A bankruptcy attorney plays an important role in your bankruptcy case. Part of their job is to review your submitted records and schedules with several goals in mind. What are these? Here are three of the main things your attorney will be looking for.
1. Nonexempt Property
Bankruptcy law allows debtors to exempt some property from liquidation or repayment. However, these exemptions have limits. The attorney will examine your property to ensure that what you are claiming an exemption on actually qualifies for one.
For instance, you may claim an exemption for the equity you have in your vehicle. But a debtor who claims an unusually low market value for that vehicle may be using this to keep the equity under the exemption limit. The attorney may verify the valuation.
2. Reversible Transactions
The moves you make before bankruptcy affect your case. The most common effects come from transactions you made which moved money or paid certain creditors ahead of others. The attorney may be able to request some of this money back from recipients to benefit the bankruptcy estate.
Perhaps you had borrowed money from your sibling but didn't want them to end up losing money if you declared bankruptcy. So you paid them back before filing. Depending on when this transaction took place, the court may ask the sibling for that money back and treat them as a regular creditor.
3. Hidden Assets
Finally, the attorney will look for indications that the debtor is trying to hide something from the court so that it won't be liquidated. These assets can take many forms, both tangible and intangible. It could include indications that you own real estate in other jurisdictions, that you have an unlisted bank or investment account, that you haven't declared a tax refund, or that you've moved cash to a temporary holding place.
There can sometimes be a strong temptation to attempt to hide assets in order to protect them, but the attorney knows what to look for. If you know of anything that may seem questionable, it's best to explain it up front rather than wait for the attorney to find it.
Where to Start
How can you prepare documents and backup information for the attorney so that nothing is amiss? Start by meeting with a bankruptcy attorney in your state today. With their guidance, you'll be ready to pass this scrutiny with flying colors.