This will continue our series on bankruptcy schedules. In a prior blog post, we looked at Schedule A/B. Today, our focus will be on Schedule C related to the claiming of exemptions.
In a bankruptcy case, Schedule C is an important form that allows debtors to claim exemptions for certain property. Exemptions are legal provisions that allow debtors to protect certain assets from being seized and sold by the bankruptcy trustee to pay off creditors. In this blog post, we’ll go over the basics of completing Schedule C in a bankruptcy case.
Step 1: Understand Your State’s Exemptions
Before you can start filling out Schedule C, you need to understand the exemptions that are available to you in your state. Each state has its own set of exemptions, and some states allow debtors to choose between state and federal exemptions. Make sure to consult with a bankruptcy attorney to understand your state’s exemptions and which ones may be applicable to your case.
Step 2: Identify Property to Claim as Exempt
Once you’ve identified the exemptions available to you, the next step is to identify the property that you want to claim as exempt. This can include things like your home, car, personal property, and other assets that are protected by state or federal exemptions. This includes things like protected accounts like IRAs and 401(k), along with a variety of other items that varies by state.
The issue of whether a debtor is a “consumer debtor” or a “business debtor” occasionally comes up in an individual debtor’s bankruptcy case. First of all, why does it matter? And the answer is that, in certain cases, this determination can make all the difference in determining whether the debtor can ultimately get a chapter 7 discharge.
The issue revolves around the “means test” in bankruptcy. Simply put, the means test looks at a debtor’s income to determine whether that particular debtor’s income is above or below the “mean” income for other debtors in a similar situation – i.e., the same geographic region and the same number of dependents.
Life happens! Divorce. Job loss. Serious illness. These are life events that can cause financial hardship and force good honest folks to file for bankruptcy. Those who have struggled with an endless stream of expenses that never end often owe income taxes that just will not let them be.
Taxes are a part of life. This is true after bankruptcy. Before filing your income tax returns when there has been a bankruptcy, it’s important to know things. Many people have either partial or incorrect information whether and how bankruptcy could help.
The following information may help you get a few things straight and find the best choice for you:
Types of Bankruptcies
Chapter 7. In a Chapter 7 bankruptcy, all of the debtor’s nonexempt property is liquidated and the proceeds distributed to creditors. Individual debtors receive a discharge of personal liability for pre-petition debts, subject to exceptions in §523, whether or not a proof of claim was filed or the debt was allowed under §502.727(b). Read More