A bankruptcy worksheet is an excellent way to organize your finances and will help you determine if filing for bankruptcy is a good option for you. This help guide will explain how to create a bankruptcy worksheet using LegalNature and elaborate on the guidance provided in the form builder.
You will begin by selecting all the reasons why you are interested in pursuing bankruptcy. When you file bankruptcy, something called an "automatic stay" goes into effect that legally prevents your creditors from contacting you while your case is pending. Many people also file bankruptcy after suffering a dramatic loss in income. This can be due to a variety of reasons, including a job loss or reduction in pay. Divorce is also another common reason. Often, one of the spouses can no longer afford to keep up with repaying debts after losing access to the other spouse's income.
Other common reasons include filing bankruptcy to relieve large medical debt, to stop wage garnishment or collections lawsuits, to prevent home foreclosure, and to prevent auto or property repossession. If either of these last two reasons applies to you, time is of the essence for your case, and it is recommended that you contact a bankruptcy attorney as soon as possible in order to get the ball rolling.
Furthermore, this list of reasons is not exhaustive. You are able to input additional reasons why you feel you might be a good candidate for filing bankruptcy. Keep your reasons short, as you will be able to give a more thorough explanation for your particular financial situation when giving your case explanation.
Indicate here whether your debt is personal, from a business you own, or both. If part or all of your debt is business debt, then be sure to include the related debts in your answers to the remaining questions.
When entering your case explanation, this is your chance to be more descriptive as to how you found yourself in your current financial situation. Briefly explain your income and major expenses. For instance, indicate whether you are responsible for supporting any dependents or whether someone in the family has suffered a major health problem. Then explain how you acquired any large debts that you owe.
Next, you will need to estimate the amount of each type of debt that you owe. Try to be as accurate as possible. It may be a good idea to obtain a recent credit report for this step.
"Personal loan debt" includes all loans for which you are personally liable for repayment. If the debt was acquired in your capacity as a sole proprietor or as a partner in a partnership, then chances are you are personally liable for such debt.
"Legal judgment debt" is any debt you owe as a result of suffering an adverse legal judgment. For instance, if you were found liable in civil court for causing someone's injury and are therefore liable for paying his or her medical expenses, then include the judgment amount here.
Indicate whether or not you are responsible for repaying any mortgages or auto loans. If so, state whether you are up to date on the payments. If you plan on keeping your home or car, then it is recommended that you continue to make the required payments. However, you may be able to renegotiate your payments. For instance, the Home Affordable Modification Program (HAMP) is a government program designed to help homeowners facing foreclosure. Depending on your situation, this legislation may require your lender to modify your repayment plan.
In this section, try to be as accurate as possible in estimating your current monthly income and expenses. It may be helpful to use the average of your monthly income and expenses over the past three to six months in order to give you a better picture of your financial circumstances.
Next you will itemize all your valuable possessions. "Personal property" includes any assets you own besides real estate and includes things such as cash on hand, bank accounts, and retirement accounts.
Once you have completed all the steps, you will be able to use your bankruptcy worksheet as a snapshot of your current financial situation. This can be helpful when combined with online tools or an experienced bankruptcy expert who can evaluate your options to determine whether bankruptcy is right for you. However, as a general rule of thumb, bankruptcy is often a good idea when the value of your total debt is more than the total value of your assets. If you fall into this category, then it may be time to get serious about filing bankruptcy.
A bankruptcy worksheet is used to help you to determine if filing for bankruptcy is the best option for you based on your financial situation. Before you even consider filing for bankruptcy, you need to use a bankruptcy worksheet so you can ensure you are making the right decision in terms of your finances. To help you to create a bankruptcy worksheet, be sure to check out this guide that will walk you through everything that you should consider, including the following:
In order to get the most out of your bankruptcy worksheet, you have to be very honest with yourself and take a detailed look at your finances. There are several steps you will need to go through. Use these steps to get the most out of your bankruptcy worksheet.
Chapter 13 bankruptcy is typically the bankruptcy option people turn to if they do not qualify for Chapter 7 bankruptcy. This type of bankruptcy is not designed to completely wipe out debt. Instead, it is the type of bankruptcy that allows the debtor to create a feasible plan to repay all of his or her debt. Debts are often repaid at only pennies on the dollar—meaning that only a fraction of the outstanding debt will ever need to be repaid.
The idea is that the debtors will propose plans to their creditors to repay all of the debt using an installment plan that will last anywhere between three to five years. The time frame is set at three years if the current monthly income of the debtor is set to less than the applicable state median set forth by law. However, the court can always approve longer repayment terms if there is a good cause for it. No plans are allowed to last longer than five years.
During this time frame, all creditors are prohibited from starting or continuing collection efforts against the debtor. For this type of bankruptcy, it is not required that you sell your assets in order to pay off your debt. This aspect often makes Chapter 13 bankruptcy very appealing. There is no income limit on this type of bankruptcy, but you are limited to the amount of debt you can file under Chapter 13 bankruptcy. Currently, the debt limits are set at $394,725 of unsecured debt and/or $1,184,200 of secured debt. If you have debt that is more than these amounts, you are not eligible to file for Chapter 13 bankruptcy.
Chapter 7 bankruptcy is a type of bankruptcy that involves a process for debtors to eliminate most of their debts. Through the process, debtors have the opportunity to start over with a clean slate in terms of their debt and credit. It is essentially a process that allows people to start over financially once it has been completed.
However, it is not always the ideal option and depends on people’s individual circumstances. This is due to the fact that in order to remove debts, many of the debtor’s assets must be sold, if possible. Assets are used to pay for as much of the debt as possible. In the end, the debtor is freed from debts even if they have not been paid in full through the sale of their assets.
As of 2005, debtors must pass the "means" test in order to qualify for Chapter 7 bankruptcy. The "means" test is used to determine whether your income is low enough relative to your necessary expenses to qualify for Chapter 7 bankruptcy. The test is a specific formula designed to prevent high-income earners from taking advantage of the system. The idea behind it is to ensure that anyone who files for Chapter 7 bankruptcy genuinely needs assistance to pay off his or her debts.
The formula used takes the current income of the potential filer and then deducts monthly expenses to determine disposable income. The higher your disposable income, the less likely you will qualify for Chapter 7 bankruptcy. If you make too much money, you cannot use Chapter 7 bankruptcy to completely wipe out your debt, but you do still have the option of filing under Chapter 13 bankruptcy.
There are many key differences between Chapter 7 and Chapter 13 bankruptcy that can help you determine which one may be the better option for your needs. These are some of the key differences between the two:
The steps for filing for bankruptcy vary depending on the type of bankruptcy you are interested in and some additional steps you may have to take for each.
Steps for Filing for Chapter 7 Bankruptcy
Follow these steps for Chapter 7 bankruptcy:
Steps for Filing for Chapter 13 Bankruptcy
Follow these steps for Chapter 13 bankruptcy:
Before you file for bankruptcy, it is important to understand what it can and cannot do for your debt situation. There are some debts that are covered in a bankruptcy as well as some that cannot be included. These are some of the types of debts you can include:
These are some of the types of debts that cannot be included:
There are both positive and negative consequences of bankruptcy. These are just a few of the impacts of bankruptcy that you can expect:
As you complete your bankruptcy worksheet, you will need to collect and provide estimates for the following information:
Use the information you collected to complete the bankruptcy worksheet. We make this easy by guiding you each step of the way and helping you to customize your document to match your specific needs. The questions and information we present to you dynamically change depending on your answers and the state selected.
It is always important to read your document thoroughly to ensure it matches your needs and is free of errors and omissions. After completing the questionnaire, you can make textual changes to your document by downloading it in Microsoft Word. If no changes are needed, you can simply download the PDF version and sign. These downloads are available by navigating to the Documents section of your account dashboard.
Once you have completed all the steps, you will be able to use your worksheet as a snapshot of your current financial situation. This can be helpful when combined with online tools or an experienced bankruptcy expert who can evaluate your options to determine whether bankruptcy is right for you. However, as a general rule of thumb, bankruptcy is often a good idea when the value of your total debt is more than the total value of your assets. If you fall into this category, then it may be time to get serious about filing for bankruptcy.
Discuss your options with a bankruptcy attorney or experienced professional. Due to the complexity of filing for bankruptcy, most people decide to hire an attorney to ensure the process goes smoothly. However, it is perfectly legal to file on your own (called filing "pro se"), and this may save you money. If you choose this option, be sure to call or visit the bankruptcy court in your district to learn about the process and other helpful tips. Take care to stay very organized through the process and complete any requirements the court may ask of you.