How to Prepare for Your Consultation
Information Needed from Prospective Bankruptcy Clients
All prospective new clients either coming in for an in-person consultation or who are preparing to have a telephone or virtual zoom consultation should either have the following information and documents at their meeting or provide the documentation to Mr. Alster prior to their telephone or virtual zoom consultation. In this way Mr. Alster should be able to provide definite answers to all questions from prospective clients at or before the conclusion of their consultation concerning their qualification for Chapter 7 or Chapter 13 protection, and so that the consultation can proceed as quickly and smoothly as possible.
Last Six Months Gross Monthly Household Income & Projected Net Monthly Income
When filing for bankruptcy protection, debtors must provide proof of all gross income (from every source) as well as proof of all payroll deductions or self-withholding deductions (if self-employed) for the six (6) months preceding the month that the debtor(s) file their bankruptcy petition. When both spouses are living together, we need this proof of the last six (6) months of gross income and all deductions for the debtor and their spouses, regardless of whether an individual or joint petition (husband and wife) is going to be filed; this documentation must be provided to the Chapter 7 or Chapter 13 Trustee shortly after the case is filed.
For salaried employees, prospective clients/debtors should simply bring in all of their paystubs for the six-month period described above, known as the “means test period”. If prospective clients/debtors cannot bring in all of their paystubs or other documentation indicating their full gross income and payroll and/or self-withholding deductions prior to or at their in-person consultation; clients should at least provide the information to Mr. Alster by way of representative paystubs for the means period (the previous 6 months), and a paystub that would represent their projected monthly gross income and deductions from gross income going forward (these may, of course, be represented by the same or different paystubs).
It is helpful for debtors to review Schedule - I prior to their initial consultation, which schedule represents debtor(s) testimony as to their projected average monthly income as of the date their projected bankruptcy petition is filed.
If the debtor is separated or not living with their spouse, they need only provide proof of gross income and all payroll or self-withholding (if self-employed) deductions for himself/herself.
Average Monthly Expenses
It is helpful for all potential clients to fill out and bring or provide earlier the attached Schedule J to their consultation, which is an itemized list of the debtor(s) and debtor(s) immediate family’s average, projected, monthly household living expenses. This should include all actual, projected, monthly household expenses being paid by the debtors, as well as the debtors’ family’s reasonable needs, even if debtor(s) have been and/or are unable to provide for same.
Current and Past Annual Gross Income
All debtor(s) must indicate the gross income earned during the last two calendar years and for the current calendar year to date in their Chapter 7 and/or Chapter 13 petition. Copies of your two most recent tax returns, W-2(s) and/or 1099(s), along with their most recent pay stubs would have this information. Debtors should also provide copies of their 2 most recently filed federal and state income tax returns, either at the time of their consultation or prior to their petition being filed as the same will likely have to be by Mr. Alster to the Trustee appointed by the Court. Every debtor filing for bankruptcy protection must certify in their bankruptcy petition that they have filed their last 4 federal and state tax returns or must be able to provide a reason why they were not required to do so open (they made insufficient income…).
For all debtors who own or owned real estate or any other significant assets within the last two years, it is absolutely necessary for the prospective client(s) to know the approximate fair market value (hereinafter “FMV”) of the real estate or other significant assets (such as a business, luxury vehicle, etc.), as well as the payoff amounts of all/any mortgage or other liens (such as Judgment or tax liens…) filed against the Property. In this way, Mr. Alster can determine how much positive or negative equity, (negative equity is when the lien amount or amount owed to a secured creditor is greater than the FMV of the asset), the prospective client/debtor has in the asset.
Often times the only significant asset that prospective clients own is their residence; all of the documentation referred to below is not required until or shortly after the bankruptcy petition is filed, however, prospective clients should do their best to bring in the following documents for each parcel of real estate to their consultation, as it is always helpful:
The most recent appraisal performed on the property (preferably it's less than 1-year-old). If clients do not have a recent appraisal, a real estate broker's price opinion (also known as a "BPO") may also suffice; a BPO is simply a letter from a realtor, whereat the realtor gives their opinion as to the FMV, or the average range of the FMV, of the subject real estate. Most trustees will not accept real estate tax bills or assessments as proof of the FMV for the subject property, as such, prospective client(s) should not base their opinion as to the FMV of their real estate solely on a municipal tax assessment.
If the property was bought or sold within the last two years, a copy of the HUD-1 settlement sheet also known as the RESPA indicating where and how the mortgage proceeds from the sale of the property were spent in/or applied;
Payoff statements for all open mortgages, indicating the total amount owed to pay off the mortgage and, often separate from this, the amount owed for all/any mortgage arrearages (past due amounts owed) for each mortgage lien, as well as for any other lien(s) against the property.
Proof of ownership, which includes copies of all deeds through which prospective client(s) took title to the property.
Copies of the filed complaint/lawsuit served on the debtor, the judgment (if entered), and the most recent document either filed with the Court where the debtor is being sued or served on the debtor, such as a wage execution or other post-judgment motion (such as a levy filed against the debtor’s assets, writ of execution…).
The identity/names, addresses, account numbers, and, at least, approximate balances owed to all unsecured and secured creditors, (secured creditors include, but are not limited to, mortgage loans, leases, tax liens, automobile loans, and mortgages), is required to be included in the debtors’ bankruptcy petition so that the debtors’ creditors are properly notified at their correct addresses about the petition being filed. If a debtors’ creditor is not properly identified in the petition, the underlying debt owed to the creditor may not be discharged along with the debtors’ other creditors when the debtor receives his/her discharge order at the successful conclusion of their case.
If retained, Mr. Alster's office will order, at no charge to clients, a report called a CIN, which contains a summary of all of the debtors' information concerning their creditors and lawsuits in the debtors' credit reports on file with the 3 national credit reporting bureaus, Trans Union, Equifax, and Experian. While the CIN ordered by our office is often perfect, there are some creditors who do not report to the 3 said credit reporting bureaus, or who are supposed to report to the reporting bureaus but fail to do so; if this occurs, it will be necessary for all prospective clients to provide the proper identities of all such creditors, if any, not included in the CIN, as well as any collection agencies retained by their creditors who may not have been not included in the CIN ordered by our office. Since the CIN will not be ordered until the client retains our office, it is important that all prospective clients know the identities of and the approximate amounts owed to all of their creditors when the clients come in for or attend their initial consultations.
Please note that all of the credit reporting agencies must offer one (1) free credit report to consumers every 12 months. One site that you can visit to procure this free credit report from each of the 3 national credit reporting bureaus is www.annualcreditreport.com.
Following are the links to the reporting agencies' actual websites.
Names, account numbers, and balances of all financial accounts, including, but not limited to, checking, savings, stock brokerage, and retirement accounts. Information on all financial accounts closed during the last twelve (12) months should be provided in must be listed in the debtor’s petition, including the address, account number, and amounts on the last statement before the account was closed.
Call or contact us today to get on the road toward a fresh start.
From his office in Hackensack, New Jersey, Attorney Alster's services extend throughout the state of New Jersey, as well as New York. Some areas he serves in New Jersey are Passaic County, Bergen County, Hudson County, Essex County, and more; in New York, he serves Rockland County, Queens, and the Bronx.