You must list your personal injury case as a potential asset for the bankruptcy trustee.
In a Chapter 7, the trustee can collect 100% of what a debtor gets from their personal injury settlement. This applies to any dates of accident that occurred prior to filing the bankruptcy petition where the statute of limitations has not expired.
If you have already hired a lawyer to represent you in your personal injury case, you would want to ask them how much you might expect to receive from the personal injury case and how long will it take for it to settle or go to trial. You might decide to either wait until your personal injury case settles and use it for reasonable expenses before filing your bankruptcy case so the trustee cannot take it.
Alternatively, you might decide to not wait and file your bankruptcy case and forgo your settlement proceeds. It works a little differently in a Chapter 13. The trustee in a Chapter 13 case is entitled to at least 50% of your settlement proceeds whether your accident happened before you filed your case or while your case is pending.
Usually, the Chapter 13 trustees will agree to let the debtor keep 50% of the net proceeds of the case, where the Chapter 7 trustee’s will take 100% of the proceeds. When you consult with your bankruptcy attorney definitely let them know about your personal injury case. You wouldn’t want to file the case and then unexpectedly have the trustee take your money. Also, communicating with your personal injury attorney is also critical.
All of your creditors get listed in the bankruptcy petition so as soon as the bankruptcy petition is filed, the court will mail your creditors the 341 meeting of creditor’s notice. The notice has your case number is located on the notice so they can log on and review all pleadings that get filed in the case.
If you have an active state court case where a lawsuit is pending against a creditor we file what is called a Suggestion of Bankruptcy in the underlying case. That alerts the Judge and all the parties in the State Court case that there is an automatic stay in effect, the litigation must stop because of the active bankruptcy. If you have any co-debtors they also receive a notice from the court.
People often ask if their employer gets notified of the bankruptcy. Your employer will not get notice of your bankruptcy filing. Similarly, people also ask if their landlord on a residential lease gets notified. You do have to list any leases/contracts so they do ordinarily receive notice.
This usually does not present an issue as long as, you are making your rent payments on time to your landlord. If you are involved in a domestic violence type of situation, we can get the court to seal the address from your file for your protection.
Your bankruptcy will typically not show up in a general google search so don’t be deterred from filing for bankruptcy because you think you people will find out. The case is filed in Federal Court and requires Pacer access to view case information.
SBA Loan funds were intended to be used for normal operating expenses such as rent, inventory, employee payroll, working capital, purchasing products, purchasing equipment, and paying off business debt. If you have misapplied those proceeds and used them to pay your personal bills or only pay yourself disbursements under the loan then the SBA can request an audit. If you do not respond within to their inquiry within 30 days, it will be considered an admission that the loan funds were misapplied.
Penalties include having to pay 1 ½ times the amount of the loan, collections, or even criminal prosecution. Ordinarily SBA loans are dischargeable in bankruptcy. However, if funds were misapplied then you could face a 727 action wherein the United States Trustee’s office will contest the dischargeability of the debt. I would only recommend filing a bankruptcy on those funds if you did in fact use the proceeds for business purposes and your business was still unable to be sustained and you have a bank trail of how the money was spent.
I also look at how much of the loan got disbursed to you personally. For example, if your salary was normally $30,000 annually then you start paying yourself $100,000 salary once you got the EIDL funds those funds that could be considered misapplying those funds. The same if you only paid yourself a salary and distributions and paid no other business expenses. If you have more specific questions, it is best to consult with an attorney.
A 2004 exam is something you do not want to happen in your case. This is not to be confused with a 341 hearing. A 341 hearing is a 10–15 minute hearing that happens in every bankruptcy case where the trustee asks you questions and clarifies information listed in your petition. A 2004 exam is more like a deposition where any interested party can compel your testimony (deposition) or force production of additional documents.
Typically, this is something that would be initiated by the United States Trustee’s office/Department of Justice in cases where they suspect a debtor has not filed their case in good faith, is hiding assets or income, or did not properly disclose information on their bankruptcy schedules. Once the additional information, such as bank statements, are obtained, you will likely be examined under oath.
The scope is broad. It is very important to always disclose all information to your attorney so they can properly advise you on whether filing bankruptcy is a good course of action or if the timing or circumstances of the filing are ideal. You do not want your attorney surprised with facts after your case is filed. Unlike regular civil state court actions, if the plaintiff no longer wants to pursue their case, they can just dismiss it.
You cannot “dismiss” or get out of a Chapter 7 bankruptcy once it is filed. Once it is filed, its filed and there is no turning back. Your then required to participate. If there is a finding of fraud or lack of good faith, it usually results in one of the following: 1) converting your case to a Chapter 13; 2) paying more money to the bankruptcy estate; 3) being permanently ineligible for a discharge; or 4) having your case dismissed where you are barred from refiling your case for a designated period of time.
While these situations are not routine, every case should be filed by your attorney with the attention to detail required as if it is getting audited. That is why communication and disclosure are so essential between client and attorney.
The short answer to that question is yes. It really doesn’t matter whether the car is repossessed by being towed out of your driveway in the middle of the night, or whether you voluntarily and cooperatively turn over the car to the lender because you couldn’t afford to make the payment.
If the lender sells your vehicle for less than you owe on it, you will be responsible legally for paying the difference (otherwise known as a deficiency). This is a little less of a problem in recent months due to car shortages, there tends to be more equity in vehicles than there has been in the past, meaning the lender in many cases can sell the car for more than you owe on it. The good news is that filing for bankruptcy will discharge a deficiency judgment against you.
It is recommended to never trade in a vehicle with negative equity and add it to your current vehicle loan. This forces you as the borrower to be in a position where you cannot sell it for more than you owe on it. Typically, that is usually accompanied with a high monthly payment. It also puts you in a position where if the car has mechanical issues it makes it even harder to get rid of it because you can’t break even if you sell it.
If you do have any questions about prior vehicle repossessions or if you are considering turning in your car, feel free to contact our office to discuss your options.
