In the course of my 35 years of bankruptcy practice, I find that there are certain questions or issues that seem to be common concerns of those considering a bankruptcy filing. I also find that prospective clients arrive with preconceived notions about the answers to these questions, or have received bad information from unreliable sources. Frighteningly, this bad information often comes from inexperienced bankruptcy practitioners.
In this first of a multi-part series, I will present those common questions. I will also provide multiple-choice answers. Test yourself to see if you can figure out the correct answer, or cheat and see them at the end of this post.
Question 1: I am told that if there is equity in my car, I might lose my car in a bankruptcy filing. What can I do to get around this?
1) Grant a lien interest to your father
2) Use the excess of any exemption available to you, even if it doesn’t directly apply to an automobile
3) Either of the above
4) None of the above
Question 2: I have a valuable diamond ring. I’m told that I might lose this in a bankruptcy proceeding. Can I just give it to my daughter before I file?
1) Yes, but you must disclose the gift to avoid a denial of your discharge
2) Yes, but you should not disclose the ring to your lawyer or on your schedules
3) Yes, but you could seek a different lawyer and not disclose the existence of the ring to that lawyer
4) None of the above
Question 3: I owe back taxes. Can they be discharged in a bankruptcy?
1) Never
2) It solely depends on the timing of the filing of your case
3) It depends on the timing of the filing of your case, the timing of your filing, and the type of taxes involved
4) None of the above
Question 4: I am expecting a tax refund. I am also planning to file a bankruptcy. Which of the following can I do?
1) Spend it after I file as long as it is used for ordinary expenses
2) Spend it only before I file and then only in a limited fashion
3) Spend it as long as I plan to declare it as exempt on my bankruptcy schedules
4) None of the above
Question 5: I run a small business. If I file personal bankruptcy, which of the following is most true:
1) The business will not be involved
2) The business will not be involved if I list it as having no value
3) My interest in the business is property of the bankruptcy estate and I will need to explore the implications with counsel
4) My business will be immediately closed
In future posts, I will discuss more common questions. For a list of Board Certified Bankruptcy practitioners in your area, go to abiworld.org.
