The first step in a bankruptcy filing is to determine the debtor's income in relation to the Current Monthly Income for your state. Assuming the debtor is above that, the more complicated Means Test must be performed. The outcome of that test will determine either if the debtor qualifies for a Chapter 7 bankruptcy or it will calculate the amount of money the debtor will need to pay to unsecured creditors in a Chapter 13 bankruptcy. The bankruptcy code says specifically that social security income need not be included in the calculation of Current Monthly Income. And therefore, it isn't a factor in determining how much a chapter 13 debtor should pay his or her unsecured creditors. Several Bankruptcy Courts have ruled specifically saying that it isn't bad faith of the debtor to exclude such income from the calculations. creditors but not include a private retirement account.

An illegal immigrant can file for bankruptcy in the United States. There is no reference to a citizenship requirement in the Bankruptcy Law. US Code §109 provides the requirements to be a "debtor." The most common way to be eligible to be a debtor is to have a "domicile" in your state. A domicile "requires the physical presence of a person at the place of the domicile claimed, coupled with the intention of making it his present home. The timing of where you use as a domicile can be tricky if you have not been domiciled in your state for two years. Assuming you've been living in your home state for a while, what other hurdles might an illegal immigrant face? You don't need a Social Security card to file for bankruptcy, but if you don't have one, you will need to provide an ITIN. An ITIN is an Individual Taxpayer Identification Number, which is often used by people who can't obtain a Social Security Number but want to pay taxes to avoid problems with the IRS. If you have been using a SSN that isn't yours, don't put it on your bankruptcy petition! Bankruptcy courts don't like being lied to and will serve up jail time to those who attempt fraud. Not only can you get in legal trouble for false statements on your bankruptcy forms, but debts incurred using a SSN that wasn't yours may not be dischargeable under the Bankruptcy Code. You will also need to be able to prove your identity at the 341 meeting, also known as the First Meeting of Creditors. You will need an ID document that proves your SSN or ITIN such as a SSN card or a pay stub, and a photo ID, such as a driver's license or passport. Of course, there is a long list of other things you will need for your bankruptcy, but those are requirements that all debtors must face, not just those without citizenship. Bankruptcy is a complicated process, but there are few additional barriers to non-citizens.

We need to know all the debts you owe or might possibly owe in order to put a Bankruptcy case together. One mistake debtors often make as we get into deeper debt is to stop looking at the bills and notices. It's stressful enough to have debt collectors calling, so we stop reading or keeping the bills and notices just to stay sane. If you can't pay it, even opening the envelope hurts a bit. But if you don't read and keep the notices and bills, it is much harder for someone else to help you. Folks come in to see me and have no real idea who they owe now, how much, or what for. There are services that allow us to access your credit reports, with your consent. And you can have free copies of your credit report each year too. But your credit report is not going to help us very much in building your case for you. However, some lenders do not report to credit bureaus. Some debt may be too old to appear on your report - but still be a debt you owe. Some is just not the type of thing that pops up on credit reports - like a debt for damage to a neighbor's car or money you owe a friend. Mistakes on credit reports happen a lot more than they want to admit. A credit report will only tell us what some creditors, possibly yours, claim you owe them - not every creditor or potential creditor you could owe. If you don't list some of your debt in your case even by accident, it can be harmful to your financial health. But in extreme cases - particularly cases where some money is paid into the bankruptcy trustee's hands from your assets or your payment plan - then the unlisted debts may not be wiped out at the end of a successful case So even if it is physically painful to keep the bills and threatening notices from creditors, do it anyway. Don't put your faith in the Great Mythic Computer to save you otherwise.

Bankruptcy can help in a lot of ways. One less well-known benefit is to free up a copy of a college transcript to use for employment or future school applications, when you can't afford to pay the college back right now. As of 2015, Americans owe more in student loan debt than credit cards. And a growing portion of that debt is in default. In some cases, your former college will be a servicer of those loans for a state lender. Or the college is owed money from some other account, like room and board or part of tuition. In those cases, the college will sometimes hold the transcript hostage to satisfaction of the debt or at least reasonable payment arrangements. You can't blame the college for trying to do its part to support the financial system that keeps it alive. But when the former student files bankruptcy, the rules change. When the bankruptcy is filed, an automatic stay is typically created. The stay prevents a creditor from taking any action to collect the debt owed without the court's permission. The automatic stay is a broad and powerful tool. Recently, a Bankruptcy Judge concluded that a college withholding a transcript to force payment of a debt was a violation of the stay and the only question was what damages would be ordered. The Judge concluded that it did not matter that the student loan owed to the college would not be wiped out in the bankruptcy. It mattered that the college continued to use this tool to "encourage" payment. And that's enough to get the college into trouble. So keep this in mind. Getting your transcript freed up may not be a good enough reason to consider bankruptcy. As we say, don't drive a nail with a sledgehammer. But if your debt load is a problem - which is likely if you have college loan problems - then it may be worth exploring how bankruptcy could benefit you.

Everyone with debts has at least one bill they'd like to pay, even if they can't pay them all. So if you are already filing Chapter 13 bankruptcy and repaying some debt, why not treat some better than others? Sometimes that is allowed and sometimes not. It's a complicated issue because, at the heart of the Chapter 13 plan, there is a pool of money - the payments you make - which has to be divided among creditors. If one is paid more, others get less typically. So favoring one means discriminating against others. The law requires some discrimination. For example if you aren't paying everyone in full, then you typically have to provide for special "priority" claims to be paid in full. These are things the government has a special interest in - paying the trustee, child support, recent taxes and so on. In other cases, like your home and car, the law often allows payment of these "secured" debts in preferential ways over your other debt because you need those assets to keep going (and putting the money into the pot each month!). But what if the debt is one you can't wipe out at the end of the typical case, like student loans? Can you pay those in full and "short change" the other debts you can wipe out? Sadly, there are only limited ways to do that because it gives you a "head start" not a "fresh start" at the end of your case, according to some. So arguing that your sister's loan to you deserves special treatment because she's been good to you probably won't fly. But all is not lost. If paying the debt with special treatment is necessary to keep your case afloat or otherwise earning income, then it might be better received by the court. So some judges have allowed restitution and some business-related debts to be paid preferentially, recognizing that going to jail or having to close your business down is counterproductive to getting anyone paid well.

Corporations and LLC's don't get a discharge in a Chapter 7 bankruptcy, so what's the point of filing? Ensuring that business assets go to pay payroll, benefits, and taxes is a compelling reason. Chapter 7 is a liquidation proceeding; the trustee appointed by the court will gather up and sell the corporation's assets and pay creditors in the order of their priority under the Bankruptcy Code. It is the notion of priority, then, that may make it advantageous for a corporation going out of business to file bankruptcy. The Code's priority scheme provides that claims with a higher priority are paid in full before claims with a lower priority get anything. The business owner probably has two personal concerns about what happens to the business assets: they want to receive payment in their role as employee, and to see that taxes for which the individual owners might be liable personally get paid from corporate assets to the extent possible. The owner's concerns dovetail nicely with the priority scheme: unpaid wages incurred in the 180 days before filing or cessation of the business, whichever came first, have a priority for payment. Claims are capped at $10,000 per employee. Taxes owed to governmental agencies have a high priority for payment in bankruptcy. While the shareholder probably isn't liable for the corporation's income tax or property tax, the individual owners may well be liable for any unpaid trust fund taxes (employment taxes) or for unpaid sales tax. The owner shareholder has a real interest in payment of these taxes before payment of run of the mill business debts. So, one very good reason for a business corporation to file a Chapter 7 bankruptcy is to see that priority claims are paid, instead of the claim of a unsecured creditors without a priority who may file a proof of claim or a collection action.  

Even if you surrender your home in bankruptcy, you are still liable for your homeowner's or condominium owner's association dues that become due after the date of filing. As a general rule, all the debt that you owe on the day you file your bankruptcy is discharged, including past-due HOA and COA dues. However, because you remain the deed-title owner of your real property until your lender takes the property back, you owe current dues and assessments going forward.  But this doesn't answer the question, "Should I pay?" Well, the answer depends on your plan, but one thing is for sure. You should pay your HO and COA dues if you continue to live in the home or if you continue to rent out your rental property.

STUDENT LOANS: Several factors should be considered regarding student loans. First, student loans, including parent PLUS loans, are generally not dischargeable in bankruptcy without a showing of undue hardship. The burden to prove undue hardship is very great. Second, if you are in financial difficulty, you may not have a high enough credit score to get a parent loan to help your child pay for college. So if you are having debt problems when your children are still several years away from going to college, you should consider filing bankruptcy to wipe out your debts, so that you have more money available to help out your college bound kids, and your credit score can recover by the time you have to get loans to help your kids pay for college. CO-OWNERSHIP AND COSIGNED LOANS: Many parents want to try to help out by setting up joint bank accounts with their minor children. If you have done this, and then file for bankruptcy, you may find that your bankruptcy trustee attempts to seize the bank account and use it to pay towards your creditors. There are ways to set up accounts to prevent this from happening. Similarly, if you cosign a loan for your child to help them out, if they ever get into financial difficulty and have to file bankruptcy, your credit score will be negatively affected and you will be hounded to pay the bill.

STRESS: Being deep in debt, receiving harassing calls from creditors, being threatened with garnishment, repossessions and foreclosure will often cause you and your spouse to experience overwhelming stress and anxiety. Your children, even young ones, also feel the stress. It affects their school work and their emotional and physical health Uncontrolled debt often leads to marital conflict and divorce. The kids become the biggest losers. Filing for bankruptcy will usually relieve the debt burdens and the stress. This will often save a marriage and restore emotional as well as financial security for the entire family.   PROVIDING FOR YOUR FAMILY: When you're paying out all of your income to try to cover your minimum debt payments, you often have difficulty paying for even life's basic necessities. The little extras that mean so much to children, such as music lessons, dance lessons, tutoring, summer camp and regular health exams, are often neglected. After filing for bankruptcy, your family budget can afford to give your children much of the nourishment they need to grow into healthy and well-adjusted adults.   EDUCATIONAL EXPENSES: When you are having financial difficulty, it is often difficult to properly afford your children's educational expenses. In the 2005 changes to the bankruptcy law Congress specifically allowed parents to include in their allowable expenses some educational costs for their children under 18 years old. For older children, however, Congress felt that paying college tuition at the expense of unsecured creditors should not be allowed.