To file for bankruptcy, a person or business can start a bankruptcy case by filing a petition with the bankruptcy court. If a client has retained a lawyer, the lawyer will be responsible for drafting and filing the petition with the court and all subsequent filings and follow up.
Along with the petition, the client or clients are required to file sworn statements that support the petition. These statements must list the following:
– All assets owned.
– The income of the person or persons filing for bankruptcy.
-The expenses for the debtor and his/her family
– All liabilities owed to all creditors.
– The names and addresses of every creditor and the amount owed to each one.
The bankruptcy regulations set forth the types of assets that are not subject to liquidation. In addition to the “homestead” type of exemption referenced above, there are exemptions for automobiles, tools of the trade, household goods, retirement assets, jewelry, as well as many others. It is important to fully disclose your assets to your lawyer so that the proper exemptions can be claimed.
Once the petition is completed and accepted for filing by the court, the law provides for a “stay” of further attempts to collect a debt from the person or the company who has filed the petition. The “stay” prevents creditors from continuing or initiating debt-collection processes such as lawsuits, wage garnishments or phone calls demanding payment.