hearing.
When will I receive my discharge?
Generally, you receive a Notice of Discharge about sixty days after the creditors’ meeting. The notice is sent directly to you, not us. It comes from the United States Bankruptcy Court. The discharge means that no creditors which you listed on your Bankruptcy Petition can pursue you for the debts. The debts will NOT be listed on the Discharge.
There are four primary types of bankruptcy fraud.
1) If you took out a loan and lied about your true income (e.g. you stated that you earn, say $100,000 per year, but really only earn $60,000) on the loan application and then listed this loan on your bankruptcy application, the creditor has the option to claim that because they relied on your lie, you should be responsible for the whole debt and not allowed to discharge this debt.
2) Cash advances of more than $750.00 within 70 days of filing unless you can prove that you had no intention to commit fraud by doing so.
3) Buying goods worth more than $500 within 90 days of filing your bankruptcy. This is a grey area because if a creditor can show that you meant to commit fraud even if you filed after the 90 day period, it could still be considered fraud. The best thing to do is to NOT buy anything of a higher value once you know you will be filing and wait as long as possible after a large purchase of a luxury good to file.
4) Money owed because of embezzlement are considered fraud. If you took the money an home association trusted you with, for instance, to buy yourself a boat or a car, or anything at all, expect to have to repay this one.
What happens to my bankruptcy case if I commit fraud and/or “forget” to list an important asset?
In this case, your creditors have every right to ask the court to not allow for your discharge and seek a dismissal of your bankruptcy so that they can pursue you for repayment. If the court agrees with the findings of your creditors (or its own findings of your fraud of omission of assets), the bankruptcy court will issue an Order dismissing your bankruptcy. This basically puts you right back to where you were before filing. Don’t hide assets, and don’t transfer assets to family members for at least one year before filing, and all will be fine. Also don’t pay back “loans” to family members within one year of your bankruptcy.
I filed bankruptcy before. can i file again?
Yes. But you can only do so if eight years have passed since your last bankruptcy was discharged. If you don’t wait this period of time, your case will be automatically dismissed, no questions asked.
What are the most common reasons for dismissal?
- Not showing up for the 341 Meeting. You stand a high risk of having the bankruptcy dismissed in this case. You may get one chance for re-scheduling, but that’s it. Don’t show up a second time? Automatic dismissal. So, make this meeting your highest priority!
- Refusing to turn over an asset not protected by exemption to the bankruptcy court. Be sure to list ALL assets and give them over the court when asked. Otherwise, expect your bankruptcy to be dismissed.
- Failure to produce documentation of any kind to the bankruptcy court. Any such requests must be honored immediately or risk dismissal.
They’re though at bankruptcy court. Do what they say, or else expect dismissal.
The above information is for your information purposes only. Laws and regulations change all the time. We do our best to update this page as often as needed. Just feel assured that when you file your bankruptcy with us everything that we do for you and all the information we give you at that time is be up to the minute. If you have questions about anything, Contact Us and ask.
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