What does a SOFA have to do with bankruptcy?
Part of the required paperwork is called the
Statement of Financial Affairs or SOFA.
The SOFA is a complex series of questions that must be answered. This is where everything that has not already been provided in the petition and schedules is listed.
What the SOFA includes.
The first page of the SOFA gives specific instructions. The first few questions deal with income. Unlike the means test which looks back six months, or Schedule I which is for current monthly income, the SOFA asks for your year to date income and your income for the past two years. It asks for wages and money from business as well as all other income.
All other income includes:
Then there are questions about your debt payments. If the bankruptcy consists of mainly consumer debts, then any payments made in the 90 days prior to filing that equal or exceed $600 must be disclosed here. That is a total of $600 or more to any one creditor and not an individual payment of $600. These are considered preference payments and the Trustee can seek return of the payments to divide among the other creditors. All payments to insiders, like your family members, made within the past year must be listed. If you are married and filing a sole petition you must also account for any payments made by your spouse. If significant payments have been made to family members and none to other creditors, then it is wise to wait until one year has passed to file a bankruptcy. Otherwise there is a very real risk that your relative will be sued by the Trustee for return of the payments.
Other things listed in the Statement of Affairs are:
- Repossessions, foreclosures and returns;
- Assignments, receiverships, transfers and set-offs;
- If anyone has sued you, there is a place to put the case information including case caption, case number and court;
- Garnishments and repossessions;
- Individual gifts and charitable contributions made in the past year;
- All losses from fire, theft and gambling in the last year;
- Payments to your attorney and for the credit counseling course;
- Contents of any safe deposit box;
- Anything you are using that belongs to another person like that DVR or cable modem that is rented or on loan;
- If you live in California, or any other community property state, your spouse even if they are not filing with you;
- If you have been divorced less than nine years, the name of your former spouse.
If you have a business there are a number of questions that must be answered. The more complex the business the more questions that must be answered.
Full disclosure is required.
The SOFA is a lengthy and complicated series of questions that must be answered completely and correctly or your bankruptcy case could have problems. If the answers are not complete or don’t match with your tax returns and other materials that the trustee will review you will be challenged and may lose your discharge. The bargain you make when filing for a bankruptcy is full disclosure of your entire financial picture in exchange for discharge of all dischargeable debts. Make use of a trusted and knowledgeable legal adviser to make certain that your case is well prepared.
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Image by Leo Reynolds.