The Explanation of Chapter 7 Bankruptcy
A chapter 7 case begins with the debtor filing a petition to the bankruptcy court serving the location in which the individual lives or where the business debtor is organized or has its principal place of business or principal assets. (3) Besides the petition, the debtor also needs to file to the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007(b).
Debtors must provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year and also tax returns filed during the case (including tax returns for prior years that had not been filed when the case began). 11 U.S.C. 521. Individual debtors with primarily consumer debts have additional document filing requirements. They have to file: a certificate of credit guidance and a copy of any debt repayment plan developed through credit advice; proof of payment from employers, if any, received 60 days before filing; a statement of monthly net revenue and any anticipated boost in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A couple may file a joint petition or individual petitions. 11 U.S.C. 302(a). Even if filing jointly, a husband and wife are susceptible to all of the document filing requirements of individual debtors. (The Official Forms may be purchased at legal stationery stores or downloaded from the internet at www.uscourts.gov/bkforms/index.html. They are not available from the court.)
The courts must charge a $245 case filing fee, a $39 miscellaneous administrative fee, and a $15 trustee surcharge. Normally, the fees ought to be paid to the clerk of the court upon filing. With the court’s permission, however, individual debtors may pay in installments. 28 U.S.C. 1930(a); Fed. R. Bankr. P. 1006(b); Bankruptcy Court Miscellaneous Fee Schedule, Item 8. The quantity of installments is fixed to four, and the debtor must make the final installment no later than 120 days after filing the petition. Fed. R. Bankr. P. 1006. For cause shown, the court may extend the time of any installment, provided that the last installment is paid not later than 180 days after filing the petition. Id. The debtor might also pay the $39 administrative fee and the $15 trustee surcharge in installments. If a joint petition is filed, only one filing fee, one administrative fee, and one trustee surcharge are charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case. 11 U.S.C. 707(a).
If the debtor’s income is less than 150% of the poverty level (as defined in the Bankruptcy Code), and the debtor is unable to pay the chapter 7 fees even in installments, the court may waive the requirement that the fees be paid. 28 U.S.C. 1930(f).
In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must provide the following information:
1.A list of all creditors and the amount and nature of their claims;
2.The source, amount, and frequency of the debtor’s income;
3.A list of all of the debtor’s property; and
4.A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.
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