No. The Bankruptcy Code provides that a debtor filing for bankruptcy can keep certain assets for a “fresh start” by exempting property from the bankruptcy estate.
The vast majority of bankruptcy cases are “no asset” cases, in which the debtors have claimed an exemption in everything they own; there are then no assets from which to pay creditors.

Not necessarily. If there is no equity in the house (today’s value less costs of sale less payoff balances on all liens) the trustee in a Chapter 7 will abandon the house to you. That is, you keep it, as long as you pay the mortgages.

A bankruptcy does not relieve the property of the liability for voluntary liens, like mortgages or deeds of trust, nor for tax liens. So, the lender retains the right to foreclose if you don’t pay.
If you pay, everyone is happy. Remember, the lender doesn’t want the property; it wants you to pay regularly on the loan. Foreclosure is a last resort for the lender if it concludes it can’t get its money any other way.

If there is equity, then determine whether the exemptions available to you equal or exceed the equity in the property. If you are under 60, you can keep up to $60,000 of equity and it increases to $90,000 if you are over 60 years of age. Remember to deduct costs and commissions, typically 6% when determining equity. If the equity is all exempt, you can keep the house, so long as you pay the mortgages.

If the exemption is not sufficient to protect the equity, consider Chapter 13.

In most jurisdictions, no one will come to your home to examine your personal belongings, unless there is a suspicion that you have hidden assets or undervalued what you own. That is very rare and should not worry you at all if you’re being honest during the process.

The trustee and the judge assume that you have truthfully scheduled your assets. Anxiety about the bankruptcy process and the fear of exposure or humiliation is created in the mind of the debtor to a far greater degree than by the reality of the judicial process.

Yes. The scope of the discharge varies in each chapter. In Chapter 7, debts incurred by fraud, intentionally harmful actions, dishonesty, as well as priority taxes (last three years), unfiled taxes, family support and debts to a former spouse, student loans, criminal fines and restitution cannot be discharged.

In Chapter 13, you can discharge non support debts to a former spouse, government fines, and some intentional torts that could not be discharged in Chapter 7.

If there is no equity in the car, after subtracting any car loan and exemption from the car’s present sale value, the bankruptcy trustee will not take the car.

If there is equity in the car over and above the value of the exemptions available, ($5,000 if single and $10,000 if married (amounts double if over 60)), a debtor can usually buy any unprotected equity from the Chapter 7 trustee.

Bankruptcy now includes a “means test” which is intended to provide a more objective approach to the issue of a debtor’s ability to pay. Prior to the 2005 amendments, the Bankruptcy now includes a “means test” which is intended to provide a more objective approach to the issue of a debtor’s ability to pay. Prior to the 2005 amendments, the trustee could ask the judge to dismiss a case because the debtor’s income was so high that to permit the debtor to discharge his debts in Chapter 7 was a “substantial abuse” of the bankruptcy system. Now, the means test purports to provide uniformity to the process and lowers the standard to simple “abuse”. 11 U.S.C. 707(b)(2).

The means test calculation is found in Form B 22, now a part of every individual’s Chapter 7 filing.

The United States Trustee or the Chapter 7 trustee can seek to have a debtor’s case dismissed for “abuse” if the debtor’s income, including that of a non-filing spouse, is sufficient to repay a significant portion of the scheduled debts. 11 U.S.C. 707(b). The real expectation is that debtors who are challenged in this way will convert their case to Chapter 13.

This concept does not apply to Chapter 7 debtors whose debts are primarily business debts, tax debt, or to those filing Chapter 13

Choosing which chapter of bankruptcy is best for you depends on what kind of debts you have, whether you are behind on secured debts, and whether you have the regular income necessary for Chapter 13 or you simply don’t qualify for a Chapter 7.

No, most forms of retirement savings are unaffected by a bankruptcy filing because Colorado law protects retirement accounts at 100%.

f you owe money on a credit card at the time you file bankruptcy, you must list the card as a debt. Remember, the schedules are filed under penalty of perjury: perjury in connection with your case can lead to denial of discharge of all of your debts. It is also a federal crime.

If you don’t owe anything on the card, you don’t have to give the credit card company notice of your bankruptcy. Note, however, that they may find out through other means and cancel the card as a precaution. American Express is notorious for this.

Most credit card companies will allow you to keep their credit card for use after bankruptcy if you agree to reaffirm the balance on the card and enter into a new agreement, signed after the bankruptcy filing. The decision is up to the creditor, but most creditors want to avoid the loss incurred when the debt is discharged, and want your future business.

Most of our newly discharged debtors are frequently solicited for new cards!

Yes. Studies show that 18-24 months after a bankruptcy discharge, bankruptcy debtors can qualify for a loan on the same terms as if they had not filed bankruptcy. That means that the lender will be much more interested in your down payment, the stability of your income, and the relationship between the loan payments and your monthly income than your past financial troubles

Chapter 13 plans are voluntary and you can dismiss them freely.

If you have a temporary interruption in income or an unexpected increase in your expenses, you can ask the court to modify your plan to reduce the payments, or to obtain a suspension of the payments for a couple of months.

If you miss the payments and don’t take action to modify or get a suspension, the court will dismiss your case.

If your case is dismissed short of discharge, the fact that you filed does not bar you from eligibility to file bankruptcy again.

You also have the right to convert your Chapter 13 case to Chapter 7.

Designation as a Sub chapter S corporation or a Chapter C corporation is a matter of tax law, rather than anything to do with the kind of legal entity the corporation is. For the purposes of the bankruptcy code, both are simply corporations.

Watch out however if your sub Chapter S Corporation files bankruptcy. Any taxable income generated after bankruptcy may still be taxable to the shareholders, since the corporation is not a tax paying entity.

The IRS must cease collection actions after a bankruptcy is filed just like all other creditors. The automatic stay protects the debtor and the debtor’s property.

Whether the tax claim will survive the bankruptcy, (that is, whether it is nondischargeable) depends on many variables as to whether the taxes are more than three years old and assessed more than two years ago.

A corporate bankruptcy likewise does not directly affect the shareholders. If the officers or shareholders are personally liable for the debts of the business, the automatic stay in the corporation’s case does not prevent creditors from seeking to collect from others who may be liable. Who is liable.

For the average individual debtor, receiving a discharge in bankruptcy has no tax consequences. The Internal Revenue Code §108 excludes the discharge of debt in bankruptcy from its definition of cancellation of debt income. Outside of bankruptcy, cancellation of debt may be treated as if it were income for tax purposes.

If you have received an IRS 1099(c) on a debt discharged in a bankruptcy case, you can file Form 982 to tell the IRS that the sum on the 1099 should be excluded from your income by reason of your bankruptcy.

Note that the debtor’s tax attributes, such as loss carry forwards and exclusion of gain on sale of a primary residence, as they exist before bankruptcy, pass to the bankruptcy estate and may be used or even exhausted by the trustee in the administration of the estate.

Get good tax advice before venturing into bankruptcy if your tax situation is complex. IRS publication on bankruptcy and tax at http://www.irs.gov/publications/p908/index.html.

Foreclosure can trigger tax consequences to you, depending on the tax basis of the property, whether the property is your residence, etc.

Know that the bankruptcy estate in a Chapter 7 and 11 is a separate, tax paying entity, distinct from the individual debtor: if the property is property of the estate when the foreclosure takes place, the tax consequences should fall to the estate, not the debtor.

This quirk in the law can present some planning possibilities in cases where loss of the property seems inevitable: you may be able to prevent the further insult of having the loss trigger taxes on money you didn’t receive upon the transfer if the foreclosure occurs after, rather than before, bankruptcy.

No. Debts discharged in a case under Title 11 of the United States Code (the Bankruptcy Code) are not “cancellation of debt income” on which you can be taxed. 26 I.R.C. 108 and 11 U.S.C. 346 (j)(1). That doesn’t always deter creditors, some of whom issue debtors a Form 1099-C, reporting the cancelled debt to the IRS as income. If that happens, the debtor’s remedy is to file IRS Form 982.

If the discharge in the Chapter 7 case eliminates the debtor’s personal liability for the tax year or years for which there is a lien, the lien survives only as a charge on the equity in the property that the debtor owned at the beginning of the case.

The lien, though not discharged, does not attach to assets that you acquire after the case is filed.

Your choices after the discharge are:

* Pay the IRS the value of the equity in assets to which the lien attached at the beginning of the case;
* Do nothing in the expectation that the IRS will not attempt to enforce a lien, if the collateral is of little value or is exempt from levy by law; or
* File a Chapter 13 to pay the lien over time if it attaches to assets of significant value.

Remember the old adage that “he who represents himself has a fool for a lawyer”?

The paralegal services and on line bankruptcy providers try to characterize filing bankruptcy as “just filling out forms”. That’s just as true as seeing tax preparation as “just filling out forms”; and the tax forms come with instructions written for the non professional. Bankruptcy forms don’t.

The more assets you have to lose in a botched bankruptcy, the more it is worth your while to pay a lawyer to protect them in a bankruptcy proceeding.

What can go wrong when you represent yourself? The bankruptcy amendments of 2005 have now studded the Bankruptcy Code with situations in which dismissal of cases is automatic and the relief available when you refile is strictly limited. The means test forms are difficult to get through and easy to bungle.

Congress was upfront that it wanted to discourage consumers from filing bankruptcy and made the process substantially more complex and the consequences of mistakes more costly.