bankruptcyinstruction

Not Revealing All Motor Vehicles Titled in Your Name

The Bureau of Motor Vehicles can instantly access a list of all motor vehicles titled in your name so there is no way you can cheat by not listing every one of them on your bankruptcy petition. Besides, it is doubtful they will be taken away from you anyway because most people who have several motor vehicles only rely on one particular one to get them back and forth to work, which is normally the one they are making payments on. Besides, motor vehicles with no equity do not have to receive the exemption allowance and this allowance can be applied to another motor vehicle already owned free and clear. In fact, in most instances, the other motor vehicles titled in your name may not be running or their market value is so low that no Trustee would bother selling them in order to obtain money to pay the creditors. 

Not Listing the Money Your Live-In Partner Brings Into the Home

I have had many divorced women fill out their bankruptcy petition, write down that they have no income but they pay rent, utilities and other living expenses.  My first question is "How can you pay these debts if you have no income?"  Oftentimes, it is because they have a live-in partner or roommate who pays the bills.  It is perfectly okay if a live-in partner is paying the bills while you are unemployed or living on other types of government assistance.  Your bankruptcy petition will simply list all your normal living expenses on Schedule J and on Schedule I under "other income" and list the amount the live-in partner contributes to pay these bills. This will balance out Schedule I and J of your bankruptcy petition to most likely a balance of $0.00.

Not Listing Small Business Income Because You Didn't File Income Taxes

Although we all know it is illegal to not file income taxes if you are making an income being self-employed, some people still do this because they are barely making enough money to label their enterprise a business.. But what happens if you no longer can pay your bills and you are forced to file bankruptcy?  Will the Internal Revenue Service come knocking down your door and haul you to jail?  Very unlikely!  All you have to do is go to the IRS website at and download the tax forms for the last 2 years; fill them out and file your taxes according to law. Besides, it is very rare that you will owe a lot of taxes if you had a small home business that never made any money. It is very common for home businesses to make the same amount of money as their business expenses, resulting in little or no actual business income. By providing the IRS with a list of your business expenses, which normally offset the income you brought in, you will probably not be paying a lot of taxes anyway for those years you didn't file.  Besides, you will have the option of making payments on any taxes you owe to the IRS. (Naturally, if you made a larger business income than you have expenses you would pay more taxes, but it is unlikely not enough money for the IRS to take you to jail and charge you with tax evasion, so relax.)

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Not Providing Information About Tickets and Crimes

Some people would rather just pay their fines and not reveal this information in a bankruptcy petition. While it may be an embarrassing situation that you want to forget about, by including these debts as a priority unsecured debt, additional money can be added to your monthly budget allowing you to keep paying those fines and reducing the money you have left every month to pay your creditors.  For instance, if you are paying $50 per month for a fine, this $50 will be added to Schedule J as a budgeted monthly expense and that is $50 less the creditors can attempt to take away from you.

Not Revealing Back Child Support Owed

Almost every state in the U.S. provides an unlimited exemption allowance for back child support owed to you. Even if it is court ordered child support, and/or uncollectable, it will be to your benefit to reveal it on your asset pages.  Besides, the truth will come out and if you should happen to receive the money and you have not declared it on your bankruptcy petition, the entire amount (or a large portion) may be demanded by the Bankruptcy Court. By listing the child support and exempting the entire amount in your petition, this asset is more than likely safe and secure.

Overstating Your Monthly Living Expenses

People who do not understand the bankruptcy law will sometimes "beef up" their living expenses so it will appear that they have no money left at the end of the month, thinking this will help them to wipe away their debts.  By doing this, they feel they will do themselves a favor; but instead they do more harm. I had a lady one time who said she spent $600 per month on clothing. The income she reported was $2,400 per month. I could not think of any job paying only $2,400 per month that would require her to purchase $600 per month in clothing. Unless she is a celebrity that is ordered under contract to spend this much money on clothing every month, the Trustee did not accept it and disallowed the expense.  This in turned caused the Trustee to question her entire petition and the case was delayed for 8 months while the client gathered paperwork and other documents to prove the validity of the rest of her bankruptcy petition. So, tell the truth and you will have nothing to worry about.

In addition, I had another client who claimed he spent $220 per month in long distance calls to his friends and relatives. You cannot expect the Bankruptcy Trustee to allow a telephone expense of this high amount. If this is your situation, you will have to ask your friends and relatives to start calling you, or find out how to send them email for communicating.  Normal telephone expenses are the basic charges, not long-distance.  That is an expense not necessary for your survival.

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