Contemplating bankruptcy can be a very stressful time. In order to obtain clear answers on your options and what to expect, an attorney will need certain information from you.
So what is it that an attorney needs to know to advise you of your best bankruptcy or non-bankruptcy options? To answer that, we only need to boil down bankruptcy to its most basic principles, as follows:
In order to determine whether you are eligible for a bankruptcy discharge, a Bankruptcy Trustee will need to examine your monthly income and expenses as well as your assets and debts.
It’s an oversimplification of the process, but that is the key concept to evaluate any bankruptcy case. In order to do that, an experienced bankruptcy attorney should be asking you to bring the following to your first meeting:
1. RECENT INCOME: The last 6 months of your income. If you don’t have all the paystubs, at least know approximately what you Gross each pay period and what the deductions are for taxes, medical, union, etc . . .
2. PAST TAX RETURNS: The last two years of your filed income tax returns ( or at least your knowledge of what your annual income has been). This information will be needed for the petition and a trustee will want to see the returns eventually. While having a high income in years past won’t disqualify you, it’s best to know what a client’s situation was and have an explanation for any change in income.
3. MONTHLY EXPENSES: A potential client should also arrive with a reasonably accurate synopsis of their monthly living expenses. This doesn’t include what you’re paying on your credit card debt that you hope to discharge. Instead, it’s your necessities for running your household. It’s not necessary to bring actual receipts and cancelled checks for the first meeting, but instead just a working knowledge of your expenses that can be compared against your income. This allows the attorney to project a rough budget which is key to determining how your bankruptcy case would proceed.
Of course, if there are any unusually high expenses, such as high transportation or food, etc., it would be a good idea to save some of your receipts prior to filing to prove to the trustee that these are accurate.
4. YOUR DEBTS: An estimate of how much you owe to creditors. You don’t need to bring every bill and a lot of this will be ascertained with a credit report down the line. Having a reasonable estimate of your debt will help the attorney better evaluate your case. This would include your total amount owed on credit cards or other unsecured debt and the outstanding balances on any secured debt, such as mortgages or car payments.
5. YOUR ASSETS: An estimate of your assets. This includes any and all bank accounts as well as personal property, a home or a car. Before filing, assets like a home or a car will require some form of valuation, either a Kelly Blue Book value for a car and a CMA (Comparative Market Analysis) for real property such as your residence.
When it comes to your home, it’s not necessary to obtain the CMA for that first meeting as long as you have some reference of what the home is worth or the recent sales of other homes in the area. Often, the value might be well within what you’re allowed for an exemption and the precise value can be determined later. Often, I have spoken to clients who have no idea on the value of their home and I have them obtain this information from a real estate broker PRIOR to the meeting so I can give them the best advice.
The above information should give an attorney a clear picture of whether you will be in a repayment plan or if you might be able to discharge all of your debts without making any payments to creditors. After this meeting, if it’s determined that bankruptcy is a viable option, then the attorney will need picture ID, such as your driver’s license, social security cards, statements on secured debt balances, etc . . But for that first meeting to figure out where you stand in terms of bankruptcy options, a working knowledge of the above 5 categories is what you’ll need to get started.
If you would like to know more about your bankruptcy options, contact Frank J. LaPerch, PC for information about what you can do to get your financial life back in order.