Filing a Chapter 7 Bankruptcy

Posted about 4 years ago. 1 helpful vote



File your tax returns

To gain the benefit of bankruptcy protection the courts reasonably expect you to meet your obligation as a citizen and file your tax returns. There is no requirement that the taxes have been paid, merely that the returns are filed. If not, it is almost certain your case will be dismissed without a discharge.


Complete the mandatory credit counseling

No matter who your attorney is the law requires you to complete a mandatory bankruptcy credit counseling course from an authorized provider before you file. You can get this counseling many places such as or It is possible to file without this certificate but you run the risk of the court dismissing your case.


List all creditors

By creditors I mean anyone you owe money to, anyone who thinks you owe them money(even if they are wrong), anyone who you used to owe money to but they forgave the debt or the Statute of Limitations have passed. Please list the Doctor who said "don't worry about the bill". Please list the former landlord who accused you of damaging the apartment. Please list the customer who threatened to sue you six months ago but you haven't heard from since. Please list your vendors or business partners who you know would never sue you. PLEASE list them all!


List all assets

Please give your attorney a list of everything you own. List every item where you are on the title and/or the loan. Did you co-sign your son's car? List it. Are you on moms bank account, just for convenience? List it, with an explanation. The trustees are usually understanding about that. List the date you purchased each item and its value in todays market if you had to sell quickly. You are not appraising these products for your insurance. Do not overestimate their value. Absolutely be honest but think it through. Would you really get $9,000.00 for your wedding ring? If Ebay and your local pawn shop say it's selling for $2,500 the value is $2,500.


Remove all money from Wells Fargo

I single out Wells Fargo because Wells Fargo freezes all funds when they learn of a bankruptcy. They do this when the funds are exempt, they do this when they have been found by a court to be in violation of the Federal Bankruptcy Code. The Ninth Circuit Bankruptcy Appellate Panel held that Wells Fargo's national policy of placing an administrative freeze on debtors' accounts when they file a bankruptcy petition violates the automatic stay by exercising control over property of the debtor's bankruptcy estate in violation of Bankruptcy Code section 363(a)(3). Wells Fargo's response was that they will continue to freeze funds while they appeal. Take your money out of Wells Fargo before you file. In fact a general rule of thumb would be, in my humble opinion, don't do business with Wells Fargo.


Yes they can take your money if you give it to them

"I am defaulting on a $10,000 Citibank Visa. Can they take the $2,000 in my Citibank savings account?" -- YES!. I am discharging NSF and Late Fees at Chase Bank but my direct deposit still deposits to that account and they took my paycheck. Can I get my money back?" - maybe through divine intervention. If you owe money to Chase remove your funds from Chase. If you owe money to Citibank remove your funds from Citibank. Remove your funds from Wells Fargo. I am amazed this needs to be in here but based on my professional experience it does.


Finish your loan modification first - if possible

If you are behind on your mortgage and you file a Chapter 7 the likely result is foreclosure. For some reason the lenders love hardship stories but not bankruptcy. Oddly discharging all of your credit cards and improving your ability to pay your mortgage causes most lenders to cancel your loan modifcation trial and force you to start over - or foreclose. Unless you are being sued or are under some other pressure to file - do the loan modification first. Because of recent changes in the laws and several California State Bar interpretations most lawyers really don't want to be involved in your loan modication. One of the most populer questions is what happens to my loan mod if I file bankruptcy? If your attorney is honest the answer probably goes like this: The lenders are not consistent, not even internally. They have high turnover and are often poorly trained. I don't know what will happen but probably nothing good.

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