How does one go about declaring bankruptcy? Declaring bankruptcy is a bit more involved than Michael Scott’s understanding of the process.
The most common consumer bankruptcy cases are filed under Chapter 7 or Chapter 13 of the Bankruptcy Code. In the Western District of Wisconsin, a Chapter 7 case will usually be concluded about three months after filing. A Chapter 13 case involves repaying a portion of your debt through a 3-5 year plan. But the process of filing the case (aka “declaring bankruptcy”) is quite similar, regardless of the Chapter.
Both Chapter 7 and Chapter 13 cases require a Petition, Schedules, a Statement of Financial Affairs (SoFA), a listing of all creditors with addresses, a Statement of Current Monthly Income/Means Test, and various disclosures. Chapter 13 filers are also required to file a proposed plan showing how the debtor intends to repay certain debts.
Petition: The petition is the first part of the bankruptcy paperwork, identifying the debtor and asking the Court for its protection.
Schedules: The Schedules usually make up the largest portion of the bankruptcy paperwork. Schedules A through J disclose the debtors assets, debts, income, expenses, executory contracts, leases, and co-debtors. The Schedules also categorize the debts as secured, unsecured, or priority.
SoFA: The Statement of Financial Affairs is kind of a catch-all for information. The debtor must disclose his/her income for the past three years, payments made to creditors over the past 3 months, payments made to relatives in the last year, sales or gifts of property to a third party, and other financial information.
Creditor Matrix: Along with the list of creditors, bankruptcy filers must provide the Court with the addresses of all creditors. It is important that all creditors receive notice of the proceedings, so I will usually list a couple of different addresses for each creditor to make sure the notices get to the correct people. Internet payday lenders are notorious for hiding behind fax numbers and email addresses rather than giving a valid mailing address. But they are still entitled to notice of the bankruptcy, so we do our best to find an address.
Means test: The Statement of Current Monthly Income must be completed by all debtors. Only some debtors are required to also complete the means test. See THIS POST for more information on the Chapter 7 means test or THIS POST for info on the Chapter 13 means test.
As you can see, filing bankruptcy is not a simple undertaking. Every case is different and there is no such thing as a “standard” filing. Simply saying (or even declaring) “BANKRUPTCY!” doesn’t cut it.
Bankruptcy attorneys from around the country are taking part in this “Bankruptcy Alphabet” exercise. Please take a few minutes to check out these other blog posts on the letter “D.”
Debt Buyer – by Pittsburgh Bankruptcy Attorney Shawn N. Wright
Debt Relief Agency – by Metro Richmond Bankruptcy Attorney, Mitchell Goldstein
Debtor – by New York Bankruptcy Lawyer, Jay S. Fleischman
Debtor – by Taylor Michigan Bankruptcy Lawyer, Christopher McAvoy
Deciding to File Bankruptcy – by Columbus, Ohio Bankruptcy Lawyer, Athena Inembolidis
Deconsolidate – by Omaha/Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
Discharge – by Northern California Bankruptcy Lawyer, Cathy Moran
Discharge – by Los Angeles Bankruptcy Attorney, Mark J. Markus
Discharge – by Kona Bankruptcy Attorney, Stuart Ing
Discharge – by Daniel J. Winter, Chicago Bankruptcy Attorney
Discharge – by Birmingham Bankruptcy Attorney, Elizabeth Johnson
Discharge – by St. Louis, Missouri Bankruptcy Attorney, Nancy Martin
Dischargeable Debt – by Chicago Bankruptcy Attorney, Kyle A. Lindsey
Disclose – by Marin County Bankruptcy Attorney, Catherine Eranthe
Disclosures – by Colorado Springs Bankruptcy Attorney Bob Doig
Divorce – by Jacksonville Bankruptcy Attorney, Monica D. Shepard
Do’s and Don’ts – by San Francisco Bankruptcy Attorney, Jeena Cho
Do’s and Don’ts – by Livonia Michigan Bankruptcy Attorney, Peter Behrmann
Do Not Do This Before Filing Bankruptcy – by Houston Bankruptcy Attorney, Eric Southward
Documents – by Philadelphia Bankruptcy Lawyer, Kim Coleman
Domestic Support – by Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
Domicile – by Miami Bankruptcy Attorney, Dorota Trzeciecka
Don’t Do This Before Filing – Houston Bankruptcy Attorneys, Busby & Associates
DUI, DWI, OVI – by Cleveland Area Bankruptcy Lawyer Bill Balena
Image credit: TooFarNorth/flickr