The Most Essential Chapter 7 Bankruptcy Forms You Need to Complete
Chapter 7 bankruptcy, also known as liquidation bankruptcy, is a legal process that allows individuals to obtain a discharge of many types of debt, including unsecured debts such as credit card bills and medical expenses, as well as secured debts such as mortgages or auto loans. In the preamble for the Bankruptcy Code, it mentions the goal of the law is to provide a fresh start for individuals who are unable to repay their debts, for the honest but unfortunate debtor. To obtain a discharge of your debts, however, it all starts with preparing and filing your chapter 7 bankruptcy forms.
Eligibility Criteria for Filing Chapter 7 Bankruptcy
Almost anyone can file a chapter 7 bankruptcy case, but not everyone is entitled to a discharge. To qualify for debt relief in a Chapter 7 bankruptcy, individuals must meet certain eligibility criteria. One of the major requirements is passing the means test, which compares the individual’s income (or combined income of spouses in a joint case) to the median income in their state for their respective household size.
If the individual’s income is below the state median, the filing is presumed to be not an abusive filing, and the debtor is typically eligible to a discharge of their debts. If the filer’s income is greater than the median income for a household of their size, the bankruptcy proceedings are presumed to be an abusive filing subject to dismissal or objection to discharge, although the debtor can try and demonstrate circumstances to overcome that presumption.
Another criteria for eligibility is that individuals must undergo and obtain a certificate of credit counseling within six months before filing for bankruptcy. Additionally, the debtor must complete and obtain a certificate of debtor education after the case has been filed. These courses must be completed with credit counseling agencies that are approved to provide those courses in your filing district.
There are a number of additional criteria to determine whether bankruptcy filers are eligible to obtain a discharge in a chapter 7 case. While not relevant here, an entity, such as an LLC, is not eligible for a discharge in a chapter 7 case. Additionally, if the debtor filed a previous case that was dismissed within a certain time period, they may not be eligible to obtain a discharge.
Overview of Chapter 7 Bankruptcy Forms
When filing for any type of bankruptcy, the debtor is required to complete a series of forms that provide detailed information about their financial situation. Since a bankruptcy case is a balance between the debtor and their creditors, you will have to provide a lot of information about income, expenses, liabilities, and property.
Importance of Accurately Completing the Chapter 7 Bankruptcy Forms
It is paramount that you complete the Chapter 7 bankruptcy forms completely and truthfully. The information provided in these forms is used by all parties – the judge, the bankruptcy trustee, the creditors – to assess the your financial situation, whether anyone may have an objection to your discharge, and facilitate the bankruptcy discharge process. Any inaccuracies or omissions in the bankruptcy schedules can lead to delays in the bankruptcy process, objections to discharge of a particular debt, or even the dismissal of the case.
Common Mistakes to Avoid When Filling Out the Forms
When completing the Chapter 7 bankruptcy forms packet, it’s important to avoid common mistakes such as providing inaccurate financial information, failing to disclose all assets and liabilities, and improperly claiming exemptions. The most common type of mistake is simply failing to disclose information, and often times this is failure to disclose assets in bankruptcy, such as cash assets, interests in real estate, or claims against someone that the debtor has. If you are thinking of filing bankruptcy, the most important piece of advice I can share is that, to try and prepare the most accurate bankruptcy forms, it is better to over-disclose than to under-disclose.
Essential Chapter 7 Bankruptcy Forms
As you may be aware, you will file your case in whatever bankruptcy court district you are located in. Because the practice of bankruptcy law differs from state to state, and from court to court, the required forms for chapter 7 filings differs from court to court, especially forms based on local rules. Notwithstanding these variances, all the courts use the official bankruptcy forms as the core required forms for any chapter 7 filing, and we’ll explore those forms below.
Form 101: the Voluntary Petition
The Voluntary Petition form is the form that is required to start each and every bankruptcy case. In the form, the debtor will provide some overview information, including their name, their address, the bankruptcy chapter they are filing under, last 4 digits of social security number or EIN, whether they have completed the credit counseling course, if there is a judgment of eviction against them, and a few more items. The Voluntary Petition must be signed and dated when filed.
Form 106SUM: Summary of Your Assets and Liabilities and Certain Statistical Information
This form provides a quick snapshot of the debtor’s assets, liabilities, and other financial information.
Form 106A/B: Schedule A/B – Property
On Schedule A/B, the debtor will list and disclose all their interests in property, both real property and personal property. This requires individuals to list all their property and assets, including real estate, vehicles, bank accounts, and personal belongings, as well as interests in property that are not yet tangible, like a tax return refund they are expecting or a potential claim against another party.
Form 106C: Schedule C – The Property You Claim as Exempt
Exemptions are pivotal in and personal bankruptcy case. When an individual files bankruptcy, all of their interests in property become property of their theoretical bankruptcy estate. Bankruptcy exemptions are the laws which state what property can be protected. A debtor will list on Schedule C the exemptions they are claiming apply that protect their property from administration in the bankruptcy estate. If someone does not claim any exemptions, then the chapter 7 trustee can liquidate all of their property, since no exemptions were claimed to protect any property from the bankruptcy estate.
How exemptions work from state to state differs. Some states allow only the use of state exemptions in a bankruptcy case, while other states (including New York) allow the use of federal bankruptcy exemptions in a case.
Form 106D: Schedule D – Creditors Who Have Claims Secured by Property
Schedule D is where a debtor is list and disclose information about secured claims, including the name of the secured creditor, the amount of the claim, identifying information if available (like the last 4 digits of an account number), as well as a description of the property that is secured.
Form 106E/F: Schedule E/F – Creditors Who Have Unsecured Claims
Information about all of the debtor’s unsecured claims goes onto Schedule E/F. Unsecured creditors whose claims are priority debts (as defined in the Bankruptcy Code) are scheduled in the first part of the form, while claims of general unsecured creditors are listed in the second half of the form. General unsecured debts are often consumer debts like credit card debt, personal loans, and medical debt.
Form 106G: Schedule G – Executory Contracts and Unexpired Leases
This form is where a debtor will list any contracts or leases they may have. This can include a lease for a car, a lease for an apartment, or some other type of contract.
Form 106H: Schedule H – Your Codebtors
Schedule H is used to list any individuals who may be a codebtor on one or more the debtor’s debts. This can often be the case on an apartment lease, a credit card that was a joint account, or an auto loan.
Form 106I: Schedule I – Your Income
Income information will be disclosed on Schedule I. Income from any and all sources will be listed here, including income from employment, income from a business or rentals, income from child support or maintenance, contribution from others, pension or other retirement income. Keep in mind that in the case of only one spouse filing, the non-filing spouse’s income must also be included and disclosed on Bankruptcy Official Form 106I- Schedule I.
Form 106J: Schedule J – Your Expenses
The household expenses will be listed in Schedule J. These include the regular monthly expenses of the debtor and all the debtor’s dependents. If there are additional living expenses that may not be somewhat common, you can list and explain those household expenses on this form.
Form 107: Statement of Financial Affairs
This form, the Statement of Financial Affairs, requires the broadest financial information of the debtor, as it inquires about all kinds of historical financial information. On this form, the debtor will disclose gross income information for the last 3 years, any transfers of property, any accounts that were closed, any lawsuits that may be pending, information about businesses, and more.
Form 122A1: Statement of Your Current Monthly Income
This form is the first part of what is commonly referred to as the bankruptcy means test. This form requires individuals to disclose their gross monthly income from all sources for the last 6 months, and then averaged out to determine your current monthly income. That number is then annualized, and compared to the median income for a household of the same size. If the current monthly income is less than the median income figure, then you are believed to pass the means test. If your current monthly income is greater than the median income figure, then it would seem that you have disposable income to repay creditors, and there is presumption of abuse for the filing.
Form 122A1Supp: Statement of Exemption from Presumption of Abuse Under §707(b)(2)
This form is used in the instance a debtor wants to claim an exemption from a presumption of abuse. This often used in the case where the debts are primarily business debts, or in the alternative used often when someone is exempt due to military service.
Form 122A2: Chapter 7 Means Test Calculation
This form is used to claim further analyze the debtor’s current monthly income to determine if they pass the means test. When there is an initial presumption of abuse, the debtor can then fill out this form to determine whether the income can be reduced to qualify.
Creditor Matrix
With every bankruptcy petition, the debtor must provide a list of their creditors along with mailing address.
Form 103A or 103B: Payment Plan or Waiver of Filing Fee
While the filing fee isn’t a form, it is due when your bankruptcy documents are submitted. If the debtor is seeking to pay the bankruptcy fee in installments, they will need to prepare and file Form 103A at the time the case is filed. If the debtor is seeking a waiver of the filing fee, they will need to prepare and file Form 103B at the time of filing.
Understanding the Role of a Bankruptcy Attorney in the Filing Process
To maximize the chance of your bankruptcy case moving as seamlessly as possible to a discharge requires that the chapter 7 bankruptcy forms are completed thoroughly and correctly. Errors and omissions can add delay in the administration of your case, or can often be the reason why someone loses property.
Working with an experienced bankruptcy lawyer, like the Law Office of Richard Kistnen, can be incredibly helpful in navigating an individual bankruptcy. An experienced bankruptcy attorney can help anticipate bankruptcy issues early on, examine non-bankruptcy alternatives, ensure the thorough and accurate completion of the bankruptcy filing, and represent the individual’s best interests throughout the bankruptcy case due to familiarity of practice in the bankruptcy district.
If you have additional questions and want to further understand the essential forms and the filing process to obtain a financial fresh start in your life, contact the Law Office of Richard Kistnen today by calling (718) 738-2324, or booking your no obligation, confidential virtual consultation here.
FAQ
How can individuals ensure they are filling out the bankruptcy forms correctly to avoid any potential complications?
To ensure you are filling out the bankruptcy forms correctly and avoiding potential complications, it is important for you to be diligent and thorough in completing the bankruptcy petition and schedules. Start by carefully reading and understanding the instructions provided with the forms. Take your time and double-check all the information you provide to ensure accuracy. Additionally, make sure to gather all necessary supporting documents and organize them properly. By being diligent and paying attention to detail, you can minimize potential complications when filling out the chapter 7 bankruptcy forms.
Are there any common mistakes or pitfalls that individuals should be aware of when completing the bankruptcy forms?
When completing bankruptcy forms, it’s important for you to be aware of common mistakes or pitfalls. One common mistake is failing to include all necessary financial information, such as debts, assets, and income. This can lead to complications and delays in the bankruptcy process. Another pitfall is not thoroughly reviewing the forms before submitting them, which can result in errors or omissions. To correct an error or omission generally requires amendments to those documents, which then have to be served on creditors, and an additionally fee possibly due to the court. Additionally, failing to follow all instructions or provide required documentation can delay administration of your bankruptcy case. To avoid these mistakes, carefully review the forms, double-check your information, and work with a bankruptcy attorney if needed.