Declaring Bankruptcy the Right Way
In an episode of television’s “The Office,” the main character Michael Scott makes a misguided attempt to resolve his debt problems by publically stating, “I. . . declare. . . bankruptcy!” Video clips of this funny episode can be found on YouTube.
Back in the real world, declaring bankruptcy is not nearly as public, or as simple, as shouting out “I declare bankruptcy!” The bankruptcy process begins with an accounting of your income, expenses, assets, and debts. The debtor is required to use approved forms for this financial accounting. A copy of these forms can be found on the U.S. Courts website, and a general description of each form that must be filed in all consumer debtor Chapter 7 and 13 cases is provided below.
The Voluntary Petition is three pages long and is the formal declaration of bankruptcy. Filing the Voluntary Petition begins the bankruptcy process and imposes the automatic stay which will generally stop action by creditors to collect debts.
Schedule A is a list of real property.
Schedule B is a list of personal property.
Schedule C is a list of property the debtor claims as exempt.
Schedule D is a list of creditors holding secured claims.
Schedule E is a list of creditors holding unsecured priority claims.
Schedule F is a list of creditors holding unsecured nonpriority claims.
Schedule G is a list of the debtor’s executory contracts and unexpired leases.
Schedule H is a list of codebtors in the bankruptcy.
Schedule I lists the debtor’s monthly income.
Schedule J lists the debtor’s monthly expenses.
The debtor must sign a Declaration that the above schedules are accurate to the best of his or her knowledge, information, and belief.
The debtor must file a Statement of Financial Affairs. This form provides a summary of the debtor’s financial history, transactions, and operations over certain time periods before the case is filed. There are 18 separate items on this form:
1. Income from Employment or Operation of Business
2. Income Other than from Employment or Operation of Business
3. Payments to Creditors
4. Suits, Administrative Proceedings, Executions, Garnishments, and Attachments
5. Repossessions, Foreclosures, and Returns
6. Assignments and Receiverships
9. Payments Related to Debt Counseling or Bankruptcy
10. Other Transfers
11. Closed Financial Accounts
12. Safe Deposit Boxes
14. Property Held for Another Person
15. Prior Address of Debtor
16. Spouses and Former Spouses
17. Environmental Information
18. Nature, Location, and Name of Business
Finally, the debtor must file either a Statement of Current Monthly Income and Means Test Calculation in a Chapter 7 case, or a Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income in a Chapter 13 case.
The success of your bankruptcy largely depends on the accuracy of these forms and the skill that your bankruptcy attorney applies in crafting these financial reports. Don’t leave your financial future to chance! Seek out an experienced bankruptcy attorney to complete these forms and advise you on the best course of action to resolve your financial problems.