Filing for California bankruptcy is the right way for a person to take charge of their financial life. However, the process is not always easy, especially when international assets are involved. You need good advice, guidance, and help to ensure that you are doing the right thing for the process to be a success. Many people living in the country today have assets in other countries other than the U.S. That will be true most especially for people who migrated into the country. International assets count as much as local assets when it comes to bankruptcy.
If therefore, you are planning to file for bankruptcy and you have some international assets, it is advisable to get in touch with a competent bankruptcy attorney. At San Diego Bankruptcy Attorney, bankruptcy cases involving foreign assets are some of the cases we deal with. Get in touch with us if in San Diego, and let us guide you through the process.
California Bankruptcy Laws
Bankruptcy is the legal process through which a person that is unable to pay their bills can enjoy a fresh economic start. In the United States, every person has a right to apply for bankruptcy, and this right is provided under Federal Laws. When a person files for bankruptcy, all their creditors are stopped from seeking payments from them, maybe until the person can sort out his/her debts legally. California bankruptcy opens up several possibilities for a person who is not financially able to pay their bills. These are, for instance:
- It eliminates the person's legal responsibility to pay for most or all their debts. Bankruptcy discharges your debts so that you can have a fresh economic start.
- It stops foreclosure on the person's mobile home or house. Bankruptcy allows you a chance to catch up on all the missed payments.
- It will stop repossession of your car and other property, and even force creditors to return any property they had repossessed.
- Bankruptcy will stop data collection harassment, wage garnishment and similar actions by creditors in their effort to collect their debt
- It will prevent any termination or utility service
- It will allow the person to challenge claims by creditors who could have defrauded them or done anything else illegal to collect more money than you owe
In California, there are four types of bankruptcy that a person can file. These are:
Chapter 7: This is the straightforward type of California bankruptcy. It requires a person to give up on any property that exceeds a specific limit. These properties, also called exemptions, are then sold to raise money to pay your creditors.
Chapter 11: This type of California bankruptcy is what is referred to as reorganization. it is the kind of bankruptcy that is used by companies and also a few debtors whose credits are relatively large
Chapter 12: this is the kind of California bankruptcy that is set aside for families that are into farming
Chapter 13: This type is also called debt adjustment. Through this type of bankruptcy, a debtor is required to file a plan through which they will pay all their obligations or parts of the debt from their current income
Majority of people who file for bankruptcy in the state of California file either Chapter 13 or Chapter 7.
Signs You Are Heading Towards Bankruptcy
No one is usually well prepared for financial difficulties, and when they come, a person gets lost into what they need to do to get out of debt and sustain their life. Deciding to file for bankruptcy is determined by several factors, which are usually unique to the person's specific situation. For some people, applying for bankruptcy is the only option they have to achieve debt relief. For others, consolidating a loan could be more beneficial for their situation.
Before making the final decision, it is advisable to find the best legal help you can get. A competent bankruptcy attorney will advise you on the best solution or your financial situation, and then allow you to make the final decision. Some of the things that could indicate that you are heading straight to bankruptcy include:
- You are finding it hard to save money
- You are paying off an unsecured loan with a home equity loan
- Data collectors have already started making contact with you
- You have reached your credit cards limit or have exceeded the limits
- You have acquired a loan with a high interest
- You do not qualify for debt management programs or loan consolidation
- You are unable to pay part of your debts with your current income
Qualifications for California Bankruptcy
Requirements for California bankruptcy mainly depend on the kind of bankruptcy you are filing and your prevailing financial circumstances. The law requires that anyone filing for California bankruptcy must complete a qualification test to determine the best type of bankruptcy they should apply.
The first is the bankruptcy means test, which is meant to prevent high-income earners from applying for chapter 7 bankruptcies when they can qualify for Chapter 13. The law does not allow anyone that can pay off their creditors from applying to erase all their debts. If the debtor is a high-income earner, or they have enough assets to clear some or all of their debts, they will apply for Chapter 13 bankruptcy.
Losing some valuable assets is one of the hardest parts of bankruptcy, though it could help alleviate some of the debts. If they are not willing to hand over some of their assets to the bankruptcy team, they can offload them in person. It means that you can sell off some of the assets and clear off some debts. This may even get you a better deal than what bankruptcy trustees can get.
However, selling off your assets, then applying for bankruptcy can be seen as an attempt to defraud the court or to hide some of the assets. This could affect your case and could see you losing some of the exempt assets as the court try to recover as much of your assets as they could to pay off your debts.
The best thing is to disclose all your assets and see what happens as you get a new start of your life.
International Assets and California Bankruptcy
As mentioned above, many people living in the country today have foreign assets. If you immigrated to the U.S or you are an investor, there are high chances that you have some assets out there. Those assets play a significant role in matters concerning bankruptcy law. The main question most people who have assets in foreign lands ask is whether or not they are required to disclose those assets to a bankruptcy court.
The answer to that is, and will always be yes. It is crucial for anyone that is applying for bankruptcy to disclose any foreign assets they might have, even if those assets are exempt. Some of the foreign assets the bankruptcy court would like to know about include bank accounts, homes, vehicles, and any other asset that is not in America.
The bankruptcy court can easily find that information out, maybe through bank records, tax returns, and official foreign documents. Sometimes people within our lives disclose such valuable information to the court, out of jealousy or malice. If this happens, the court might feel that you are not being honest with it and could affect your bankruptcy case.
If a person is filing either a Chapter 7 or Chapter 13 bankruptcy, they have already signed off on their petition, and even swore that the information they have provided in the application is correct and true. If you fail to disclose foreign assets to the court or your bankruptcy attorney, you risk having your petition dismissed. In addition to that, you may face criminal prosecution for the offense of perjury. If you are convicted, you could spend up to five years behind bars, and be required to pay a fine of $250,000 at a maximum.
When it comes to bankruptcy cases, honesty will grant you the fresh financial start you are seeking, but dishonesty could land you in prison.
Mandatory Disclosure in California Bankruptcy Cases
One of the requirements of filing for California bankruptcy in California is transparency. The law requires anyone that is applying for bankruptcy to list all their income, assets, and debts if they want their debts to be discharged. A qualified bankruptcy attorney can advise you on what mandatory disclosure entails, its benefits, and what you stand to lose if you are dishonest.
Mandatory disclosure is intended to increase transparency when a person is filing for either Chapter 7 or Chapter 13 bankruptcies. Remember that trustees or the court can easily find out if you are honest or not by reviewing your disclosures and doing their background checks. Many people feel that it will be too much work for the court to dig information in foreign countries for assets they could possess. Even if this is the case, things can get worse for you if the court got information about an asset you might be hiding from it.
There are several ways in which debtors try to hide assets from bankruptcy courts. A person can lie about owning a particular asset. Other people give the asset to another person for hold. The last group of people are those that transfer the assets they own to other people's names. Sometimes a person will create a mortgage or lien to make their asset seem invaluable. This is also another way of hiding the asset from the bankruptcy court. Bankruptcy trustees work hard to locate all the properties owned by the debtor regardless of where the asset is and how the owner has tried to hide it.
These are the mandatory disclosures required by the bankruptcy court:
- The debtor’s identifying information
- Property under their ownership
- Assets they claim as exempt
- Their financial transactions and situations
- Their income and expenses
- Their debts
- Their contracts, co-debtors, and leases
How do trustees find discrepancies in the mandatory disclosure?
Bankruptcy trustees could either be individuals or entities. Their main duty is to represent the debtor's estate in an insolvency case. Trustees are usually assigned this duty by the Trustees Program of the United States. Their role includes evaluating your demands and them making recommendations according to federal laws on bankruptcy. The judge will always have more authority over the outcome of your case, including the distribution of your assets. The trustee handling your case cannot do so unless they gain the approval of the bankruptcy court.
Once they have been allocated to your case, bankruptcy trustees will work hard to protect the interest of your creditors. For that reason, they will review all the paperwork you have filed with the court, comparing it to relevant documents such as paycheck stubs, tax returns as well as bank statements. As your case progresses, you will be required to appear in a 341 meeting at least once, with the creditors. Trustees will use the meeting to verify the information you have disclosed. They will also ask whether you have included your entire income as well as listed all the assets and properties you own, including international assets.
Note that trustees are highly skilled and will, therefore, identify any omissions in the bankruptcy paperwork. Again, they will always be on the lookout for signs that you could be hiding assets. Just to be sure, trustees can do the following to find any hidden information:
- They can review your debts
- They can conduct searches through public records
- Check your bank records and tax returns
- Review your payroll slips. The review will show deposits you have made you’re your retirement accounts or any bank account that is unlisted
- Commission searches for online assets
- Gather reports from your friends, business partners, coworkers or former spouses
What happens if trustees suspect fraud?
As mentioned above, consequences for not disclosing all your assets in a California bankruptcy case can be grave. If trustees assigned to your case suspect fraud, they will pursue a lawsuit against you. The suit will be in the form of a trial and will be filed in a county bankruptcy court. The trustees will be required to prove that you had intended to defraud, delay or deter creditors from recovering their debts. If this part of your case is demonstrated, the court will proceed to deny your bankruptcy request, and you need to discharge your debts.
If the trustees do not have enough evidence to prove that you were intending to defraud, delay, or deter creditors from recovering their debts, they will request the court for Bankruptcy Rule 2004 exam. This rule will allow the trustees to examine problems that are affecting the management of your estate. Through this exam, trustees should be able to review your property liabilities, acts, and financial situation.
Consequences of Not Disclosing International Assets on Bankruptcy Paperwork
Having assets does not automatically mean that a person can pay back all their debts. Some people have enough assets but are still in debt. However, people intending to defraud the bankruptcy court do not understand this. That is why they will try to hide some of their assets, hoping that they will qualify for a more straightforward bankruptcy, say chapter 7 or chapter 13. Chances of succeeding in hiding assets from bankruptcy paperwork are usually very slim. On top of your lies being discovered, you are likely to face the following penalties:
You risk losing your discharge: After finding out that you have hidden some assets, the trustee could ask the court to revoke or take back your discharge. Trustees are allowed by bankruptcy courts to take this course before and after the closure of your case. Your discharge could also be revoked a year after your debts were discharged
You will no longer be able to discharge your debts: the court can waive your right to bankruptcy once it is established that you hid some assets. Afterward, the asset you had protected will be handed over to the trustee, who can sell it off to pay off some of your debts. The court may not discharge other debts you still have, and so, you may have to find other means of settling them
You risk facing criminal charges: as mentioned above, hiding assets from a bankruptcy court is considered bankruptcy fraud in the state of California. Failing to name all your assets is charged as perjury. The penalties are severe and may include incarceration for a period of up to twenty years.
Find a San Diego Bankruptcy Attorney Near Me
Matters concerning bankruptcy in California are a little complicated. You need expert advice to be able to understand the requirements and the process. Things can get a bit more complicated when you have some international assets; you are not sure whether or not to list. That is why the help of a bankruptcy attorney is needed. At San Diego Bankruptcy Attorney, we have a team of skilled and experienced bankruptcy attorneys that are ready to take you through the entire process. Call us at 619-488-6168 if you are in San Diego, and let us help you avoid a costly mistake.