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Chicago Bankruptcy Question: What is the Statement of Financial Affairs?

Chicago Bankruptcy Question of the Day:  What is the Statement of Financial Affairs?  The Statement of Financial Affairs is the second significant set of documents filed with any bankruptcy petition.  The purpose of the Statement of Financial Affairs is to disclose to the court, trustee, creditors and any other interested parties your recent financial history as it pertains to your bankruptcy filing.  More often than not, it shows the path that brought you into the bankruptcy filing.

Disclosure under the Statement of Financial Affairs includes a variety of items.  You must disclose your income year to date and from the two years immediately preceding the filing of the bankruptcy.  The disclosure of income must include income from all sources. 

The Statement of Financial Affairs continues to then disclose recent significant financial transactions.  Payments made to creditors, including insiders, must be listed.  Lawsuits filed against you and recent actions taken against you or your property must be disclosed here as well.  This includes recent garnishments, repossessions, foreclosures and levies. 

You must schedule any consistent charitable contributions that you have made, along with payments to anyone involved in assisting you with your debts.  Any recent transfers of property, closing of financial accounts, major losses (including those covered by insurance), property titled in someone elses name that is in your possession and recent addresses must also be listed.

The true purpose of the Statement of Financial Affairs is to disclose to interested parties the recent events in your financial history that led you to file for bankruptcy and to ensure that there were no transactions that were executed to the detriment of your creditors.  Failure to properly disclose these items can lead to an objection in your bankruptcy case or, in extreme circumstances, an outright denial of your bankruptcy discharge.

Filing for bankruptcy is a complex and detailed process.  To do so properly, you need to be represented by experienced bankruptcy process. At Ledford & Wu, we are always happy to offer you a free initial consultation to review the facts of your case and determine whether or not filing for bankruptcy is the right option for you.

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