SPECIFIC ISSUES IN COMPLETING YOUR QUESTIONNAIRE
Exempt Personal Property
Under the Florida Constitution you are allowed to exempt and keep in a Chapter 7 liquidation bankruptcy $1000 of personal assets ($2,000 for a joint Petition).
Value of Personal Property
The bankruptcy court uses “forced sale” values in the valuation of personal assets for the purposes of this exemption limit. Therefore, when you complete your Questionnaire you should value your assets based on what you could expect to receive for the assets at a fair market value.
Verification of Values
Only you know the condition and value of your assets. Therefore, your bankruptcy attorney will rely on values you submit on your Questionnaire, and your attorney will not change your values. The Trustee has the authority to send an appraiser to your house to value your property. If the Trustee orders an appraisal of your assets, the appraiser will contact you to make an appointment to come to your house.
Liquidation Test
One of the requirements under Chapter 13 bankruptcy is that the creditors are paid through your Chapter 13 Plan at least as much money they would have received if you filed a Chapter 7 petition. The amount payable to creditors in Chapter 7 depends largely on the value of your assets and your available exemptions. Therefore, it is important that you accurately list and provide a current fair market value of all of your assets in a Chapter 13 case, even though the purpose of a Chapter 13 is to avoid having you sell any of those assets.
Income and Expenses
In Chapter 13 cases, the income and expense statement should be as accurate as possible because the amount of your net monthly income will determine your ability to make monthly payments to the Chapter 13 Trustee. The law requires that you pay all of your “disposable income” into the Chapter 13 Plan. Disposable income is the amount of income you have at the end of the month after paying reasonable expenses. If you list expenses for luxury items, the Trustee may require that you liquidate these luxury items unless your Plan provides for the repayment in full of all creditors (secured and unsecured). The Trustee requires that you submit your income tax returns for the past three years in order to substantiate your income and to show that all your disposable income is being applied to the repayment of your creditors.
Federal Taxes and Student Loans
Income taxes and student loans are considered priority debts. Priority debts must be paid in full during your Chapter 13 bankruptcy. One advantage of filing Chapter 13 bankruptcy is that income taxes owed the IRS can be paid without further penalty or interest which would otherwise accrue outside bankruptcy. Your bankruptcy attorney may not practice tax law. If you are unsure when certain income taxes were due and payable you must contact the IRS or your tax advisor or a tax attorney.
Tax Refunds
Income tax refunds are assets, and you should list a refund you expect to receive from a prior year’s tax withholding. During your Chapter 13 Plan, you will be required to surrender any tax refunds to the Chapter 13 Trustee.
Tax Returns
In a Chapter 13 case, you must timely file all income tax returns due before and after the filing date. Failure to file any tax return is grounds for dismissal.
Value of Vehicles
Any equity you have in a car is considered personal property and may be counted toward your $1,000 overall personal property exemption allowance (see b. below). If you own your car free and clear, the entire car value is equity. If you have a car loan, only the excess of the car’s trade-in value over the current loan balance is considered equity. Most people with car loans owe more than their car is worth. Thus, they have no equity in their car. To determine the value of cars, most Trustees rely on NADA values and apply the average of the wholesale and retail value. You may want to obtain your own appraisal of the car’s value if you believe it is worth less than NADA book value. Your bankruptcy attorney will rely upon the car value you provide in your Questionnaire when the attorney prepares your petition. If you are unsure of your car’s value, you can obtain a value at http://www.nada.com or http://www.kbb.com.
Additional Exemption for Automobile
Florida Statutes 222.25 gives you a $1000 extra exemption for a car in addition to your $1,000 personal property exemption. If married, you are allowed $1,000 on each car, up to two cars.
Car Lease
If you lease a car, you do not list the car as your personal property. Be sure to list your car lease in the Questionnaire under Executory Contracts and list the leasing company as an unsecured creditor.
Separated Spouses Filing Jointly
If you and your spouse are separated and filing jointly, each spouse should complete separate questionnaire sections for Schedule A and B (real and personal property) and Schedule J (expenses).
Contact a Chapter 13 Lawyer at Dominguez & Associates, P.A.
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