The Chapter 13 bankruptcy means you will make payments on a monthly basis for up to sixty months to a case administrator known as a Trustee. This is the bankruptcy you file when you either do not qualify for Chapter 7, or you have priority debts like the IRS, child support, etc. that cannot be eliminated under Chapter 7 bankruptcy. Your attorney may advise you to do a Chapter 13 if you have IRS taxes, child support or alimony arrearages, or other non-dischargeable debt.

What forms make up the Bankruptcy Petition?

There is the Petition itself, The Schedules, The Statement of Financial Affairs, The Statement of Intentions, The Attorney Statement, and in Chapter 13 there is also what is known as the Plan. The Petition itself is a short document that just gives the debtor’s name, address, approximate number of creditors and approximate total amount, how long you have lived in the jurisdiction, and whether you have filed for bankruptcy before. The schedules go from A – J as follows.

What is schedule A?

Schedule A consists of real property that you have an interest in such as your home, raw land, etc. Mobile homes are often listed under real property.

What is schedule B?

Schedule B consists of basically all other property you have aside from your real property.  It also includes cash, bank accounts, household goods like your furniture, cars, motorcycles, guns, computers, appliances, collections like a doll or baseball card collection, interests in insurance policies, IRAS, ERISA, pension or profit sharing plans, stocks, bonds, interests in corporation, partnerships, accounts receivables, and investments of any kind…as well as things like security deposits to which you have an entitlement and even the proceeds of a personal injury claim that you may have that you have not yet received. This is true even if you never filed a lawsuit. Therefore, if you got into an accident and filed bankruptcy before you received a settlement…it is likely the settlement will be taken by the Trustee and distributed to your creditors. It is important that you list everything. Failure to list all of your assets may be considered fraud and could land you in jail. That is no exaggeration. Trust me, “oops, I forgot I owned that old clunker in the yard will not keep you out of jail”.  List everything! An important point to remember is that in many if not most states cash is not a protected asset. If you own a bank account at the time you filed your bankruptcy case…any funds in the bank account on the day you file may be ceased by the trustee and distributed to your creditors. There are sometimes “wildcard exemptions” which protected a certain dollar amount worth of property regardless of what the property is, even cash.

What is schedule C?

What are exemptions and how do they work?

Exemptions refer to what property a person gets to keep, that may not be seized by creditors. Exemptions apply whether someone is in a bankruptcy or not.  There are both federal and state exemptions. Most states do not allow the federal exemptions just the state exemptions. Those that allow both require a bankruptcy filer to choose one or the other, either the state exemptions or the federal bankruptcy exemptions. You cannot mix and match.  The state exemptions have been provided in your written materials for each state. These materials also indicate which states allow you to choose the federal exemptions if you like. For some people, the state exemptions protect more of the type of property that a debtor in bankruptcy may have, for others…the federal exemptions may be more helpful.  There is no across the board general rule of thumb. Look at what you own and see what the exemptions allow you to keep, and then consult your attorney.  Here is an example of how an exemption works. In Nevada vehicles are exempt up to $15,000.00–you owned a car that was completely paid off and worth $10,000…the car would be totally exempt meaning the bankruptcy trustee would not take it. But, if the car was worth $20,000 and was completely paid off…then this would be $5000 more than the state exemption allows and the Trustee would probably seize the car and auction the vehicle to pay the $5,000 difference to the creditors.  Personal property is valued at garage sale value not at replacement value.  For example, a couch you paid $1,000.00 for…may only have a value on the bankruptcy schedules of $100. It is the amount that a reasonable person would pay for the property in its current condition-not new.  So don’t overvalue your stuff when listing your assets. But don’t undervalue your stuff either…you do that or you risk attracting the attention of the Trustee who may thinking you are trying to pull a fast one. A special note on home exemptions…also known as homestead exemptions.  Equity in a home is protected up to a certain amount  which varies from state to state. Equity is the difference between the value and the amount you owe. If your home is worth $200,000 and you owe $140,000, your equity is the difference of $60,000. 

Do I have to list a personal injury claim or a lawsuit?

The proceeds of a personal injury claim that you may have that you have not yet received. This is true even if you never filed a lawsuit. So if you got into an accident and filed bankruptcy before you received a settlement…it is likely the settlement will be taken by the Trustee and distributed to your creditors.

Are there certain assets that are typically not protected?

Yes, the following is a list of following

- cash,

- money in bank accounts,

- money in joint bank accounts even if the joint holder is not filing,

- stocks that are not part of a 401k or qualified retirement plan,

- bonds, certificates of deposits,

- annuities,

- cash value insurance policies,

- jewelry,

- furs,

- art,

- valuable collections,

- boats,

- recreational vehicles like ATVs, jet-skis, dirt bikes, etc.

What happens if I do not list all of my assets?

Failure to list all of your assets may be considered fraud and could land you in jail. And that is no exaggeration. Trust me, “oops, I forgot I owned that old clunker in the yard will not keep you out of jail”. List everything!

Is cash a protected asset?

An important point to remember is that in many if not most states cash is not a protected asset. If you own a bank account at the time you filed your bankruptcy case…any funds in the bank account on the day you file may be ceased by the trustee and distributed to your creditors. There are sometimes “wildcard exemptions” which basically protected a certain dollar amount worth of property regardless of what the property is, even cash.

How does the trustee value my property?

Personal property is valued at garage sale value not at replacement value.  For example, a couch you paid $1,000.00 for…may only have a value on the bankruptcy schedules of $100. It is the amount that a reasonable person would pay for the property in its current condition-not new.  So don’t overvalue your stuff when listing your assets.

What is a homestead exemption?

Equity in a home is protected up to a certain amount which varies from state to state. Equity is the difference between the value and the amount you owe. If your home is worth $200,000 and you owe $140,000, your equity is the difference of $60,000. Homes purchased within 1,218 days before filing are limited to a cap of $125,000 in equity.

What is schedule D?

Schedule D…your list of Secured Creditors. Secured creditors are creditors that have a security interest in a tangible piece of property like a home or a car. A mortgage company is a secured creditor. The mortgage is secured against the home itself. If you don’t make the payments, they foreclose on the home. You must make sure that if you plan on keeping the property like your house or your car that you must continue to make your payments on time. We recommend sending the payments by certified mail so you have proof they received the payment. Some unscrupulous mortgage companies have been known to claim they did not receive payments so they could move forward with foreclosures on homes.  You cannot list a secured creditor in a bankruptcy and expect to keep the property. If you don’t make the payment the creditor will repossess the property. Otherwise, people would go out and buy a Lamborghini and then file bankruptcy.

What is schedule E?

Schedule E is where you list Priority Creditors, or creditors that cannot simply be wiped out in bankruptcy.  These include certain federal and state taxes, child support arrearages, alimony arrearages, and student loans, among others.

May taxes be eliminated in bankruptcy?

As a rough guide, taxes must be at least three years old, you must have filed them with the IRS at least two years before the bankruptcy, the IRS cannot have assessed them within 240 days, and the taxes must not have become an IRS lien. If the taxes meet this criteria, you may be able to eliminate them without repayment. IRS liens may sometimes be eliminated in Chapter 13, however, this website focuses on the Chapter 7 filing.  IRS liens will not be eliminated in a Chapter 7 bankruptcy.

What is schedule F?

Schedule F lists the unsecured Creditors such as credit cards, charge cards, personal loans, bank loans, payday loans, medical bills, cell phone bills, etc.  It is extremely important that you list all of your creditors on your schedules. If a creditor is not listed, it will not be discharged, and that creditor will still be able to pursue you after your bankruptcy is over.  Provide your petition preparer with as many creditors as you can find. Also, make sure you list the collection agencies even if the debt is already listed under the original creditor. So, if Bob’s Electronics turned the matter over to Nasty Collectors, make sure you list them both. More is definitely better. List everyone that could conceivable claim you owe them money. Even if you got into an accident and your not sure whose fault it was, still list the other driver in the bankruptcy or anyone else in the accident that might sue you, including any passengers in your own car. Even if it is a friend or relative. Blame it on your lawyer, say your attorney required you to list all potential creditors. Actually, this is not a lie, you must list all of your creditors.

What is schedule G?

Schedule G is a list of debts for which you have a co-signer. For example, if good old Dad co-signed on your vehicle, you would list that here. Keep in mind, that if you list a debt for which you had a co-signer, your obligation will be discharged in the bankruptcy but the creditor will still be able to go after good old Dad because he will still be on the hook for the debt he co-signed on your behalf.

What is schedule H?

Schedule H is a list of your unexpired leases or contracts like a vehicle lease or apartment lease.

What is schedule I?

Schedule I is your current income from any sources including, wages, social security, pension, disability, roommate contribution, family support, alimony, child support, etc. In this section, you also give marital status information, list of dependents, and specific employment information.

What is schedule J?

Schedule J is a list of your expenses like mortgage, rent, food, car payments, utilities, insurance, clothing, laundry expenses, gas for your vehicle, entertainment charitable contributions, etc. The expenses must be reasonable. Below is a list of common areas where debtors sometimes list unreasonable amounts. A reasonable range has been included.

Please keep in mind that you are filing a bankruptcy and wiping out your obligation to pay your creditors. Exhibiting to the Trustee that you live the lifestyle of the rich and famous is not too smart. Provide accurate information but use your head! Sit down and try to determine what you could prove if the Trustee asks you for proof. Around the time you decide to file, keep receipts from your expenses. Keep copies of your utility bills, car payments, insurance payments, grocery receipts, gas receipts, etc.

What is the statement of financial affairs?

The Statement of Financial Affairs is sort of a history that gives the Trustees and creditors a picture of what has gone on in your financial life and life in general for the past number of years.

What is the Statement of Intentions?

The Statement of Intentions indicates what you plan on doing with property secured by a loan, like your house or car. You have two primary options. Reaffirm the debt, meaning you will keep the property and promise to make payments on it in the future. Second, surrender the property, not make any further payments and not owe anything further. Under certain circumstances, you may also redeem property. This means that if the trustee has the right to cease a piece of property, you may pay the value of the property to the Trustee in order to keep it. The idea being that the Trustee will get the same value from you for distribution to the creditors that he would have gotten from the sale of the property through an auction or outright sale.

What is a reaffirmation agreement?

A reaffirmation agreement is a contract you sign with your secured creditors you are your mortgage company for your home or your credit union for your car. Reaffirming the debt means, you will keep the property and promise to make payments on it in the future.

What does it mean to surrender property?

Surrendering the property means that you are giving up your interest in the property and allowing the property to be repossessed by the secured creditor. The property will then be sold to cover the amount owed to the secured creditor. If the amount the property is sold for is less than the amount owed, you will not owe the deficiency to the secured creditor under Chapter 7.

What does it mean to redeem property?

This means that if the trustee has the right to cease a piece of property because it is not protected by an exemption, you may pay the value of the property to the Trustee in order to keep it. The idea being that the Trustee will get the same value from you for distribution to the creditors that he would have gotten from the sale of the property through an auction or outright sale. For example, let us assume that you are single and have two vehicles that are both completely paid off. If your state only allows you to keep one of the two vehicles, you may pay the trustee to keep the second vehicle.

What is the Attorney Statement?

 The Attorney Statement is a short form that states the name of the attorney and the amount you paid for the legal services.

What happens when the bankruptcy is filed?

The first thing is the Automatic Stay. The automatic stay makes it a violation of federal law for any of your creditors to pursue any remedies against you including filing a lawsuit, continuing an existing lawsuit, sending you letters requesting money, or even calling you on the telephone.  A creditor violating this rule may be brought before the Court and sanctioned.  However, a creditor may also file a motion with the Court seeking permission to continue to pursue collection actions. This typically only happens if you are delinquent on your payments on a house, car, or other secured loan. The Court will generally conclude that if you are not paying for it, than you do not deserve to keep it. This does not apply to property obtained with an unsecured credit card. For example, if you buy a toaster with a Visa card, Visa will not come and ask for the toaster back. Unless of course, you bought the toaster immediately before filing in which case they may ask for the money back for the charge, but you’ll probably get to keep the toaster.