The Paperwork: Filing Your Bankruptcy Petition
To initiate a bankruptcy filing, you must fill out and submit a Bankruptcy Petition. The petition is a collection of documents including a Voluntary Petition, Bankruptcy Schedules A though J, a Statement of Intention, a Statement of Financial Affairs, and your Means Test form, which we have already discussed above. If you are filing Chapter 13, you will also have to submit a proposed repayment plan.
You can find the most recent versions of these forms on the website www.uscourts.gov. The versions of each form are state-specific, so you will have to find the forms listed below that are appropriate to you by searching this site (click “Services and Forms” and then “Bankruptcy”).
As we have mentioned, you can file pro se, on your own, or you can use a petition preparer. The petition preparer will be substantially cheaper than using an attorney, but the problem is that they are not allowed to give you any legal advice. All they do is help you fill in the documents. Since you have many decisions to make, and need a broad background knowledge of how the bankruptcy process works in your state, we strongly recommend using an attorney to help you with the paperwork.
It is called “voluntary” because you are filing bankruptcy of your own free will, as a debtor who is trying to make arrangements for the payment of your debts and/or be relieved of those debts. (This is in contrast to an “involuntary” petition, which is a petition filed by the creditors against the debtors will to seek repayment of debts - a case which only rarely happens).
Use Form 1, Voluntary Petition. The petition lists all of the basic information that will be pertinent to your case, including your contact information, your assets and liabilities, as well as your debts and an estimated number of creditors. You must also indicate whether you are filing for Chapter 7 or Chapter 13, and whether you have filed for bankruptcy before.
You must sign the form and certify that all of the information you have entered is true. Once you file Form 1, Voluntary Petition, you will be assigned a judge, a trustee and a case number.
Schedules A through J
The schedules provide much more detailed information to the bankruptcy court about your properties and other assets, as well as your debts. Your attorney or accountant can help you fill them out. It’s extremely important that you be honest in completing these forms: if it looks to the trustee like you are trying to hide assets, your case may be thrown out.
Here’s a quick run-down of what is in each schedule:
Schedule A lists any real property you own, such as your home and any other real estate that you own or share an interest in, as well as any liens or other secured claims against this property.
Schedule B lists all of your personal property. You must list everything you own, whether or not you intend to claim it as an exemption. Schedule B lists 35 categories of property, ranging from vehicles to furniture to money in your bank. You must list all of the property you own in each category, whether it’s owned jointly or not, and provide a value for that property. It is very important to note that the value you list is not the price that you paid for each item: you list the value of what you would be able to sell that item for today, in its current condition.
Schedule C is where you list all of the property that you want to claim as exempt. Every state treats exemptions differently. We discuss exemptions in much more detail in a separate article.
Schedule D lists all of your secured creditors and how much you owe each of them.
Schedule E lists all of your unsecured priority creditors and how much you owe each of them.
Schedule F lists all of your unsecured creditors and how much you owe each of them.
Schedule G lists any executory contracts or unexpired leases that you are party to. In bankruptcy law, an executory contract is a contract where both parties still have obligations outstanding at the time of filing, such as a residential lease or rental agreement. Unexpired leases are leases that are still in effect, such as a car lease. In bankruptcy, you have the right to assume a contract or lease (have it continue under the original terms) or to reject it (have it terminated by the court).
Schedule H is a listing of co-debtors: anyone who has guaranteed or co-signed any of your debts.
Schedule I lists your current monthly income. If you are married, you must also include your spouse’s income, whether they are also filing or not. The income you list here will look different from what you list on Form 22A, the Means Test. Schedule I asks only for your actual income now, at the time of filing, rather than a six-month average. Schedule I also asks only for your net income, not your gross income - in other words, your income after deductions. If you think your income may change within the next year, be sure to include that information on Line 13.
Schedule J lists your monthly expenses. Expenses should be pro-rated to monthly amounts. For example, if you have a bill that is paid quarterly, divide it by three to determine the monthly amount. At the bottom of the form, total all of your monthly expenses and subtract them from you monthly income, calculated on Schedule I, to determine your monthly net income. Again, if you think your average expenses may change within the next year, state that on Line 24.
Statement of Intentions
If you are filing Chapter 7, you must fill out the Statement of Intentions form (Official Bankruptcy Form 8). This form is your opportunity to tell your creditors, the trustee and the court what you intend to do about your secured debts. Bankruptcy wipes out your obligations to repay secured debts, such as your home mortgage or your car loan. But that does not simply mean that you get to keep the house and the car. As secured property, your lender has the right to seize it.
You have many options of how to deal with your secured property. You can:
- give up, or surrender the property - in other words, let your lender take it
- redeem the property, which means buying it from the lender by paying the lower of: what you still owe on the debt, or the property’s replacement value
- reaffirm the debt, which means that you agree that you still owe the debt and will be legally liable for repaying it after the bankruptcy by negotiating with your lender (e.g. renegotiating your mortgage)
- avoid a lien on the property - a strategy that is only available in rare cases on some types of exempt property - which wipes out the creditor’s right to claim it
- retain the property, also known as “riding through,” which allows you to keep the property without redeeming it or reaffirming it, as long as you remain current on your payments. This option, described in more detail in our article Bankruptcy Strategies, may not always be available.
Most of these options are discussed in more detail in our article Keeping Property: How to Make the Best of Your Exemptions. You must state what your intentions are for each of your secured properties on the Statement of Financial Affairs and, in most cases, you must carry out those intentions within 30 days or the automatic stay will no longer cover that particular property. Your lender or creditor will then be free to initiate foreclosure or repossession.
Statement of Financial Affairs
The Statement of Financial Affairs form (or SFA, also known as the Official Bankruptcy Form B7) is a form that gathers your financial information for review by the trustee, to determine which of your property should be part of your bankruptcy estate. It contains 25 questions, and everyone must answer the first 18 of those questions. If you are a business owner (including self-employed, even if only part-time), you must also answer the final seven questions as well.
The SFA collects information pertaining to your income, as well to transactions or exchanges of property that you have been party to, such as:
- payments you’ve made to creditors before filing bankruptcy
- repossessions or foreclosure
- gifts or other assignments or transfers of property
- financial accounts you have closed.
The SFA allows the trustee to review transfers of property, so they can make sure that there has been no preferential treatment of your creditors. For example, if you paid off your loan to your mom right before filing bankruptcy, that could be viewed as preferential treatment of your mother over the other creditors, and the trustee might seek to recover those funds to distribute them more fairly between all creditors. Similarly, if you gave your daughter your car, or sold it to her for an unrealistically low price, the trustee might view that as an attempt to keep an asset outside of the bankruptcy.
Statement of Social Security Number
On all of the other forms you fill out as part of your bankruptcy petition, for privacy reasons you only need to fill in the last four digits of your social security number. However, on this one form you are required to provide your entire social security number. Only your creditors, your bankruptcy trustee, and the United States Trustee or bankruptcy administrator will have access to this form: it is not included as a part of the public bankruptcy file.
The signature page is the final page of the voluntary petition. Here you must sign your name, agreeing that to the best of your knowledge the information contained is correct and does not involve fraudulent statements. You must also certify that you are aware that there are other types of bankruptcy available to you - information that your attorney is required to have provided to you. If you are not using an attorney, you must sign that you have read the information in Form 201: Notice to Consumer Debtors Under 342(b) of the Bankruptcy Code. If you have a choice of which state to file in, you will want to figure out which state allows exemptions that are more favorable to your personal situation.
Read on for our next article in this series: How the Automatic Stay Protects You