Los Angeles Bankruptcy Blog http://www.bklaw.com/bankruptcy-blog Bankruptcy issues, articles and thoughts by attorney Mark J. Markus Mon, 14 May 2012 17:52:21 +0000 en hourly 1 http://wordpress.org/?v=3.3.2 P is for Planning: What John Wooden Knew About Bankruptcy http://www.bklaw.com/bankruptcy-blog/2012/05/p-is-for-planning/ http://www.bklaw.com/bankruptcy-blog/2012/05/p-is-for-planning/#comments Sun, 06 May 2012 01:00:15 +0000 Mark Markus http://www.bklaw.com/bankruptcy-blog/?p=1127 Letter “P” in my Bankruptcy Alphabet is “Plan” or “Planning”.   Coach Wooden said it best:  ” Failing to Plan is Planning to Fail.”   While the Coach didn’t invent that saying himself (some sources credit Benjamin Franklin with the phrase), he certainly understood its meaning and consequences and used it consistently to help his students.

Planning leads to benefits in most aspects of life and failing to plan can lead to dire consequences.

While planning might prevent the need for filing a bankruptcy case, it is at least equally important to plan when bankruptcy is needed.   It is a risky proposition to contact a bankruptcy attorney the day before one needs to file a bankruptcy case.  It leaves no time to properly prepare for the case and do things which might be critical to prevent loss of assets and/or anticipate problems and issues that might arise in a case.

There isn’t a week that goes by that I don’t get a phone call from some client telling me they have a foreclosure sale scheduled within a week and they need to do something about it.   This is a foreclosure they knew was pending for at least 3 months prior, but decided it was better to trust their bank telling them that a loan modification was in progress, or trusting that things would just work out somehow.   Not a wise choice.

The time to consult with a bankruptcy attorney is when you feel there might be any possibility that bankruptcy might help you.  How do you know when a bankruptcy would be helpful?   By contacting an experienced bankruptcy attorney in your area.

 

Others playing the alphabet game:

 

 

image courtesy of takomabibelot

]]> http://www.bklaw.com/bankruptcy-blog/2012/05/p-is-for-planning/feed/ 0 Bankruptcy REPORT: Success In Less Than 61% of Cases Without Lawyer http://www.bklaw.com/bankruptcy-blog/2012/04/bankruptcy-discharge-without-attorney/ http://www.bklaw.com/bankruptcy-blog/2012/04/bankruptcy-discharge-without-attorney/#comments Wed, 18 Apr 2012 22:53:00 +0000 Mark Markus http://www.bklaw.com/bankruptcy-blog/?p=1089 I’ve been saying it for years:  It will cost you more money in the long run to not use an attorney for bankruptcy (or for using a bad attorney) than it will to hire a competent one at the outset.
Now there is impartial, empirical evidence to support this.

Bankruptcy Court Report

A new report issued by the United States Bankruptcy Court for the Central District of California found that debtors who represent themselves pro se (without an attorney) in a Chapter 7 bankruptcy case succeed in obtaining a discharge of their debts only 61% of the time, versus 95% for those represented by attorneys.  In Chapter 13 cases the success rate was less than one percent for those not represented by an attorney versus 55% with an attorney.  (Chapter 13 is used for, among other things, to stop foreclosures by catching up on past due mortgage payments over a period of time; removing junior liens against real estate, and/or doing a repayment plans–at zero to 100% depending on circumstances–of one’s debts).

It is important to also consider that simply not getting a discharge is not the only problem that can result from filing without being represented by an attorney.  In some cases, the denial of discharge may be permanent, preventing the filing of a future bankruptcy case to eliminate the debts; or, there may be other negative consequences in a subsequently filed case, such as not receiving the protection of the automatic stay during the case.

Also, while representation by an attorney does not guarantee success 100% of the time (in many of those cases that don’t succeed, particularly in Chapter 13, the reason is the failure of the client/debtor to make the required payments to the court trustee), it clearly gives one the best chances of success and, as can be seen above, the chance for success in a Chapter 13 case is practically zero without an attorney.

The report states that “common problems in self-represented debtors’ cases include: the failure to file required documents, resulting in dismissal; filing a chapter which may not be correct for the debtor’s circumstances; choosing incorrect property exemptions; unnecessarily filing bankruptcy in the first place; not filing the required credit counseling or financial management certificate; being unable to answer or adequately defend an action seeking to deny discharge; and not understanding the significance of certain motions or adversary actions. Self-represented creditors are often harmed by not filing a proof of claim in time, by missing the deadline to file a dischargeability action, and having difficulty filing an objection to a claim.”

The report also takes aim at “bankruptcy petition preparers”, who are people or agencies that simply fill out forms, but are not attorneys and strictly prohibited from giving any legal advice .   It points out that “[t]hough some BPPs in the district get good results for debtors, some practice outright fraud.”

There has never been more clear actual evidence of the need for competent legal counsel.   Less than 61% succeeded in their Chapter 7 filings and less than 1% in Chapter 13.  That’s incredible.   Do you want to risk your financial future to save a few dollars?

 

Image Credit: Casey Serin

]]> http://www.bklaw.com/bankruptcy-blog/2012/04/bankruptcy-discharge-without-attorney/feed/ 0 Renting After Bankruptcy: Can it Be Done? http://www.bklaw.com/bankruptcy-blog/2012/04/renting-after-bankruptcy/ http://www.bklaw.com/bankruptcy-blog/2012/04/renting-after-bankruptcy/#comments Fri, 06 Apr 2012 06:48:02 +0000 Mark Markus http://www.bklaw.com/bankruptcy-blog/?p=1061 R is for “Renting” in the bankruptcy alphabet

I recently had a former bankruptcy client (who successfully discharged her debts) inform me that she hasn’t been able to move because nobody will rent to her.   Since I have always told my clients that they shouldn’t have much difficulty renting after bankruptcy, I was concerned that maybe times had changed and there was a problem.

I told my client to try a few more places, and be persistent.   She still had no luck.  She was informed that the policy (at each place) was if there was a bankruptcy, they won’t rent to her.

Many Landlords Will Ignore a Prior Bankruptcy Filing

I then went and did a little fieldwork of my own, asking several landlords in various areas what their policy was.   While this was far from a scientific survey, about 80% told me that bankruptcy had no bearing at all on whether they would rent to a new tenant.   Of those, they said the criteria they used (in addition to the obvious income/expense analysis and references) was the credit score.   Most required a credit score above 600, with lower security deposit requirements the higher the score was.  The remaining 20% either had a strict “no bankruptcy” policy, or used bankruptcy as one of the factors they look at.

The bottom line is this:  There is no grand collusion or industry-wide scheme to prevent former bankrupt people from renting.   You may need to try different cities and lots of different landlords before you find one that works with your situation, but you will find them.

If at First You Don’t Succeed…..

There is a great deal of ignorance among landlords as far as bankruptcy goes, but you’re probably not going to succeed in educating them at this time, so your best tool is persistence.

Keep trying, you will find places that will rent to you!

 

This article is part of my bankruptcy alphabet series

See others’ articles on the Letter “R”:

 

Image Credit:  theD34n

]]> http://www.bklaw.com/bankruptcy-blog/2012/04/renting-after-bankruptcy/feed/ 0 How to Deal With Stress Associated with Bankruptcy http://www.bklaw.com/bankruptcy-blog/2012/04/how-to-deal-with-stress-bankruptcy/ http://www.bklaw.com/bankruptcy-blog/2012/04/how-to-deal-with-stress-bankruptcy/#comments Mon, 02 Apr 2012 23:24:17 +0000 Elizabeth Roque http://www.bklaw.com/bankruptcy-blog/?p=1049 When you begin the process of bankruptcy, you may think that you’re getting out of all of your problems and that afterwards, things will start over and you’ll have a fresh new start. Though this is true because most, if not all,  of your debt will be lifted and you’ll have the opportunity to live a debt free lifestyle, dealing with the emotional stresses that come along with filing bankruptcy can leave you in a dark place where you feel you have no place to go.  By dealing with the emotional stress correctly, you may be able to enjoy your debt-free lifestyle instead of worrying about all of the things that come along with it.

Obligations to Friends and Family

Often when one sinks into debt, they take a couple of people along for the ride – namely those who are closest to you.  Before turning to bankruptcy, most people choose to borrow money from friends and family in an effort to recover. When you file for bankruptcy, you may feel guilty or afraid because you know that means you can’t pay the people in your life back with money, and this may make them disappointed or upset with you.    Since repaying them prior to filing bankruptcy can result in severe consequences, including the relatives being sued to return the money you repaid them, they are often left “holding the bag.”

Here are some tips on how to repair those relationships.

Apologize. You can always start with an apology. Starting with an apology means that you sit down with your loved one and tell them exactly how you feel and what drove you to bankruptcy and that now you are recovering and will do everything in your power to make up the debt you owe them.

Offer your services. If you have a small business of some sort or are trained in a trade, ask them if you can help them in some way around the house or at their business. You can also offer services like cleaning and general maintenance to help quell the tension between the two of you.

Don’t get angry. Even if your loved one gets angry with you, don’t get angry back – it will only make things worse.  Allowing them to express how they feel through words or actions is the right thing to do. They will cool down eventually, and that’s when you can talk to them.

The Stress of the Process itself

The process itself of bankruptcy can be a difficult one emotionally.   Not only do you have to disclose every credit problem you’ve ever had, you have to discuss it all with a lawyer and have them write down all of your personal finances – and sometimes it takes more than one meeting. Bankruptcy can take awhile and cost some money too, and the entire process can be incredibly stressful.

The one thing you should remember while you’re going through bankruptcy is to breathe – it’s not the end of the world. You will, at the end of the process, be more adept at dealing with your financial burdens and decisions, and you can start living your life again in a way more suited to what you want.  Remember to always arrive on time to all of your meetings, dressed appropriately with all the needed paperwork in your hand – this will help reduce the stress of trying to figure out where everything is, and you’ll always look professional when you present yourself.  Obviously, selecting a caring and competent bankruptcy attorney will help with this process as well.

Make Sure You Talk About It

Although you may not be able to afford professional therapy to help deal with the stress of bankruptcy, you can always talk to friends and family members about the stress instead. They can also help you discover why you had to file bankruptcy in the first place so you don’t ever repeat the actions and have to do it again. You are losing something, and it’s painful – and speaking about it openly can be incredibly helpful in reestablishing stability and a stress free life, which is what you deserve after a bankruptcy.

 

About the Guest Author:   Elizabeth Roque is an in-house writer for FranklinDebtRelief.com. She presents information about debt relief services, credit card debt relief and getting out of debt on a variety of financial sites online.

 

 Image Credit-Benjaminasmith

]]> http://www.bklaw.com/bankruptcy-blog/2012/04/how-to-deal-with-stress-bankruptcy/feed/ 0 Organization: Do You Need it For Bankruptcy? http://www.bklaw.com/bankruptcy-blog/2012/03/being-organized-in-bankruptcy/ http://www.bklaw.com/bankruptcy-blog/2012/03/being-organized-in-bankruptcy/#comments Mon, 26 Mar 2012 03:58:15 +0000 Mark Markus http://www.bklaw.com/bankruptcy-blog/?p=1030 Are you an organized person?  Perhaps you are in some parts of your life, but not in others.  Maybe you’re not at all.    I have had clients over the years that range from completely disorganized to the type who tab and cross-reference their Kleenex.   You’re all welcome to the bankruptcy party.

However, there are definite benefits to being organized (or getting organized), both inside and outside of bankruptcy.  Failure to do so not only creates many problems for your attorney, but potentially for yourself as well and may have even been the cause of your needing to file a bankruptcy case.

Why Do you Need to Be Organized?

First of all, it will help you and your attorney present your case accurately and maximize the protections that are available for you.   It make thing significantly easier for your attorney (which can translate into cost savings for you).

Second, at least in a Chapter 7 case, you can be denied a discharge of your debts  if you knowingly withhold or fail to provide books, documents, records, and papers relating to your property or financial affairs

But the biggest reason of all is that it will help you.  One of the biggest benefits my clients receive from my counsel in bankruptcy is not the discharge of their debts (although that is certainly a big one), but getting their books and records in order so they can see at any given time where they need to cut costs, or alter spending, etc.   If their accountant needs to analyze something for them, they have it ready and easy for the accountant to see.   This is particularly important for people who are self-employed, but being organized can help anyone.

Specifically, what needs to be organized?

Here are the main things you’re going to need for your bankruptcy filing:

  • List of who you owe and how much you owe them
  • List of your assets, and what they are worth.  This includes everything from real estate to vehicles, to insurance to clothing. Anything you own is an asset.
  • Your income for the past 6 months:  this would include pay stubs or, if you are self-employed, profit and loss statements.
  • Your monthly expenses.
  • Your tax returns filed for the past at least 3 years (4 years for Chapter 13 cases).

Within the above there are obviously many sub-categories, which a good bankruptcy attorney will explain to you.

Keeping track of who you owe and all the other information is a good first step, but obviously doesn’t help if you don’t know how to “read” or analyze it.  Ask your bankruptcy attorney for how to optimally review your finances to avoid ending up in a similar position in the future.

This article is part of my bankruptcy alphabet series

Others playing the alphabet game:

 

 

Image Credit: katerha

 

]]> http://www.bklaw.com/bankruptcy-blog/2012/03/being-organized-in-bankruptcy/feed/ 0 5 Reasons Not To Consider Bankruptcy http://www.bklaw.com/bankruptcy-blog/2012/03/5-reasons-against-bankruptcy/ http://www.bklaw.com/bankruptcy-blog/2012/03/5-reasons-against-bankruptcy/#comments Fri, 09 Mar 2012 03:45:21 +0000 Mark Markus http://www.bklaw.com/bankruptcy-blog/?p=995

I see and hear nothing

We’ve all seen the advertisements from debt consolidation and other companies (who, by the way, are owned by banks and credit card companies) instructing people with debt problems to contact them and avoid bankruptcy as an option.   They give their self-interested reasons for their position, most of which are untrue.

I decided to write this tongue-in-cheek post to give my reasons why someone with debt problems (also known as a “debtor“) should not look into bankruptcy as an option to resolve their debts.

Reason #1: You Prefer To Not Know All Your Options

This one is pretty basic.  Why get all the facts before deciding on something?    Just like going to a doctor for back pain.  One doctor tells you you need surgery.  Why would you want to learn about potentially superior and less invasive alternatives such as physical therapy, prolotherapy, etc?

The real answer is simple:  You cannot make an intelligent decision about anything without knowing the costs and benefits of all available alternatives.   If you close your eyes and ears to your options, you shut out possibilities.  When you are in dire financial straits, this is the time to fully examine your options, including bankruptcy, and determine what works best for you.

Reason #2:  You Prefer to Pay More Than You Can Afford

Did you know that in bankruptcy you often will pay far less (and often nothing) on your debts than you would if you try to do alternative resolution such as debt consolidation or negotiations?  Well, it’s true.  It depends of course on your budget and value of your assets and other considerations, but it is important to have a comprehensive consultation with a bankruptcy attorney to determine how it would affect and/or assist you.

Reason #3:  You Don’t Care About Tax Consequences

Did you know that if you do debt consolidation or negotiate with your creditors and they agree to accept less than 100% of what is owed, that the amount forgiven can become taxable income to you and that income can result in significant tax liability for you?   It’s true.   However, by federal law,  debts discharged (forgiven) in bankruptcy do not result in taxable income to the debtor.   Nifty, huh?

Reason #4:  You Have Rich Friends and/or Relatives

Hey, that’s great.  If they are willing to pay off your debts for you, you are a lucky soul.   However,  you still might want to explore bankruptcy as an option even if you decide not to use it.

Reason #5: You Enjoy Anxiety

What causes anxiety?  Generally it is fear of the unknown.   Nothing defeats anxiety like knowledge and taking charge of your actions.   Yes, Xanax and other drugs work nicely too, but they are short term solutions.   Learn about all your alternatives, including bankruptcy, and then decide what works best for you.

Bankruptcy: To Sum Up

There are lots of myths about bankruptcy but like most myths, if you take the time to learn the truth, you may find the myths to be false.   Most bankruptcy attorneys offer free initial consultations to go over your situation.  I encourage anyone with debt problems to take advantage of that to learn what may very well end up being your best option for a fresh start and debt relief.

 

Image courtesy of:  sonofgroucho

]]> http://www.bklaw.com/bankruptcy-blog/2012/03/5-reasons-against-bankruptcy/feed/ 0 Types of Debts Dischargeable in Bankruptcy http://www.bklaw.com/bankruptcy-blog/2012/03/types-of-debts-dischargeable-in-bankruptcy/ http://www.bklaw.com/bankruptcy-blog/2012/03/types-of-debts-dischargeable-in-bankruptcy/#comments Thu, 08 Mar 2012 06:46:07 +0000 Martha Jackson http://www.bklaw.com/bankruptcy-blog/?p=986 Bankruptcy as an Option for Dealing With Debts

If you are crushed under an insurmountable amount of debt, it can get your heart-rate up. Resolving economical issues is best executed through an extensive approach. One viable option that you might consider employing is bankruptcy. Although you could also opt to consolidate debt, bankruptcy provides you with the opportunity for a fresh economical future, also known as a “fresh start”. Based on the kind of bankruptcy you file, your debts get reduced or eliminated, or you obtain extra time to pay them off.

Personal Bankruptcy–Not All Debts Are Dischargeable

However, when you declare personal bankruptcy, not all debts are dischargeable. Liabilities that you cannot reduce or liquidate via Chapter 13 or Chapter 7 bankruptcy include child maintenance, court fines, alimony, and debts incurred as a result of drunk driving.  Liabilities such as back taxes and student loans normally do not qualify for bankruptcy debt relief but these debts may be dischargeable under certain circumstances.

The following are a few important things that you need to know:

Certain back taxes

If certain requirements are met, some taxes are dischargeable in bankruptcy. For details on these requirements, click here.

General loans and credit cards

You can discharge general loans as well as credit card bills in your bankruptcy filing. However, if you have used any fraudulent means to obtain loans, the creditor may successfully object to the discharge of that debt.

Federal student loans

There is new movement afoot in Congress to make it easier to discharge student loans in bankruptcy, but as of this time it is very difficult. The only way currently is if the debtor can prove “undue hardship” as that term is defined by case law. There are other non-bankruptcy means of dealing with student loans under certain circumstances.  To see more about these visit http://www.bklaw.com/chapter7/student_loans.html

Secured loans

Loans that are obtained with collateral such as a home or an automobile are dischargeable, but the lien remains against the property on which it is secured. Under certain circumstances liens can be removed or reduced. Discuss with your attorney what options might be available in your situation.

You may also discharge past due cable and utility bills, tuition, rent, and medical debts in bankruptcy. However, if you fail to pay your rent after bankruptcy you may be lawfully evicted by your landlord. Moreover, you may be required to pay an extra deposit to your utility companies if you do not stay current with your obligations, even after bankruptcy.

Need More Information?

For more information on which debts are dischargeable in bankruptcy,  please visit http://www.bklaw.com/discharge.html

Author’s Bio: Martha Jackson loves to write financial articles and she is a contributory writer associated with the Debt Consolidation Care Community and has written several articles on debt consolidation, debt settlement and get out of debt for various financial websites. She holds her expertise in the Debt industry and has made significant contribution through her various articles.

Image Courtesy of  Caitlyn_and_Kara

]]> http://www.bklaw.com/bankruptcy-blog/2012/03/types-of-debts-dischargeable-in-bankruptcy/feed/ 0 Bankruptcy Alphabet: N is for Numbers and New Bankruptcy Laws http://www.bklaw.com/bankruptcy-blog/2012/03/numbers-and-new-bankruptcy-laws/ http://www.bklaw.com/bankruptcy-blog/2012/03/numbers-and-new-bankruptcy-laws/#comments Thu, 01 Mar 2012 19:18:05 +0000 Mark Markus http://www.bklaw.com/bankruptcy-blog/?p=972 This article is part of my bankruptcy alphabet series

People are Not Numbers

When numbers are used to identify people, it’s usually when they are in prison.   The Bankruptcy laws used to be about helping out people (and businesses) in need.   They were about equitable solutions to serious financial problems.   Laws in general are designed to help society as a whole, but one must never forget it is always about people.   When a potential bankruptcy client comes into my office with debt problems, it is very personal to them.   Most of my clients never imagined being in this situation, and they would hope that the laws (and their attorney) are there to treat them as individuals, and not numbers.

The New Bankruptcy Laws

Back in 2005 the Republican controlled Congress and President G.W. Bush passed sweeping changes to the Bankruptcy Code that had been in existence for several decades prior.   These “new bankruptcy laws” were designed to reduce bankruptcy eligibility to a numbers game instead of basing it on need and the overall good for society.

Prior to 2005 the overriding purpose of the bankruptcy laws was one of equity.   I discussed courts of equity in my bankruptcy alphabet post on Justice.   Bankruptcy judges at that time had far more ability to balance the needs of a bankrupt debtor to get a fresh start with the rights of the creditors to get paid.

With the new bankruptcy laws, Congress instituted a very complex “means test” to determine threshold eligibility to file under Chapter 7.  The means test, in its base form, takes any and all income received by the debtor in the six calendar months prior to filing the bankruptcy case and subtracts from that certain expenses allowed under IRS guidelines (one size fits all, apparently).

The Saving Grace is Attorneys

While bankruptcy attorneys are of course bound by the laws, experienced ones have figured out where the laws can be applied beneficially for their clients and how to maximize the effectiveness for their specific case.   Similarly, while Congress tried to reduce the flexibility bankruptcy judges have to make equitable rulings, there is still plenty of room for Judges within the laws to do Justice and reach a fair and just result in each case, hopefully never forgetting these are people, not numbers in front of them.

The best way to avoid being just a number in the bankruptcy process is to hire a bankruptcy attorney that understands where the laws have been, where they are, and where they may be going.

Others Writing on the Letter “N”:

 

Image Courtesy of lrargerich

]]> http://www.bklaw.com/bankruptcy-blog/2012/03/numbers-and-new-bankruptcy-laws/feed/ 0 M is for Median Income: Above or below–Any Difference? http://www.bklaw.com/bankruptcy-blog/2012/02/median-income-bankruptcy/ http://www.bklaw.com/bankruptcy-blog/2012/02/median-income-bankruptcy/#comments Sat, 11 Feb 2012 23:41:52 +0000 Mark Markus http://bklaw.com/bankruptcy-blog/?p=910 This article is part of my bankruptcy alphabet series

Here’s something many don’t realize.  You can earn above the median income for your location and household size and still qualify for Chapter 7  bankruptcy.    What’s that, you say?  You’ve read online (or your “Friend” told you) that if you’re below the median income, you can file for bankruptcy without doing a repayment plan (such as in a Chapter 13 case) and if you’re above it, you cannot.

A Little Knowledge Can Be Dangerous

The eligibility requirements for filing bankruptcy, particularly Chapter 7 are extremely complex thanks to the changes in the laws that went into effect in 2005.     The median income is a part of the “Means Test” analysis which is ONE of the tests used to determine eligibility.   It is possible to be below the median income and still not be eligible for Chapter 7, and it is possible to be above the median income and qualify.

Below Median Income Doesn’t Mean Automatic Qualification

The median income is merely the starting point.  If you are below the median income, for the income you received from ALL sources EXCEPT social security in the six calendar months prior to commencing the bankruptcy case, then you “pass” the means test (or, more accurately, the means test will not apply in that case).

However, you can be below the median and your budget of “actual” current income and expenses showing surplus income that could render you unable to remain in a Chapter 7 case.

The Means Test and Why Above-Median Doesn’t Mean Automatic Disqualification

If you are above the median income, then the means test must be performed.  The means test is a mind-numbingly complex, and somewhat random, set of calculations that includes certain allowed IRS expense deductions from your income, and other actual expense deductions, such as mortgage payments, etc.   After going through the test, if you are showing the ability to make a certain amount of payments to your creditors,  a “presumption of abuse” will arise in the Chapter 7 case and you may need to either switch to a Chapter 13 repayment plan, or have your case dismissed.

Similar to the under-median case above, if you pass the means test as an above-median income debtor, you can still be ineligible for Chapter 7 based on your actual current income and expenses if they are showing a surplus available to pay your creditors, based on allowed expense criteria.

See an Attorney

In short, it is virtually impossible to correctly anticipate what will happen in your case without having a qualified bankruptcy attorney represent you, not to mention correctly completing the required means test and other forms.

For others writing on the letter “M” see:

 

Image Courtesy of Double–M

]]> http://www.bklaw.com/bankruptcy-blog/2012/02/median-income-bankruptcy/feed/ 0 L: Listing Debts and Assets in Bankruptcy http://www.bklaw.com/bankruptcy-blog/2012/02/l-listing-debts-and-assets-in-bankruptcy/ http://www.bklaw.com/bankruptcy-blog/2012/02/l-listing-debts-and-assets-in-bankruptcy/#comments Fri, 03 Feb 2012 07:37:33 +0000 Mark Markus http://bklaw.com/bankruptcy-blog/?p=895 This article is part of my bankruptcy alphabet series

You Cannot Pick and Choose Which Assets and Debts to List

One of the most common misconceptions people have about bankruptcy is that you can pick and choose which debts one “files bankruptcy on” (I hate that phrase) or which assets can be included.  Not a week goes by that I don’t get at least 2 or 3 people start out their consultation with me by saying “I only want to include these debts”  or, “I have property in another state (or country) that I don’t want to include”.

There are few questions in the law that have simple answers but, happily for this article,  this one is easy.

When you file a bankruptcy case, you must list (i.e. “include”) all assets wherever on the planet earth or the universe they may be located, and all debts no matter who they are owed to (yes, this includes your mother, your best friend, and any other person or entity to whom you owe a debt).

What About My Spouse?

If you live in a Community Property state, such as California, you must list all debts and assets of your spouse–even if they are not joining in the bankruptcy filing– if they were incurred or obtained during the marriage and are not separate property.   If you’re unsure about this, talk to a bankruptcy and/or family law attorney.

Does that mean I can’t repay my family or friends?

No.  To my knowledge, there has never been a law passed in the history of mankind that prevented someone from repaying a debt to another.   Bankruptcy simply takes away the legal obligation to do so.  If you want to file bankruptcy, discharge your debts, and then pay them all back anyway, you may do so.

For others writing on the letter “L” see:

 

 

 

Image courtesy of Mr. Mystery

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