HOW TO FILE CHAPTER 7 PETITION FOR INITIATING BANKRUPTCY PROCEEDINGS ?

A Chapter 7 bankruptcy case is commenced by the filing of a voluntary petition with the appropriate United States Bankruptcy Court. The filing of the petition is the formal act through which an individual debtor invokes the protection of the Bankruptcy Code and places the debtor’s financial affairs under the jurisdiction of the bankruptcy court. From the date of filing, the bankruptcy case is assigned a case number and a bankruptcy estate is generally created consisting of the debtor’s interests in property, subject to the provisions of the Bankruptcy Code. The filing also triggers important legal consequences, including the commencement of the automatic stay under 11 U.S.C. § 362, which generally prevents creditors from continuing or initiating specified collection and enforcement actions against the debtor.

The principal document used to commence an individual Chapter 7 case is Official Form 101, Voluntary Petition for Individuals Filing for Bankruptcy. The petition identifies the debtor, specifies that the case is being filed under Chapter 7, provides information relevant to the debtor’s residence and the appropriate venue, and contains other information required for commencement of the case. The petition also requires the debtor to provide information concerning eligibility, prior bankruptcy filings, and certain other matters relevant to the administration of the case.

An individual Chapter 7 debtor is required to file certain documents with Voluntary Petition.  These include  the statement concerning the debtor’s Social Security number (generally Official Form 121), the required information concerning completion of prepetition credit counseling, and the creditor mailing list or matrix required for service of notices. The debtor must also pay the applicable Chapter 7 filing fee or, where permitted, file an application to pay the fee in installments or seek a waiver of the fee. These documents provide the basic information necessary to commence and administer the bankruptcy case.

A substantial portion of the debtor’s financial disclosures may be filed with the petition or within 14 days after filing, pursuant to Federal Rule of Bankruptcy Procedure 1007. These documents generally include the debtor’s Schedules of Assets and Liabilities (Schedules A/B through J), the Summary of Assets and Liabilities and Certain Statistical Information, and the Statement of Financial Affairs. The debtor must also file copies of payment advices or other evidence of payments received from an employer during the 60 days preceding the filing of the petition. The 14-day period permits a debtor, in appropriate circumstances, to commence a case by filing the petition and essential documents and to complete the remaining financial disclosures shortly thereafter.

Not every document required during a Chapter 7 case is necessarily filed on the public bankruptcy docket. Certain documents are instead provided directly to the Chapter 7 trustee. For example, the debtor generally must provide the trustee with the federal income tax return or transcript for the most recent tax year ending immediately before the commencement of the case, within the period required by 11 U.S.C. § 521(e). Trustees may also request bank statements, mortgage statements, vehicle loan documents, property deeds, insurance records, retirement-account statements, business records and other documents necessary to verify information contained in the petition and schedules.

SUMMARY OF DOCUMENTS

Creditor Mailing List

A creditor mailing list, commonly referred to as a creditor matrix, is a list of the names and mailing addresses of the creditors and other entities to whom the debtor owes debts and who are entitled to receive notices in the bankruptcy case. Under Federal Rule of Bankruptcy Procedure 1007(a)(1), a debtor filing a voluntary Chapter 7 petition must provide a list of the names and addresses of the entities included or to be included in the schedules of liabilities. The principal purpose of this list is to enable the Bankruptcy Court and the bankruptcy system to send the required notices of the commencement and progress of the bankruptcy case to creditors.

The mailing list generally includes the names and addresses of credit-card companies, banks, mortgage lenders, vehicle-finance companies, personal-loan creditors, medical providers, collection agencies, landlords, government agencies, and other persons or entities having claims against the debtor. The addresses must be sufficiently complete and accurate to ensure that bankruptcy notices reach the appropriate recipients. Where a creditor has designated a particular address for bankruptcy notices, that address should generally be used in accordance with applicable court requirements.

The creditor mailing list is particularly important because creditors must receive timely notice of the bankruptcy case in order to protect their legal rights. Depending upon the circumstances, a creditor may need to file a proof of claim, attend or participate in the §341 meeting of creditors, object to exemptions, seek relief from the automatic stay, or commence an adversary proceeding concerning the dischargeability of a particular debt under 11 U.S.C. §523. Failure to provide a correct address or failure to list a creditor may therefore create significant notice problems and, in certain circumstances, affect the creditor’s ability to take timely action.

Statement of Financial Affairs (SOFA)

The Statement of Financial Affairs (SOFA) is a formal bankruptcy document that provides the Bankruptcy Court and the Chapter 7 trustee with a historical picture of the debtor’s financial activities and circumstances. In an individual Chapter 7 case, it is generally filed using Official Form 107. While the bankruptcy schedules primarily provide a picture of the debtor’s current financial position as of the filing date, the Statement of Financial Affairs asks questions about the debtor’s financial history, including income, transfers of property, payments to creditors, lawsuits, foreclosures, repossessions, business activities, and certain other financial events.

The Statement of Financial Affairs is intended to give the trustee and creditors information that may reveal assets that have been transferred, unusual payments, financial transactions, or other circumstances relevant to the administration of the bankruptcy estate. For example, the form asks about the debtor’s income during specified periods before bankruptcy, payments made to creditors, certain payments to insiders, transfers of property, closed financial accounts, losses from theft or other causes, certain legal actions, and business or other financial activities. The questions and applicable look-back periods vary according to the particular item on the form.

Accuracy and completeness are particularly important because the Statement of Financial Affairs is filed under penalty of perjury. A debtor must carefully review each question and provide truthful and complete answers. An unexplained transfer of property, undisclosed payment to a relative or other insider, omitted income, or failure to disclose a lawsuit or business activity may attract the trustee’s attention and could result in further investigation. Depending on the circumstances, materially false or concealed information can have serious consequences, including denial of discharge under 11 U.S.C. §727, denial or revocation of discharge, recovery of transferred property, dismissal of the case, or even civil or criminal consequences where the conduct satisfies applicable law.

Statement of Intention

The Statement of Intention is a document filed by an individual Chapter 7 debtor to inform the Bankruptcy Court and the Chapter 7 trustee about what the debtor intends to do with certain secured debts and leased property after filing bankruptcy. It is governed principally by 11 U.S.C. §521(a)(2) and is generally submitted using Official Form 108. The statement is relevant when the debtor has debts secured by property of the bankruptcy estate or has entered into certain personal property leases.

With respect to secured debts, the debtor generally indicates whether the debtor intends to surrender the property, retain the property and redeem it, or retain the property and continue making payments under the applicable agreement, commonly referred to as reaffirmation where legally appropriate. For example, if a debtor owns a vehicle subject to a loan, the Statement of Intention allows the debtor to indicate whether the vehicle will be surrendered, redeemed by paying the applicable redemption amount, or retained subject to the requirements governing the debt and collateral.

The Statement of Intention may also address leases of personal property, such as a vehicle lease. The debtor generally indicates whether the lease will be assumed or rejected, as applicable. The purpose is to give the trustee and the creditor early notice of the debtor’s proposed treatment of the secured property or leased property. The statement itself, however, does not necessarily determine the ultimate legal rights of the debtor and creditor. The Bankruptcy Code, the underlying agreement, applicable court orders, and other provisions of bankruptcy law continue to govern the parties’ rights.

Under §521(a)(2), when applicable, the debtor must file the Statement of Intention within 30 days after the petition is filed or by the date of the §341 meeting of creditors, whichever is earlier.

Means Test Forms

Official Form B 122A-1, titled “Chapter 7 Statement of Your Current Monthly Income,” is the first part of the Chapter 7 means-test process. It is used to calculate the debtor’s current monthly income (CMI) for purposes of determining whether the debtor’s income is above or below the applicable median family income for the debtor’s state and household size. Current monthly income is generally based on the debtor’s average monthly income received during the six calendar months preceding the commencement of the bankruptcy case, subject to the specific definition and exclusions contained in the Bankruptcy Code. The form requires the debtor to provide information concerning income received during that period and, where applicable, income of a spouse in a joint case.

Form B 122A-1 is important because it provides the starting point for determining whether the statutory presumption of abuse under §707(b)(2) may arise. If the debtor’s current monthly income is not above the applicable state median income, the means-test calculation on Form B 122A-2 generally is not required, and there is no presumption of abuse based on the §707(b)(2) means test. If the debtor’s income is above the applicable median, the debtor generally proceeds to Form B 122A-2, subject to statutory exceptions and exemptions.

Official Form B 122A-2, titled “Chapter 7 Means Test Calculation,” is the second part of the means test and is used when the debtor’s current monthly income is above the applicable median, unless an exception applies. It takes the current monthly income determined through Form B 122A-1 and applies the deductions and calculations permitted by 11 U.S.C. §707(b)(2). These include specified expenses, certain secured-debt payments, priority claims, and other deductions permitted by the statute. The resulting calculation is used to determine whether the debtor’s financial circumstances create a presumption of abuse under Chapter 7.

The two forms therefore perform different but connected functions. Form B 122A-1 determines the debtor’s current monthly income and compares it with the applicable median income, while Form B 122A-2 performs the detailed means-test calculation when the debtor’s income is above the median. If the Form B 122A-2 calculation produces the statutory threshold for abuse, a presumption of abuse arises. The debtor may, in appropriate circumstances, rebut that presumption by demonstrating special circumstances that justify additional expenses or adjustments to current monthly income, as provided by §707(b)(2)(B).

It is also important to distinguish Form B 122A-1 from Form B 122A-1Supp. The latter is the “Statement of Exemption from Presumption of Abuse Under §707(b)(2)” and applies in specified circumstances, such as certain debtors whose debts are primarily non-consumer debts or who qualify for particular military or homeland-defense exclusions. The U.S. Courts currently identify B 122A-1, B 122A-1Supp, and B 122A-2 as the Chapter 7 means-test forms.

Credit Counselling Certificate

Credit Counseling Certificate is a document demonstrating that an individual who intends to file bankruptcy has completed the required credit counseling or budget-and-credit counseling session with an approved nonprofit budget and credit counseling agency. The requirement is primarily established by 11 U.S.C. §109(h). Generally, an individual may not be a debtor under Chapter 7 unless, during the 180-day period preceding the filing of the bankruptcy petition, the individual received an individual or group briefing from an approved nonprofit budget and credit counseling agency concerning the individual’s financial situation and available alternatives to bankruptcy.

The counseling session is intended to help the debtor understand whether bankruptcy is the most appropriate solution to the financial difficulties or whether alternatives, such as debt-management plans or other forms of financial restructuring, may be available. The counseling agency reviews the debtor’s financial circumstances and provides information concerning available options. Completion of the counseling session does not mean that the debtor is required to pursue any particular alternative; it is principally a statutory pre-filing requirement.

Ordinarily, the certificate of completion issued by the approved counseling agency should be filed with the Bankruptcy Court with the Chapter 7 petition. Under Federal Rule of Bankruptcy Procedure 1007(c), if the certificate has not yet been received when the petition is filed, the debtor may, in the circumstances permitted by the rule, file the required certification or statement and subsequently file the certificate within the applicable period. Therefore, the certificate should generally be obtained before filing the bankruptcy petition, rather than treated as an ordinary schedule that can simply be prepared after filing.

There are statutory exceptions to the normal requirement. Under §109(h)(2), the counseling requirement may be temporarily excused in certain circumstances involving an emergency in which the required counseling services are unavailable. The statute also provides an exception where the debtor resides in a district in which the United States Trustee has determined that approved counseling agencies are not reasonably able to provide the required services. In addition, §109(h)(4) permits a court to waive the requirement for a debtor who is unable to complete the counseling because of incapacity, disability, or active military duty in a military zone.

The Credit Counseling Certificate should be distinguished from the financial management course certificate required after filing. Credit counseling under §109(h) is generally a pre-filing requirement, whereas the personal financial management course under §727(a)(11) is generally completed after the bankruptcy case begins and is one of the requirements for receiving a Chapter 7 discharge. Thus, the two certificates serve different purposes and occur at different stages of the bankruptcy process.

SUMMARY OF SCHEDULES

Schedule A/B – Details of Property

Schedule A/B, Official Form 106A/B titled “Property,” is the bankruptcy schedule in which an individual Chapter 7 debtor is required to disclose the property and other assets in which the debtor has a legal or equitable interest. It combines the former Schedule A, which dealt primarily with real property, and Schedule B, which dealt with personal property. The purpose of Schedule A/B is to provide the Bankruptcy Court and the Chapter 7 trustee with a comprehensive picture of the debtor’s assets so that the trustee can determine which property is part of the bankruptcy estate, whether any property is exempt, and whether there are assets that may be available for liquidation and distribution to creditors.

Schedule A/B requires disclosure of a wide range of property. Real estate must be disclosed, including a house, apartment, condominium, land, commercial property, or other real property interests. The debtor must also disclose vehicles, household goods and furnishings, clothing, jewelry, electronics, bank accounts, cash, stocks, bonds, mutual funds, retirement accounts, interests in businesses, tax refunds, security deposits, insurance interests, intellectual property, claims against other persons, contingent and unliquidated claims, and other personal property. The schedule is deliberately broad because the Bankruptcy Code defines property of the estate very broadly under 11 U.S.C. §541.

The debtor must generally disclose the current value of the property, rather than merely the amount originally paid for it. For many assets, the relevant concept is the property’s current replacement value, as defined in 11 U.S.C. §506(a)(2), although the appropriate valuation can depend upon the nature of the particular property. The debtor should therefore make a reasonable and good-faith assessment of the value of each asset. Where an asset has little or no market value, it should not simply be omitted; the debtor should disclose it and provide an appropriate valuation.

Schedule A/B is particularly important because all property of the estate is not necessarily property that the debtor will ultimately lose. After identifying property on Schedule A/B, the debtor generally claims applicable exemptions on Schedule C. The trustee then examines the schedules to determine whether an asset is exempt, partially exempt, or non-exempt. Non-exempt property may, depending upon the circumstances and the trustee’s administration of the estate, be sold or otherwise administered for the benefit of creditors.

Schedule A/B must be completed carefully and truthfully because it is filed under penalty of perjury. Deliberately concealing assets or providing materially false information can have serious consequences, including denial of discharge under 11 U.S.C. §727, recovery of concealed property by the trustee, dismissal of the case, and, in appropriate circumstances, civil or criminal liability. Consequently, Schedule A/B is one of the most important disclosure documents in a Chapter 7 case.

Schedule C – Exempt Property

Schedule C, Official Form 106C titled “The Property You Claim as Exempt,” is the bankruptcy schedule in which an individual debtor identifies the property that the debtor claims to be protected from administration or liquidation under applicable exemption laws. It is generally completed after the debtor has disclosed all assets on Schedule A/B. The fundamental purpose of Schedule C is to inform the Bankruptcy Court, Chapter 7 trustee, and creditors which property the debtor claims as exempt and the legal basis for each exemption.

A debtor does not automatically protect property merely by listing it on Schedule A/B. The debtor must generally affirmatively claim an exemption for property for which an exemption is available. Schedule C therefore requires the debtor to identify the particular property claimed as exempt, specify the law providing the exemption, state the value of the claimed exemption, and provide the relevant valuation information required by the form. The exemption may arise under federal bankruptcy law, particularly 11 U.S.C. §522, or under applicable state law, depending upon which exemption system the debtor is legally permitted or required to use.

Common categories of property for which exemptions may potentially be claimed include a homestead or interest in a residence, motor vehicle, household goods and furnishings, clothing, jewelry, certain retirement funds, personal property, tools of the trade, and certain insurance or public-benefit interests. The amount that can be protected varies considerably depending upon the applicable exemption law and the type and value of the property. Consequently, a debtor should not assume that every asset listed on Schedule A/B is fully protected simply because it is described as an exempt type of property.

An important feature of Schedule C is that the exemption law applicable to the debtor must be determined before the schedule is completed. Under 11 U.S.C. §522(b), debtors may in appropriate circumstances use the federal exemptions provided by §522(d), while states may have their own exemption systems and may restrict or prohibit the use of the federal exemptions. In addition, the Bankruptcy Code contains a 730-day domicile rule and a related provision dealing with situations in which the debtor has not maintained the required domicile for the applicable period. Therefore, a debtor who has recently moved from one state to another may have to apply a different exemption analysis rather than simply selecting the exemptions of the debtor’s current state.

Schedule C is especially important in a Chapter 7 liquidation case because the Chapter 7 trustee examines the debtor’s assets and claimed exemptions to determine whether there is any non-exempt equity that can be administered for the benefit of creditors. If property is fully exempt, it will generally remain with the debtor, subject to applicable law and any valid liens. If property is only partially exempt and has sufficient non-exempt value, the trustee may have an economic basis to administer that property. Thus, Schedule C plays a central role in determining whether a Chapter 7 case will effectively be a no-asset case or whether the trustee may have assets to administer.

The debtor must complete Schedule C accurately and in good faith. An exemption that is incorrectly claimed may be challenged by the trustee or another party in interest. Conversely, failure to claim an available exemption may result in the debtor not receiving the protection that the applicable exemption law could have provided. The debtor should therefore carefully identify the property, determine its appropriate value, identify the correct statutory authority for the exemption, and calculate the amount of the exemption being claimed.

Schedule D – Details of Secured Property

Schedule D, Official Form 106D, “Creditors Who Have Claims Secured by Property,” is the bankruptcy schedule in which an individual debtor identifies debts that are secured by collateral or a lien on the debtor’s property. It is generally completed along with the other bankruptcy schedules and provides the Bankruptcy Court and Chapter 7 trustee with information about the debtor’s secured debts, the property securing those debts, the amount owed, and the estimated value of the collateral.

A secured debt is a debt for which the creditor has a lien or other security interest in particular property. Common examples include a mortgage secured by a home, an automobile loan secured by a vehicle, or a loan secured by other personal or real property. If the property is worth less than the debt, the debt may be undersecured, meaning that the value of the collateral is insufficient to cover the entire claim.

Schedule D requires the debtor to provide information such as the name and address of the secured creditor, the type of lien or security interest, a description of the collateral, the date the lien was incurred, the amount of the claim, and the value of the property securing the claim. The debtor should distinguish between the total amount owed and the value of the collateral because this distinction may determine whether the claim is fully secured or only partially secured.

Schedule D should be read together with Schedule A/B, which identifies the debtor’s property. For example, if a debtor owns a vehicle worth $20,000 and owes $15,000 on a vehicle loan secured by that vehicle, the vehicle is reported on Schedule A/B and the corresponding secured loan is reported on Schedule D. The debtor may then claim an exemption for the vehicle, if available, on Schedule C. Thus, these schedules work together: Schedule A/B identifies the asset, Schedule C identifies the claimed exemption, and Schedule D identifies the secured debt attached to the asset.

The existence of a secured claim does not automatically mean that the creditor will receive the full amount of its debt from the bankruptcy estate. The creditor’s secured status generally extends to the value of its collateral, subject to the applicable provisions of the Bankruptcy Code. If the collateral is worth less than the amount owed, the creditor may have a secured portion and an unsecured portion, depending upon the circumstances and applicable law. The treatment of such claims can become particularly important when determining whether the debtor intends to surrender, redeem, or retain the property securing the debt.

Schedule D is also closely connected with the debtor’s Statement of Intention, Official Form 108. In an individual Chapter 7 case, when the debtor has debts secured by property of the estate, 11 U.S.C. §521(a)(2) generally requires the debtor to state what the debtor intends to do with the property. The debtor may, depending upon the circumstances, indicate an intention to surrender the property, redeem it, or retain it subject to the requirements of the Bankruptcy Code and applicable agreements.

The information in Schedule D must be complete and accurate because secured creditors, the trustee, and the Bankruptcy Court rely upon it to understand the relationship between the debtor’s liabilities and assets. The debtor should not omit a secured debt merely because the debtor is current on payments, intends to continue paying the creditor, or believes that the property will be retained. The existence and nature of the lien should still be disclosed when required.

Schedule E/F – Unsecured Claims

Schedule E/F, Official Form 106E/F, “Creditors Who Have Unsecured Claims,” is the bankruptcy schedule used by an individual debtor to identify and disclose debts that are not secured by collateral. It combines the former Schedule E, which dealt with priority unsecured claims, and Schedule F, which dealt with nonpriority unsecured claims. The schedule is important in a Chapter 7 case because it provides the Bankruptcy Court and Chapter 7 trustee with information about the debtor’s unsecured liabilities and distinguishes between priority claims and nonpriority claims.

A priority unsecured claim is an unsecured debt that Congress has given a higher priority for payment under 11 U.S.C. §507. Examples can include certain recent tax obligations, certain domestic support obligations, and certain employee wage claims, subject to the specific statutory requirements and limitations. These claims do not have collateral securing them, but the Bankruptcy Code gives them preferential treatment in the distribution of bankruptcy estate assets. Schedule E/F requires the debtor to identify the nature of the priority claim and provide the relevant information concerning the creditor and amount owed.

A nonpriority unsecured claim, on the other hand, is generally an unsecured debt that does not receive priority under §507. Common examples include credit-card debts, medical bills, personal loans, deficiency balances, certain collection claims, and many ordinary contractual debts. These claims are generally treated as general unsecured claims and, in an asset Chapter 7 case, may receive a distribution only after claims entitled to higher priority have been paid according to the distribution scheme established by the Bankruptcy Code.

Schedule E/F requires the debtor to provide information such as the name and address of the creditor, the amount of the claim, the date the debt was incurred, the nature of the debt, and whether the claim is entitled to priority. The debtor must also disclose certain disputed claims and claims for which the amount or liability is uncertain. A debtor should not omit a debt merely because the debtor disputes it, believes the creditor will not file a proof of claim, or has not recently received a statement from the creditor. The form contains specific questions for identifying claims that are disputed, contingent, or unliquidated.

Schedule E/F should be distinguished from Schedule D. Schedule D concerns secured claims, where the creditor has a lien or other security interest in property. Schedule E/F concerns unsecured claims, where the creditor does not have collateral securing the claim. For example, a mortgage loan secured by a house would ordinarily be reported on Schedule D, whereas an ordinary credit-card balance would ordinarily be reported on Schedule E/F. A debt may also have both secured and unsecured components in certain circumstances, such as where the debt exceeds the value of the collateral.

The distinction between priority and nonpriority unsecured claims is particularly important in Chapter 7 because the trustee must distribute funds from non-exempt estate assets according to the statutory order of priority under 11 U.S.C. §726. Priority unsecured claims generally receive payment before general unsecured claims. However, if the Chapter 7 estate contains no non-exempt assets for distribution, unsecured creditors may receive no distribution even though their claims are properly listed on Schedule E/F.

The debtor must complete Schedule E/F fully and accurately, because the information provided may affect creditor notice, the trustee’s administration of the estate, the classification and distribution of claims, and the eventual discharge of debts. Listing a debt on Schedule E/F does not by itself determine whether that debt is legally dischargeable. Certain unsecured debts may be excepted from discharge under 11 U.S.C. §523, even though they are properly disclosed on the schedule.

Schedule G – Executory Contracts and Unexpired Leases

Schedule G, Official Form 106G titled “Executory Contracts and Unexpired Leases,” is the bankruptcy schedule in which an individual debtor discloses contracts and leases that are still legally operative and have not yet been fully performed or terminated as of the bankruptcy filing date. The purpose of Schedule G is to inform the Bankruptcy Court and the Chapter 7 trustee about ongoing contractual obligations that may become part of the bankruptcy estate and may require a decision concerning their continuation, assumption, or rejection.

An executory contract is generally a contract under which significant obligations remain to be performed by both the debtor and the other party. Examples may include certain employment contracts, service agreements, business contracts, franchise agreements, or other continuing contractual arrangements. The precise legal meaning of an executory contract can depend upon the nature and terms of the particular agreement. A contract that has already been completely performed by one or both parties ordinarily would not be treated as an executory contract merely because some payment or administrative matter remains outstanding.

An unexpired lease is a lease that has not expired or otherwise been terminated as of the bankruptcy filing. Schedule G may therefore include leases relating to residential property, commercial premises, vehicles, equipment, or other personal property. For example, if a debtor is renting an apartment under a lease that remains in effect when the Chapter 7 petition is filed, the lease may need to be disclosed on Schedule G. Similarly, a vehicle lease that remains outstanding at the time of filing may be required to be reported.

The debtor is generally required to provide information concerning the other party to the contract or lease, the nature of the agreement, the date it was entered into, and the remaining obligations or other relevant details requested by the form. The debtor should disclose agreements even where the debtor believes that the contract has little economic value or that it will ultimately be rejected. The trustee must have sufficient information to determine whether the contract or lease has value to the bankruptcy estate or imposes continuing obligations.

Schedule G is particularly important because 11 U.S.C. §365 governs the treatment of executory contracts and unexpired leases in bankruptcy. Subject to the requirements and limitations of that section, a Chapter 7 trustee may generally assume or reject an executory contract or unexpired lease. If the trustee assumes a contract or lease, the estate generally remains responsible for performing the applicable obligations. If the trustee rejects it, the rejection generally constitutes a breach, with the resulting claim treated according to applicable bankruptcy law. Special rules apply to certain types of contracts and leases.

The debtor should also understand that listing a contract or lease on Schedule G does not itself determine whether it will be assumed or rejected. The schedule is primarily a disclosure document. The ultimate treatment of the agreement depends upon the Bankruptcy Code, the trustee’s actions, applicable deadlines, and, where necessary, a court order. In some circumstances, the debtor may have continuing personal obligations even though a contract or lease is rejected, depending upon the nature of the agreement and applicable law.

Schedule G should be distinguished from Schedule D and Schedule E/F. Schedule D identifies debts secured by property, while Schedule E/F identifies unsecured claims. Schedule G, by contrast, identifies ongoing contractual relationships and leases that have not yet been completed or terminated. It therefore focuses not simply on an amount presently owed, but on continuing contractual rights and obligations.

Schedule H – Details of Co-debtors

Schedule H, Official Form 106H titled  “Your Codebtors,” is the bankruptcy schedule in which an individual debtor identifies persons or entities that are jointly liable with the debtor for any of the debts disclosed in the bankruptcy schedules. A co-debtor is generally another person who is also legally responsible for paying a debt owed to a creditor. Schedule H is therefore intended to inform the Bankruptcy Court and the Chapter 7 trustee about the existence of co-obligors, joint debtors, co-signers, or other persons who may be liable for the same debt.

For example, if a husband and wife jointly borrowed money from a bank and both are legally responsible for repayment, one debtor’s bankruptcy filing may require disclosure of the other spouse as a codebtor. Similarly, a person who has co-signed a loan, guaranteed an obligation, or is jointly liable under a contract may need to be identified, depending upon the nature of the legal obligation. The fact that another person is connected with the debt does not by itself establish codebtor status; the relevant question is whether that person has a legal obligation to the creditor for the debt.

Schedule H generally requires the debtor to provide information identifying the co-debtor and the creditor, and to indicate the nature of the debtor’s relationship with the codebtor. The debtor must carefully review the underlying loan agreements, guarantees, and other documents to determine whether another person has joint liability. The information in Schedule H should also be consistent with the corresponding debt disclosed on Schedule D or Schedule E/F.

Schedule H is particularly important because the bankruptcy filing of one debtor does not ordinarily discharge the separate liability of another person who is jointly liable for the same debt. For example, if A and B are jointly liable on a $20,000 loan and A files Chapter 7, A may receive a discharge of A’s personal liability if the debt is otherwise dischargeable, but B generally remains liable to the creditor. The creditor may therefore continue to pursue B, subject to any applicable protections or limitations under bankruptcy law.

The treatment of codebtors also differs between Chapter 7 and Chapter 13. Chapter 13 contains a specific codebtor stay under 11 U.S.C. §1301, which can protect certain individuals who are jointly liable with the Chapter 13 debtor for consumer debts. Chapter 7 does not contain a comparable general codebtor stay. Consequently, the filing of a Chapter 7 case generally does not prevent a creditor from pursuing a non-filing codebtor merely because the debtor has filed bankruptcy.

Schedule H should therefore be distinguished from the Statement of Financial Affairs and the schedules of debts. Schedule D identifies secured claims, Schedule E/F identifies unsecured claims, and Schedule H identifies the persons or entities who are also liable for those debts. It provides the trustee and the Bankruptcy Court with a clearer understanding of the debtor’s obligations and the potential effect of the bankruptcy case on other persons.

Schedule I – Details of Income

Schedule I, Official Form 106I titled  “Your Income,” is the bankruptcy schedule in which an individual debtor provides information about the debtor’s current income and employment. It is used in a Chapter 7 case to give the Bankruptcy Court and the Chapter 7 trustee a picture of the debtor’s present financial circumstances, including employment, wages, business income, and other regular sources of income.

Schedule I generally requires the debtor to identify the employer or source of income, occupation, length of employment, and the debtor’s gross monthly income. The debtor must also disclose deductions from income, such as taxes, Social Security contributions, insurance, retirement contributions, and other applicable payroll deductions, so that the form can arrive at the debtor’s current monthly net income. Where the debtor is married, the form also addresses the spouse’s income, subject to the applicable requirements of the form.

Schedule I should be distinguished from Form B 122A-1, which is used for the Chapter 7 means-test calculation. Although both forms deal with income, they serve different purposes. Schedule I focuses primarily on the debtor’s actual current income and financial situation at the time of filing, whereas Form B 122A-1 calculates current monthly income as defined by the Bankruptcy Code, generally using income received during the six-calendar-month period preceding the bankruptcy filing. The figures on the two forms therefore may not necessarily be identical.

Schedule I is closely connected with Schedule J, which deals with expenses. Schedule I shows the debtor’s current income, while Schedule J shows the debtor’s current monthly expenses. When considered together, the two schedules provide an indication of whether the debtor has income remaining after ordinary monthly living expenses. This information can assist the trustee and other parties in understanding the debtor’s financial condition and may also be relevant to questions concerning the debtor’s ability to repay debts.

The debtor must provide complete and accurate information on Schedule I. Income should not be omitted merely because it is irregular, comes from self-employment, is received from a second job, or is generated from another source. Where income fluctuates substantially, the debtor should provide information in accordance with the instructions on the official form and explain the circumstances where required.

Schedule I is therefore different from Schedule A/B, Schedule D, Schedule E/F, and Schedule G. Schedule A/B identifies the debtor’s property; Schedule D identifies secured debts; Schedule E/F identifies unsecured claims; Schedule G identifies executory contracts and unexpired leases; and Schedule I identifies the debtor’s current income. When read together with Schedule J, it provides a current snapshot of the debtor’s household cash-flow position.

Schedule J – Details of Expenses

Schedule J, Official Form 106J titled  “Your Expenses,” is the bankruptcy schedule in which an individual debtor discloses the debtor’s current monthly household expenses. It is generally filed together with Schedule I and is intended to provide the Bankruptcy Court and the Chapter 7 trustee with a clear picture of the debtor’s current cost of living and monthly financial obligations.

Schedule J requires the debtor to disclose regular household expenses such as mortgage or rent, utilities, food, clothing, transportation, insurance, taxes, medical and dental expenses, personal care, entertainment, charitable contributions, installment payments, support obligations, and other necessary household expenses, as applicable. The debtor is required to provide realistic monthly amounts based on the debtor’s actual financial circumstances rather than simply estimating expenses in a manner designed to produce a particular result.

Schedule J is closely connected with Schedule I, which deals with income. Schedule I sets out the debtor’s current monthly income, while Schedule J sets out the debtor’s current monthly expenses. By comparing the two schedules, the Bankruptcy Court, trustee, and other parties can determine whether the debtor has monthly income remaining after paying ordinary household expenses. Schedule J therefore provides an important snapshot of the debtor’s present cash-flow position.

The figures on Schedule J should, however, be distinguished from the income-and-expense calculations used for the Chapter 7 means test. The means test under 11 U.S.C. §707(b)(2) uses the specific statutory definition of current monthly income and the deductions permitted by the Bankruptcy Code. Schedule J, by contrast, is intended to show the debtor’s actual current monthly expenses. Consequently, the figures appearing on Schedule J and the means-test forms do not necessarily have to be identical.

Schedule J also requires consideration of household circumstances. The debtor should account for expenses that are actually incurred for the household and follow the official form’s instructions regarding expenses paid by or for other household members. Where expenses fluctuate, the debtor should use a reasonable monthly figure based on the circumstances and provide explanations where the form requires them. Expenses should not be artificially inflated or omitted merely to create the appearance of a particular amount of disposable income.

Accurate completion of Schedule J is important because the trustee may compare the expenses reported there with the debtor’s bank statements, income records, tax returns, payment records, and information provided at the §341 meeting of creditors. Significant discrepancies may result in requests for clarification or supporting documentation. Deliberately providing false or misleading financial information can have serious consequences under the Bankruptcy Code.

Schedule J should therefore be read together with Schedule I. Schedule I answers the question, “What is the debtor’s current monthly income?” while Schedule J answers, “What are the debtor’s current monthly household expenses?” Together, these schedules provide a practical picture of the debtor’s current financial condition and help the trustee understand whether the debtor has income available after necessary living expenses.

FILING FEE IN CHAPTER 7

A debtor who files a Chapter 7 bankruptcy petition is generally required to pay a filing fee to the bankruptcy court. The filing fee is prescribed by the Judicial Conference and is separate from attorneys’ fees or other administrative expenses associated with the bankruptcy case. The fee is ordinarily paid when the petition is filed, although the court may permit payment in installments in appropriate circumstances. Because filing fees may be periodically adjusted, the applicable fee should be verified against the current bankruptcy court fee schedule at the time of filing.

A debtor who cannot afford the filing fee may request a waiver of the fee under 11 U.S.C. § 418 and the applicable bankruptcy rules. For an individual debtor to qualify, the debtor’s income generally must be below 150 percent of the official poverty guidelines applicable to the debtor’s household size and the debtor must be unable to pay the fee in installments. The court considers the debtor’s financial circumstances and supporting information submitted with the fee-waiver application. A fee waiver is therefore not automatic merely because the debtor has limited income; the statutory and court-prescribed eligibility requirements must be satisfied.

If the debtor does not qualify for a fee waiver but cannot pay the entire filing fee immediately, the debtor may request permission to pay the fee in installments under Federal Rule of Bankruptcy Procedure 1006(b). The court may establish the number and amount of installments, subject to the applicable rules and limitations. Failure to make the required installment payments can result in dismissal of the bankruptcy case. Accordingly, before filing a Chapter 7 petition, the debtor should determine whether the filing fee can be paid in full, whether installment payments are appropriate, or whether the debtor may qualify for a fee waiver.

DEBTOR’S DUTIES AND RESPONSIBILITES

The filing of a Chapter 7 bankruptcy petition provides the debtor with important protections, including the automatic stay and the possibility of a discharge, but it also imposes significant statutory duties. Section 521 of the Bankruptcy Code requires the debtor to provide complete, accurate, and timely financial information so that the trustee and creditors can properly administer the bankruptcy estate and evaluate the debtor’s financial affairs. These obligations include filing the required schedules, Statement of Financial Affairs, and other prescribed information; filing a Statement of Intention concerning certain secured consumer debts; cooperating with the trustee; surrendering estate property and relevant records; providing required tax returns and financial information; complying with obligations concerning certain secured personal property; and completing the required personal financial-management course.

The debtor’s duties continue throughout the bankruptcy case, and compliance is essential to the proper administration of the estate. In particular, §521(a)(3) requires the debtor to cooperate with the trustee, while §521(a)(4) requires the surrender of estate property and records. Section 521(a)(5) addresses the provision of tax returns and related financial information, and §521(a)(6) imposes specific obligations concerning certain secured personal property in applicable Chapter 7 cases. Section 521(a)(7) requires completion of the personal financial-management course, which is distinct from the pre-filing credit-counseling requirement under §109(h). The debtor must also comply with applicable tax-return filing and information requirements under §521(e) and related provisions.

Failure to comply with these duties can result in serious consequences. Under §521(i)(1), failure to file the information required by §521(a)(1) within the statutory period can result in automatic dismissal of the bankruptcy case, subject to the exceptions and extensions provided by §521(i)(3) and (4). Failure to cooperate with the trustee or surrender estate property may result in court orders compelling compliance and other sanctions. Where the debtor fails to comply with obligations concerning secured property, §362(h) may cause the automatic stay to terminate with respect to the relevant property, allowing the secured creditor to exercise its rights against the collateral, subject to applicable law.

Non-compliance may also affect the debtor’s right to receive a discharge. Section 727(a)(3) may deny discharge where the debtor improperly conceals, destroys, falsifies, or fails to maintain records necessary to determine the debtor’s financial condition. Section 727(a)(4) addresses knowingly and fraudulently making false oaths, accounts, or materially false statements in connection with the bankruptcy case, while §727(a)(6) concerns refusal to obey a lawful court order or answer a material question. Finally, §727(a)(11) provides a ground for denial of discharge where the debtor fails to complete the required personal financial-management course, subject to statutory exceptions. Thus, while not every failure to perform a procedural duty automatically results in denial of discharge, deliberate, fraudulent, or serious non-compliance can jeopardize the debtor’s case and discharge.

FILING CHAPTER 7 PERSONALLY OR THROUGH ATTORNEY

An individual debtor is legally permitted to file a Chapter 7 bankruptcy case without an attorney. Such a debtor is commonly described as proceeding pro se. The right to self-representation does not, however, mean that filing Chapter 7 without professional assistance is simple. The U.S. Courts expressly state that individuals may file without an attorney but strongly recommend obtaining qualified legal advice because bankruptcy involves significant and long-term legal and financial consequences.

A debtor who files pro se must prepare and file the required petition, schedules, statements and other documents and must comply with the Bankruptcy Code, Federal Rules of Bankruptcy Procedure, and applicable local rules. The debtor is also responsible for accurately disclosing assets, liabilities, income, expenses and financial transactions. Bankruptcy court personnel and judges cannot provide legal advice or assist the debtor in determining what information should be disclosed or what legal strategy should be adopted.

Filing through an attorney has some advantages. An experienced bankruptcy attorney can advise the debtor whether Chapter 7 is appropriate, whether the debtor is eligible, whether particular debts are dischargeable, what exemptions may be available, and whether the debtor is likely to retain particular property. The attorney can also assist in preparing the petition and schedules, dealing with the Chapter 7 trustee, responding to objections, and addressing problems that arise during the case.

The decision becomes particularly important where the debtor has significant assets, a home or other valuable property, business interests, disputed debts, recent transfers of property, substantial tax liabilities, prior bankruptcy filings, potential preferential payments, or concerns about dischargeability or bankruptcy fraud. In such circumstances, mistakes in filing or disclosure can have serious consequences. Chapter 7 itself involves administration and possible liquidation of non-exempt property, making a proper analysis of exemptions particularly important.

A relatively straightforward case involving a debtor with few assets, uncomplicated debts, no significant property issues and no apparent legal complications may be capable of being handled pro se. Nevertheless, the debtor must still satisfy all statutory and procedural requirements. Courts emphasize that self-representation can be extremely difficult and that a mistake or failure to comply with a requirement may affect the debtor’s rights or even result in dismissal of the case.

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Mukesh Suman is a lawyer based at Delhi, India. He provides bankruptcy paralegal services to clients based in the United States. He may be approached at mukesh_suman@outlook.com.