Thinking about filing Bankruptcy in Michigan? What do you need to list or disclose in your Michigan Bankruptcy Filing?
If your considering filing a personal bankruptcy case in Michigan, or anywhere else for that matter, one of the most important things you need to know is that you as the debtor (the person or married couple filing the case), need to list and disclose (tell your lawyer, your bankruptcy Trustee, Judge etc.) in your bankruptcy petition, schedules and
statement of financial affairs (the bankruptcy paperwork that you fill out and file), ALL of your assets. This means that pretty much everything you own or have any interest in, whether you think it has value or not, must be brought to the Trustee’s attention. I am a bankruptcy attorney in Detroit Michigan and have seen many people who try to file on their own and unfortunately end up creating a big mess for themselves. Part of my job as your bankruptcy attorney is to make sure you are playing by the rules and to assist you in filing out the bankruptcy petition accurately. Failure to list an asset that you knew about and intentionally concealed, can cause serious problems including denial of your bankruptcy discharge, loss of the asset, court fines and possibly jail in extreme cases of bankruptcy fraud. It’s never too late to disclose an asset. If you forgot to list it in your bankruptcy paperwork and you remember it later, let your attorney know immediately so that he or she can let the Trustee know, and you usually will not have a problem.
Many people do not even think about filing bankruptcy until a creditor is taking serious action against them including filing a collection lawsuit or, if they have already obtained a judgment, exercising on that judgment by wage garnishment, tax refund garnishment or seizure of bank accounts or personal assets. When a judgment creditor starts taking 25% of a person’s wages or a court officer shows up and takes a vehicle, people want immediate help. Filing bankruptcy will immediately stop the above actions and can even force the court officer to release the vehicle.
Filing a bankruptcy is very powerful and will result in a court order that prevents your creditors from collecting against you for most of your debts, forever. To be granted a discharge in bankruptcy court requires certain rules be followed by the debtor seeking the bankruptcy discharge. The first and foremost rule is that you be honest when you prepare your bankruptcy petition and schedules. Bankruptcy is basically an exchange. You agree to give up any non-exempt assets in exchange for getting your debts wiped out. In the vast majority of the Chapter 7 bankruptcy cases that I handle, there are no non-exempt assets, meaning all of the assets can be protected with the bankruptcy laws that allow you to protect certain property as the basis of your fresh start. The key is that these assets must be disclosed and properly exempted. Some people are tempted to hide assets out of fear that they may be taken by the bankruptcy trustee. This is never a good idea because a). The bankruptcy trustee will usually find out about it anyways and b). The asset more than likely could have been claimed as exempt from distribution to creditors anyhow. The moment a bankruptcy case is filed, either under Chapter 13 bankruptcy or Chapter 7, a “bankruptcy estate” is created, which according to the bankruptcy code, consists of “all legal or equitable
interests of the debtor in property as of the commencement of the case.” What does this mean? It basically means that anything that you own or have any type of interest in, comes into the bankruptcy estate. In addition to listing all real estate you may own, a bankruptcy petition has specific questions regarding all types of personal property you may own including (generally) :
What do I need to list on my bankruptcy?
- Cash on hand (how much money do you have on hand (in your pocket, sock drawer or cookie jar).
- Bank accounts (list all bank accounts your name is on, checking, savings, certificates of deposit, etc.) Even if your name is on an elderly parent’s bank account or your kid’s checking because you help them manage their finances, list it).
- Security deposits. (deposits that you may have with a landlord or utility such as DTE Energy).
- Household goods and furnishings (Don’t be too general, but don’t be too specific either. There is no need to count all your forks, but do count how many computers you may own.)
- Collections (books, stamp, coin and art collections etc. should be disclosed).
- Wearing apparel. (All clothing and accessories must be listed.)
- Furs and jewelry. ( Be specific here. If you have lots of jewelry, consider having it appraised and supply the appraisal to the bankruptcy trustee.)
- Guns and hobby equipment. (be specific).
- Insurance policies. (Many people have a term life insurance policy through work or a small burial policy. If you have a whole life policy with a cash surrender value, be sure to indicate that value here.)
- Annuities (list the present value).
- Educational IRA (If you have a 529 plan for your child for example, list it here.)
- IRA, pension or profit sharing plans (give details).
- Stock and interest in business ( If you own stocks, list the number of shares and present value. If you own a small business, list it here.)
- Bonds (government bonds such as US Savings bonds or corporate bonds).
- Accounts receivable (if you have a business, list any money owed to the business).
- Alimony, maintenance, child support, property settlements. (even if you think you’ll never collect it).
- Debts owed to the debtor including tax refunds (disclose tax refunds you expect and if anyone owes you a debt).
- Future interests, life estates etc.
- Interests in estate of a decedent, life insurance, trust (Did someone die and leave you an inheritance or life insurance?)
- Contingent and unliquidated claims of every nature. (Do you think you have a claim against and individual or company for some harm they may have done to you such as a personal injury or medical malpractice claim? If so, this is a good place to list it.)
- Patents, copyrights and other intellectual property.
- Licenses, franchises, other intangibles. (liquor licenses, cab license, to name a few).
- Customer lists.
- Automobiles, trucks, trailers, and other vehicles and accessories. (Be sure to list your car and your children’s car if your name is on it.)
- Boats, motors and accessories.
- Aircraft and accessories.
- Office equipment, furnishings and supplies.
- Machinery, fixtures, equipment and supplies used in business.
- Animals. (Yes, you need to list your cat and dog, but I have never had a bankruptcy trustee try to take family pets.)
- Crops. (generally applies to farmers).
- Farming equipment.
- Farm supplies, etc.
- Other personal property of any kind not already listed. Itemize. (This is kind of a catchall category in which you would list anything that doesn’t fit into one of the above.)
So, as you can see, there are 35 questions that are asked in every bankruptcy case and that must be answered correctly and you must swear to the accuracy of the papers you submit to the bankruptcy court under penalty of perjury. Not only must you answer the questions by listing the property or asset, but you must do your best to place a value on it. These tasks can be difficult and hiring a good Michigan bankruptcy attorney is well worth the nominal attorney fee to help you through the complex bankruptcy court system. I have been a bankruptcy attorney in Michigan for over 20 years and have filed over 10,000 bankruptcy cases in the Detroit bankruptcy court. I give free in person consultations and will happily answer any bankruptcy questions you may have. Call me at 313-962-4656.