How to File for Chapter 7 Bankruptcy

What's On This Page

This page outlines the most common forms necessary to file personal bankruptcy under chapter 7. You will find outlines and some tips at each step, as well as example forms for most of the required paperwork for your reference. This is not kept up to date and should not be construed as legal advice. Always talk to a lawyer before taking any steps towards preparing to file Bankruptcy.

Once you've established that you qualify for chapter 7, decided that bankruptcy is the best option, and you've completed pre-bankruptcy counseling, you will begin the process by completing and filing the petition and other required paperwork. Once the petition has been filed a court hearing will be scheduled to meet with the petitioner and potentially any creditors with complaints. The whole chapter 7 process will not take long, usually the length of time for a Chapter 7 bankruptcy may take 60-90 days from petition to discharge.

This page will walk you through the process, and offer helpful hints for completing the petition and schedules correctly.

The bankruptcy petition, form B-1, consists of three pages where you will enter basic information such as address, type of bankruptcy, joint filer and filing fee option.

Completing the Petition

Most of the petition is self explanatory, but here is some information for some of the individual questions.

Court District. If you complete the form on a computer (as you should), the top of the form will have a drop down menu from which you can select the judicial district in which your case will be heard.

Type of Debtor. As a personal filer, you should select "individual", even if you are self employed or operate a sole proprietorship.

Nature of Debts. For most people, the majority of debts will be of the consumer type. However, if you have become indebted by a small business, choose the business debts box. If it is an equal combination of both, select business debts.

Statistical/Administrative Information. In this section you will need to estimate whether, after any exempt funds, you will have any remaining to repay unsecured claims. If you are not sure, you can come back to this question after completing Schedules A, B and C in which you will outline all of your personal property, as well as property claimed to be exempt.

Prior Bankruptcy Cases Filed within Last Eight Years. If you, or a joint filing spouse, have not filed bankruptcy in the last eight years, type None or N/A in the first box. If you have filed for chapter 7 bankruptcy in the last eights years, you may not do so again and will have to file for chapter 13.

Exhibit D

Exhibit D of the Bankruptcy Petition

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Exhibit A. Leave Blank.

Exhibit B. This is only for your attorney, if you choose to hire one to represent you in your bankruptcy case.

Exhibit C. Check this only if you have some dangerous property such as toxins stored in a backyard or a bazooka.

Exhibit D. This is an attachment that says you have completed the required pre-bankruptcy counseling, or will be.

Certification by Debtor Who Resides as a Tenant of Residential Property. If you have been issued an eviction order prior to filing bankruptcy, the automatic stay may not stop the eviction. However, if you file before a eviction notice is filed, you may serve your landlord a certification which protects you from eviction.

Once the petition has been prepared, and you've completed the required schedule D indicating that the bankruptcy counseling requirement has been met, continue to the list of required schedules where you will record and submit all property, assets, liabilities and exemptions.

2. Schedule A: Real Property

Schedule A is where you will list all real property which you and/or a joint filing spouse owns. Even if you do not own any real estate, you are still required to complete the top portion of this form and submit it along with the rest of the bankruptcy paperwork.

Schedule A

Schedule A to the Bankruptcy Petition

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What's Considered Real Property

Real property is generally any piece of land or real estate that you own. This can be a primary residence, rental property, business property, vacation property(ies) unused land or any other type of real estate.

What About Exempt Property?

If you own exempt land, you will list that in further documents, but you must still include in this schedule of real property, otherwise your petition will not be complete and the case may be dismissed.

Nature of Debtors Interest in Property. For the vast majority of people, this will be "Fee Simple" which means you own the property. Even if you have a loan against the property, you are still the title holder and owner. Other common types of interests are as follows:

• Future Interest: A future interest means you will have the right to the property in the future. For example, if some real estate will be transferred to you though a deed of trust or other inheritance, you should list that property on Schedule A and indicate it is a future interest.
• Lien Holder: If you have a lien on third party property, it must be listed.
• Easement Holder: If you have been granted an easement on third party property you must list it.

Current Value of Debtors Interest in Property. The value of your interest in the property is it's fair market value. Do not count real property exemptions here.

Amount of Secured Claim. This is the amount owed a lender on the property. When this amount is larger than the debtors interest, the debtor is said to be "upside-down".

Get Informed: Learn About Real Property in Bankruptcy.

3. Schedule B: Personal Property

Schedule B

Schedule B to the Bankruptcy Petition

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In schedule B, you must list out all personal property of value that is not real estate. This includes cash, insurance policies, stocks, bonds, annuities, retirement accounts like a 401k or IRA, cars, musical instruments, card or coin collections, and any other assets of value.

List Everything

Be thorough in you list and do not leave anything out. Even if you think something is worthless, list it and inform the court of your opinion of it's lack of value in the description. If you are unsure about any property, always list it. You will not be penalized for listing too much.

If something of value is found to be missing, your case may be dismissed!

Use the Property's Replacement Value

When determining the value of your property in schedule B, use the property's replacement value. That is, the amount of money it would cost to purchase the property in it's current condition. If you've got a 2007 Chevy Truck, use the Kelly Blue Book amount, not what you paid for it.

Get Informed: Learn About Property and Exemptions in Bankruptcy.

4. Schedule C: Property Claimed as Exempt

Schedule C is where you will list all assets and property that you claim is exempt from Chapter 7 Liquidation in your chapter 7 case. If you are unsure about what you may be able to claim as exempt, you should talk to a Bankruptcy Lawyer to ensure your case is not jeopardized by a misstep in your petition.

In the great majority of chapter 7 cases, most, if not all, of the debtors property will be exempt and not subject to liquidation by the trustee for repayment to creditors.

Schedule C

Schedule C: Property Claimed as Exempt

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Valuable Non-Exempt Assets

In certain situations, non-exempt assets are great value that can easily be sold may be subject to liquidation. If this is the case, you have options to "redeem" that property and keep it. Redemption is a means of staving off liquidation by offering creditors a lump sum of cash in return for the right to keep the property. Even so, do not list non-exempt property on Schedule C!

Federal vs. State Exemptions

If you live in a state that allows federal exemptions to be used, and the federal exemptions are preferable to your states', you can elect to use the federal exemptions. At the top of the page, select the preferable legal code under "Debtor claims the exemptions to which debtor is entitled under".

What About a Home?

This is often the most critical aspect of your bankruptcy filing. If you own a home, you obviously want to keep it. One of the most important things to look at is the equity in your home. If you are "upside-down", meaning you owe more than the house is worth, then you have nothing to worry about. The trustee will not sell your home because you have no equity from which to get cash for your creditors.

On the other hand, if your equity is positive but under $136,875 then you should be able to keep all of that equity as it is exempt under federal laws. If you have positive equity greater than $136,875 you'll need to check the box indicating so at the top of Schedule C, but you should probably have an attorney represent your case.

Get Informed: Learn About Bankruptcy Exemptions.

5. Schedule D: Creditors Holding Secured Claims

Unsecured claims are those for which creditors have some type of property "securing" the debt. Common examples are car loans and home loans.

Nature of Lien

Schedule D

Schedule D: Creditors Holding Secured Claims

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All secured claims are subject to a lien on the property "securing" the debt. The most common types of liens are as follows:

Mortgage or First Mortgage. This is the loan taken out to purchase your home.

Purchase-Money Security. This type of lien secures a debt for which the loan was taken out (other than home loans). A common example would be your car loan.

Nonpossessory, Nonpurchase-Money Security. This loan is secured by property other than that for which the loan was taken. A common example would be a home equity loan. The loan is secured by your house, but used for a different purchase.

Tax Lien. If a lien was placed against your property for unpaid taxes, record it as a tax lien.

Mechanics Lien. If a contractor or car mechanic performed work for which you could not pay, they may often place a mechanics lien on your property.

Judgment Lien. If you have a court ordered judgment against you, and the court ordered a lien on your home, you would indicate it as a judgment lien.

Value

For value, you should put the same amount as you did for market value in schedules A and B.

Contingent, Unliquidated or Disputed

Contingent. Contingent loans mean you will owe money only if something happens. For example, if you are the co-signer on a third party loan you will be liable for the debt only if the third party defaults on payment.

Unliquidated. Unliquidated means you are expecting a debt but are unsure of the amount.

Disputed. If you and a creditor are disputing a claim, or the amount of a claim, then mark the "disputed" column next to the claim.

Amount of Claim

Amount of claim is essentially the amount of money you owe the creditor. You should be able to get this number from the most recent statement sent to you. It should reflect the amount of money you would need to pay now to fulfill your obligation and eliminate the claim.

Unsecured Portion

The unsecured portion is essentially the amount of money you would still owe if you sold the property and gave the proceeds to your creditor. The most common example is your car note. Because automobiles depreciate so fast, it is not uncommon to owe more than the car is worth. If you owe $20,000 on a car worth $18,000, then $2,000 of the claim would be unsecured.

Get Informed: Learn About Debts in Chapter 7 Bankruptcy.

6. Schedule E: Creditors Holding Unsecured Priority Claims

In some specific cases, unsecured creditors may have priority over others, meaning if there are any assets to repay unsecured debts, these will be paid first.)

The first two pages of Schedule E outline the types of priority creditors. The third page can be used several times, once to list out all of one type of priority creditor.

Schedule E

Schedule E: Creditors Holding Unsecured Priority Claims

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Types of Priority Unsecured Debts<

Some of the most common priority debts listed in Schedule E are as follows:

• Domestic Support Obligations. These include both child support and spousal support.
• Taxes and Certain Other Debts Owed the Government. Unpaid taxes (for which no lien has been placed securing the debt) will be among the first paid out.
• Wages, Salaries and Commissions. For small business owners declaring bankruptcy, any unpaid employee compensation will be a priority unsecured debt.
• Wages, Salaries and Commissions. For small business owners declaring bankruptcy, any unpaid employee compensation will be a priority unsecured debt.

Amounts to Fill In

Amount of Claim. This is the total amount owed this priority creditor.

Amount Entitled to Priority. Some priority claims are capped as listed in the first two pages of Schedule D. If the amount owed is greater than a listed cap, you would put the cap here. An example would be wages owed an employee. If you owe an employee $12,000 in wages, you would put the cap of $10,950 under the Amount Entitled to Priority.

Amount Not Entitled to Priority. For any priority unsecured debt larger than the cap, the difference would go in this column. From our employee wages example above, the difference between $12,000 and the $10,950 cap of $1,050 would go in this column.

7. Schedule F: Creditors Holding Unsecured Non-Priority Claims

Schedule F

Schedule F: Creditors Holding Unsecured Non-Priority Claims

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Non-Priority Unsecured Claims are those remaining from Schedule E, and are typically made up of credit card company claims, medical bills not covered by insurance, personal loans, services rendered but unpaid and any other debts you haven't already listed in Schedules D and E.

Make Sure You List All Remaining Debts

It is important to list all the debts you owe, even if you want to repay them. Any debts not listed may end up causing you real trouble if the bankruptcy trustee finds out. Even if it's a small amount which you intend to repay, it can be held against you as preferential treatment and may end up costing you your case.

Debts from Repossessions or Foreclosure

After a foreclosure or repossession has occurred, some secured debt may become unsecured debt in the form of a deficiency judgment. If you have any deficiency judgments you should list them here as unsecured debts. In most cases, chapter 7 bankruptcy will eliminate these debts along with credit cards, medical expenses and the other unsecured debts.

8. Schedule G: Executory Contracts and Unexpired Leases

Executory contracts and unexpired leases are those contract into which you and a lender have entered and to which both parties are still obligated.

Common Examples of Executory Contracts and Unexpired Leases

Schedule G

Schedule G: Executory Contracts and Unexpired Leases

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Some common examples that might end up in Schedule G are as follows:

• An Ongoing Car Lease
• Timeshares
• An Apartment or Other Residential Lease
• Insurance Contracts
• Leases of Personal Property

What Happens to These Debts?

Depending on whether you wish to keep the property or not, you may or may not elect to reaffirm the debt. Should you choose you cannot afford to make the lease payments after bankruptcy, the debt will likely be eliminated and the property surrendered to the creditor. The good news is that you will generally have complete access to the property during the bankruptcy process.

This means if you leased a car, you are free to drive it during the bankruptcy without making any payments and the creditor is legally barred from trying to repossess it. Once the bankruptcy process is completed, you will have to surrender the car but will not be responsible for any missed payments.

If you are behind on payments, include any unpaid portion so that you will not be responsible for the debt later.

9. Schedule H: Codebtors

This schedule of the bankruptcy petition is designed to expose any codebtors which may become liable for debts which are discharged by your bankruptcy. Even though you should have listed any codebtors in Schedules D, E and F, you must still list them here.

Protecting Codebtors

If you have family or friends that you would like to protect from having to repay your debts, you should talk to a bankruptcy lawyer. The legal strategies for protecting co-signers are beyond the scope of this guide.

Schedule I

Schedule I: Current Income of Individual Debtor

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10. Schedule I: Current Income of Individual Debtor

Schedule I outlines your monthly gross income to determine that you are indeed eligible for chapter 7 bankruptcy once compared to your monthly expenditures (Schedule J).

It is important that, before filing for chapter 7, you are sure you meet the income requirements, or are able to pass the means test. If the Chapter 7 bankruptcy court finds that your income far outweighs you monthly expenditures, your case will likely be dismissed or converted to a chapter 13 repayment plan.

Completing Schedule I

This form is fairly straightforward, but be sure to list all income being earned on a regular basis. If you have some form of irregular income, and can reasonably expect to get it in the coming months, make sure you note that at the bottom of the form in the space provided.

11. Schedule J: Current Expenditures of Individual Debtor

When you file for individual bankruptcy, you must still list out your complete household expenditures, even if you’re married and filing alone.

Schedule J

Schedule J: Current Expenditures of Individual Debtor

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The Effect of Your Disposable Income<

When compared to your monthly income, if your expenses allow you a substantial amount of disposable income compared to your debts, your case may be converted to a chapter 13, even if you pass the means test.

In general, if you’re disposable income would allow you to repay your debts over five years, then you may have to file for chapter 13.

12. Summary of Schedules

Now that schedules A through J are complete, you must summarize all the totals from all schedules to come up with a picture of your debts versus assets. This gives the court and trustee a snapshot of your financial situation.

13. Statistical Summary of Certain Liabilities and Related Data

This form is fairly straightforward, and requires you to fill in the blanks using the schedules you’ve completed thus far.

Current Monthly Income

You will need to complete form 22A (in a later step) in order to get the current monthly income number that is used on this form. It will likely be different from the monthly income number on schedule I.

14. Declaration Concerning Debtors Schedules

You will need to swear under penalty of perjury that you have completed all schedules and related paperwork honestly, accurately and truthfully to the best of your abilities. If you choose to represent yourself in your bankruptcy case, you cannot use ignorance as a defense.

The bankruptcy court may assume that debtors are abusing the bankruptcy system to avoid financial liability, and any errors or mistakes may be viewed as an attempt to deceive the court and grounds for dismissal.

Get Informed: Learn About The Means Test and Income Issues in Bankruptcy.

Financial Affairs

Statement of Financial Affairs

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15. Statement of Financial Affairs

The statement of financial affairs is where you will outline all of your recent payments, or transactions, in order for the bankruptcy trustee to identify and act on any potentially preferential or voidable transfers.

These two terms essentially mean that, under certain circumstances, the bankruptcy trustee can force a creditor that you have recently paid (usually over $600) to give the money back in order to repay other creditors.

What to Include

This is an important part of your bankruptcy petition, and you must fill out this form as completely as possible. Any eligible payments not included may be considered an act of deceit on your part, and may be grounds for a dismissal. You should
include all payments of $600 or over made to creditor within the 90 days prior to submitting your bankruptcy petition.

16. Individual Debtors Statement of Intentions

The individual debtors statement of intentions allows you to tell the court and the trustee how you wish to proceed as far as maintaining certain debts and payments in order to keep property that is not protected by exemptions, such as unexpired leases. For all secured debts and the collateral property, you can elect to do one of three thing: "Reaffirm" the debt, "Redeem" the debt, or surrender the property.

Statement of Intention

Individual Debtors Statement of Intention

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Reaffirmation

For all of your secured debts, you are given the option to reaffirm these debts, meaning you wish to continue with your obligations in order to keep the property, such as a leased car. Despite the outcome of the bankruptcy, you are agreeing to continue repaying the debt as per your original contract. You should reaffirm debt held by property that you wish to keep and continue paying on.

Redemption

Alternatively, you may "redeem" any secured debts and keep the property by offering a lump cash sum (usually at the replacement value of the collateral) in return for the property. The creditor gets paid and you keep the property with not further obligations.

Surrender

For any property you don't mind parting with, you can surrender the property and usually free yourself of all obligations, including past due payments. Usually, this is a good way to get out of costly leases, and into a more comfortable financing agreement after your bankruptcy case is completed.

17. Statement of Current Monthly Income and the Means Test Calculation

Form 22A is where you will calculate your monthly income again, only differently from Schedule I. You will use the monthly income figure here to determine the dollar amount you left blank in step 13.

If, due to a high income, you will need to take the means test, this form will also take care of that. Click here for the PDF.

18. Notice to Individual Consumer Debtor Under § 342(b)

This notice is a new addition as part of the 2005 Bankruptcy Abuse and Consumer Protection Act.

It is essential a warning from the court about the seriousness of a bankruptcy petition and the importance of completing all paperwork honestly. You are warned about the consequences of fraud or an attempt to abuse the US Bankruptcy protection laws.

19. Filing Your Petition

Triple check every form and schedule to ensure no mistakes were made and that you and any joint filer properly signed and dated everywhere that is necessary.

Mailing Matrix

You will need to contact the local court for the proper format required for the mailing matrix. This is a list of all your creditors, given to the court so that they can notify them of the petition for bankruptcy protection and put into effect the automatic stay.

Send the Petition

Once you’ve checked and triple checked all the required forms, and are sure you’ve done everything accurately, place all the forms in order in a 9" by 12" envelope along with a check for the filing fee and send to the appropriate address. You should contact your local court to get the correct address and recipient or department.

What Happens Next?

Once you petition has been filed with the court, your creditors will be notified and barred from making any attempts to collect debt or repossess and property. Additionally, any foreclosure proceedings will be halted pending the completion of your case.

Within a few weeks of filing, you will receive a letter from the court with a date to appear for your first court appearance and further instructions. The chapter 7 court procedure is fairly simple, and generally there is only once hearing.

Your First Court Appearance

The next step in the bankruptcy process is the 341 meeting of the creditors, during which your creditors may or may not appear to dispute some of the exemptions and other facts of your bankruptcy petition. Check out the following links to find out what to expect:

1. How to Prepare for the Meeting of the Creditors
2. The Bankruptcy Process from Start to Finish