Anatomy of a Chapter 7 Bankruptcy Petition

On January 28, 2011, The Wall Street Journal reported in “Chili’s Feels Heat to Pare Costs” that healthcare laws and rise in food prices are prompting restaurants to decrease costs.  Chili’s studied its operations for 18 months and determined its employees to be inefficient.  The company is testing technology to take over what its employees currently do like heating products that require fewer kitchen cooks. 

Filing Chapter 7

With companies reviewing labor efficiency and continued high unemployment, many people are filing Chapter 7 bankruptcy to stop creditors from calling.  Chapter 7 means liquidation.  A debtor includes a “Chapter 7 Statement of Current Monthly Income and Means-Test Calculation with the petition to show s/he qualifies for Chapter 7.  The calculation involves the average gross compensation and other income for the 6 months before filing. 

Bankruptcy Petition

When filing bankruptcy, a debtor must use the correct form provided by the court.  For instance, a person living in Solano County would file a petition that states “United States Bankruptcy Court, Eastern District of California” at the top.  On the first page of the petition, a debtor fills out his/her name, address, social security number (last four digits), and indicates that it is an individual filing involving primarily consumer debts.  When a person’s debts are primarily consumer debts, the debtor needs to complete a “Statistical Summary of Certain Liabilities and Related Data” to report unsecured claims, amounts entitled to priority, and amounts not entitled to priority.  If the person’s spouse files also, the spouse needs to be named, and must also sign the petition.

On page 2, the debtor indicates how s/he chooses the venue for filing the chapter 7 bankruptcy petition, that s/he has been domiciled or has had a residence in the court district for 180 days immediately before the petition filing.  Included with the petition is Exhibit D, where the debtor signs showing compliance with a credit counseling requirement. 

Schedules of the Bankruptcy Petition

There are several schedules as part of the Chapter 7 filing:

• Schedule A:  Real property – the debtor gives the address location of property s/he owns, amount of secured claim, and the current market value.
• Schedule B:  Personal property – the debtor lists everything that is not real property like the cash on hand, bank accounts, household furnishings, clothing, jewelry, firearms, insurance policies, annuities.
• Schedule C:  Property claimed as exempt – the debtor lists property s/he wants to keep after bankruptcy closing and the statute the allows the property not to be taken for creditors.
• Schedule D:  Creditors holding secured claims – the debtor lists the creditor names, account numbers, addresses, amounts of debts, collateral securing the debts.
• Schedule E:  Creditors holding unsecured priority claims – the debtor lists the creditor names, account numbers, addresses, amounts of debts.
• Schedule F:  Creditors holding unsecured nonpriority claims – the debtor lists the creditor names, account numbers, addresses, amounts of debts.  These debts get paid last.
• Schedule G:  Executory contracts and unexpired leases – the debtor explains the any leases, timeshare interests, contract interests.
• Schedule H:  Codebtors – the debtor discloses any entities or individuals jointly liable for any of debtor’s debts.
• Schedule I:  Current income of individual debtors – the debtor discloses monthly income (from wages, retirement, property), tax deductions, alimony or other support.
• Schedule J:  Current expenditures of individual debtors – the debtor describes monthly expenses (such as utilities, taxes, food, clothing, medical, recreation, insurance)

Petitioners Attorney

The attorney for the debtor discloses his/her compensation when filing the petition.  The debtor verifies the master address list used to distribute information on the petition to creditors.  The debtor signs under penalty of perjury a statement on social security number. 

Rinne Legal helps people with bankruptcies, estate planning, and loan modifications in Contra Costa County, Sacramento County and Solano County. Rinne Legal has offices in Walnut Creek, Fairfield, Sacramento and Elk Grove. Contact Rinne Legal for a free consultation.  These blog posts are for informational purposes only and not intended nor should be construed as legal advice.  These blog posts may be considered attorney advertising in some states. Prior results described on blog posts do not guarantee similar outcomes in future cases.  There is no intent to create an attorney-client privilege or relationship with anyone accessing information on this blog.  Authors posting on this blog are not obligated to reply to any emails seeking legal advice.  The information contained on this blog is not intended to be a solicitation.