a guide for the self represented debtor in a …the bankruptcy laws are complex and are continuously...
TRANSCRIPT
UNITEDSTATESBANKRUPTCYCOURTFORTHE
DISTRICTOFMASSACHUSETTS
AGUIDEFORTHESELF‐REPRESENTEDDEBTORINABANKRUPTCYCASE
April2016
INTRODUCTION
TheCourthasalwayswelcomedthoseindividualswhowishtoasserttheirrighttofilebankruptcywithouttheservicesofanattorney.Theterm“prose”isaLatinadjectivemeaning"forself",thatisappliedtosomeonewhorepresentshimselforherselfwithoutalawyerinacourtproceeding,whetherasadefendantoraplaintiffandwhetherthematteriscivilorcriminal.Thisstatusissometimesknownas"propriapersona"or"proper".Thisguideisforindividualproseorself‐representedfilersofconsumerbankruptcycases.
Thebankruptcylawsarecomplexandarecontinuouslyevolving.Thelawsandrulesmaybedifficulttounderstand,andthedecisionsthatmustbemadearenotalwaysaseasyastheymightappear.Forexample,thereisthedecisionofwhatchapterofbankruptcytofileandwhichexemptionsyoushouldclaim.Thereistheunderstandingofwhatdebtsmayormaynotbedischarged.
Manyofthesequestionscanbestbeansweredbyacompetentandqualifiedattorneywhounderstandsthesecomplexities.Acompetentbankruptcyattorneycanhearallofthefactsaboutyouruniquesituationandcangiveyouadviceandcounselyoumayrelyon.Nevertheless,theCourtunderstandsthatsomeindividualswillchooseto“goitalone.”
Thismanualispreparedforthatperson:theindividualwhohasmadethedecisiontoproceedwithabankruptcyfilingwithoutanylegalassistance.WhileneithertheCourtnoranyemployeeoftheCourtcanprovidelegaladvice,1thereareanumberofproceduralstepsinfilingabankruptcypetitionandmanagingthecasethroughdischargethatcanbecomplicated.Themanualisintendedtoassisttheprosedebtorinnavigatingthoseproceduralsteps.
InDecember2015,theJudicialConferenceoftheUnitedStatesadoptedmodernizedOfficialFormstobeusedinbankruptcycasesthroughoutthecountry.DebtorsmustusetheseOfficialForms.Inadditiontothisguide,thereareinstructionstothosenewforms.However,thereisnotaformforeverything.Somepleadingsordocumentsneedtobecreated,suchasmotionsthatseekrelieffromthecourtorcomplaintsseekingtodischargestudentloanobligations.
Thisguideshouldnotbecitedorrelieduponaslegalauthority.TheinformationinthisbookletdoesnotsubstitutefortheUnitedStatesBankruptcyCode,theFederalRulesofBankruptcyProcedure,ortheLocalRulesofthisCourt.
1 Courtshaveadoptedthepolicythatemployeesoftheclerk’sofficeareprohibitedfromgivinglegaladvicetothepublic.Courtsuse28U.S.C.§955tosupportthisposition,reasoningthatprovidinglegaladvicecomeswithinthedefinitionofthe“practice”oflawprohibitedby§955.
Inaddition,theinformationinthisbookletalsodoesnotserveasasubstitutefortheadviceofcompetentlegalcounsel.Itisnecessarilylimitedandisintendedonlyasaguidetosomebasicaspectsofbankruptcylaw.Itdoesnotincludeallofthecontrollinglaw(suchastheentireBankruptcyCode,theFederalRulesofBankruptcyProcedure,thisCourt’sLocalBankruptcyRules,andcourtdecisions).
TableofContents
Subject PageNumber
LegalAuthority,StatutesandRules.......................................................................................1
OverviewoftheBankruptcyProcess.....................................................................................1
TheConsequencesofRepeatFilings......................................................................................4
AutomaticStay
Discharge...........................................................................................................................4
BeforeFilingforBankruptcyProtection..............................................................................5
WorkingwithProfessionals.......................................................................................................5
Petitionpreparers..........................................................................................................5
Attorneys...........................................................................................................................6
Self‐Representation:Prose...........................................................................................................7
ProseClerk......................................................................................................................7
CommunicatingwiththeCourt................................................................................................8
GettingStarted.................................................................................................................................8
PreparingyourPaperwork........................................................................................................9
B101–TheVoluntaryPetitionforIndividualsFilingforBankruptcy......10
‐Part2,B101........................................................................................10
‐Part3and4,FormB101 ‐Part5,FormB101............................................................................11
‐Part6,FormB101 ‐Part7,FormB101............................................................................12 OfficialForm121:StatementAboutYourSocialSecurityNumbers........12
OfficialLocalForm1:MatrixofCreditors.............................................................12
OfficialFormB106A/B:ScheduleA/B:Property............................................13
‐Part1.........................................................................................................13
‐Part2,Part3,Part4,Parts5and6.............................................14
‐Part7,Part8..........................................................................................15
OfficialFormB106C:ScheduleC:ThePropertyYouClaimasExempt...15
OfficialFormB106D:ScheduleD:CreditorsHoldingSecuredClaims....16
OfficialFormB106E/F:ScheduleE/F: CreditorsWhoHaveUnsecuredClaims:...................................16 OfficialFormB106G:ScheduleG:ExecutoryContractsand UnexpiredLeases................................................................................18 OfficialFormB106H:ScheduleH:YourCodebtors.........................................18 OfficialFormB106I:ScheduleI:YourIncome..................................................18
OfficialFormB106J:ScheduleJ:YourExpenses..............................................19
OfficialFormB106Sum:SummaryofYourAssetsand LiabilitiesandCertainStatisticalInformation.......................19 OfficialFormB106Dec:DeclarationConcerningDebtor’sSchedules....19
OfficialFormB107:StatementofFinancialAffairsfor IndividualsfilingforBankruptcy.................................................19 OfficeFormB108:StatementofIntentionforIndividuals FilingunderChapter7......................................................................20 OfficialFormB119A:BankruptcyPetitionPreparer’sNotice DeclarationandSignature..............................................................20 ‐Part1,Part2.......................................................................................20
OfficialFormB122A‐1:Chapter7StatementofCurrentMonthlyIncome
OfficialFormB122A‐1Supp:StatementofExemptionfrom PresumptionofAbuseunder§707(b)(2)
OfficialFormB122A‐2:Chapter7MeansTestCalculation
OfficialFormB122B:Chapter11StatementofYourCurrentMonthlyIncome
OfficialFormB122C‐1:Chapter13StatementofYourCurrentMonthlyIncome AndCalculationofCommitmentPeriod
OfficialFormB122C‐2:CalculationofYourDisposableIncome................21
‐Chapter7 ‐‐FormB122A‐1Supp ‐‐FormB122A‐2 ‐Chapter11............................................................................................22 ‐Chapter13 ‐‐FormB122C‐1 ‐‐FormB122C‐2...................................................................................23ThePlan ....................................................................................................................23
IncompleteFilings...........................................................................................................23 Amendments......................................................................................................................24 FilingthePetition...........................................................................................................................24 CaseNumber Caption ElectronicFiling................................................................................................................25TheBankruptcyProcess MeetingofCreditorsPursuantto341(a)..............................................................25 PreparingfortheMeetingofCreditors..................................................................26 AftertheMeetingofCreditors....................................................................................27 FinancialManagementCourse...................................................................................27 BankruptcyCrime............................................................................................................28Motions,HearingsandCourtAppearances.........................................................................28
CertificatesofServiceHearings...............................................................................................................................29
CourtAppearances..........................................................................................................30
AdversaryProceedings................................................................................................................31
Chapter7:LiquidationundertheBankruptcyCode.......................................................32
Chapter11:ReorganizationundertheBankruptcyCode.............................................40
Chapter12:FamilyFarmerorFamilyFishermanBankruptcy..................................55
Chapter13:IndividualDebtAdjustment.............................................................................61
DischargeinBankruptcy.............................................................................................................69
RequiredLists,Schedules,Statements,andFees.............................................................74
Glossary..............................................................................................................................................79
LEGALAUTHORITY,STATUTESANDRULES
Theletters“U.S.C.”refertotheUnitedStatesCode.Thenumberthatprecedes“U.S.C.”referstothetitleoftheU.S.Code(e.g.,11U.S.C.).Throughouttheguide,youwillseethissymbol:“§”or“§§”whichisusedtoreferto“section”or“sections.”Thenumbersfollowing“U.S.C.”refertothesectionofthetitleoftheU.S.Code(e.g.“11U.S.C.§109”).
TheUnitedStatesBankruptcyCodeisfoundinTitle11oftheU.S.Code.CopiesoftheUnitedStatesCodeareavailableatpubliclibrariesandmayalsobefoundonline(linkstotheCodearefoundattheU.S.BankruptcyCourt’swebsite:www.mab.uscourts.gov).
Inthisguide,referencesonlytothesectionnumberrefertothesectionoftheBankruptcyCode(i.e.,title11).
InadditiontotheU.S.Code,thereareFederalandLocalRulesthatapplytoeverycase.LinkstotheFederalRulesofBankruptcyProcedure(“Fed.R.Bankr.P.”)aswellastheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusetts(“LocalRules”or“MBLR”),andlinkstoOfficial,ProceduralandLocalFormscanbefoundattheU.S.BankruptcyCourt’swebsite:www.mab.uscourts.gov.Inthisguide,theyarecollectivelyreferredtoasthe“Rules.”
IfyouareaprosedebtoryoumustreviewthislegalauthoritytobetterunderstandthedutiesandobligationsimposedbytheCodeandtheRules.
OVERVIEWOFTHEBANKRUPTCYPROCESS
Thissectionwillgiveyouaquickglimpseintothebankruptcyprocess,thestepsinvolvedinmostcases,andwhatadebtormustdotoeffectivelynavigateacasethroughthisCourts.
1. Alldebtors1mustreceive“anindividualorgroupbriefing(includingabriefingconductedbytelephoneorontheInternet)thatoutlinestheopportunitiesforavailablecreditcounselingandassistssuchindividualinperformingarelatedbudgetanalysis.”§109(h).Inajointcase,bothdebtorsmustreceiveabriefingandthebriefingmustbeobtainedwithin180daysbeforethepetitionisfiled.Inajointcase,thedebtorswillreceiveseparatecertificates.Thecourtmayexcusethis
1 “Theterm‘debtor’meansaperson….concerningwhichacaseunderthistitlehasbeencommenced.”11U.S.C.§101(13).Forotherdefinitionsofterms,see§101.
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requirementifexigentcircumstancesexist,orinthecaseofdisability.See§109(h)(3),(4).
2. AlldebtorsmustuseOfficialForms,includingtheMeansTestCalculationformapplicabletoyou;theymustbecompletedaccuratelyandfiledwiththeCourt.FormsareavailableattheBankruptcyCourt’swebsite:www.mab.uscourts.gov.
3. Thecertificate(s)ofcreditcounselingmustbefiledwiththecourtwiththeOfficialForms.
4. Alldebtorsmustpaythefilingfeeinfullor:
a. FileanApplicationtoHavetheChapter7FilingFeeWaivedwhichmustbeapprovedbytheCourt.SeeLocalRule1006‐2(b)andOfficialForm103B;
b. FileanApplicationforIndividualstoPaytheFilingFeeinInstallments,whichmustbeapprovedbytheCourt.SeeLocalRule1006‐2(a)andOfficialForm103A.
5. Atleast7daysbeforethescheduledmeetingofcreditors(alsoreferredtoasa“§341meeting”),alldebtorsmustsendthetrusteeacopyoftheirprioryear’sfederalincometaxreturn,includingallattachments.2SeeFed.R.Bankr.P.4002;LocalRule4002‐1.Debtorsshouldensurethatonlythelastfourdigitsoftheirsocialsecuritynumberarevisibleonthedocument.SeeFed.R.Bankr.P.9037.
6. Inadditiontothetaxreturn,atleast7daysbeforethescheduledmeetingofcreditors,alldebtorsmustsendthetrusteecopiesofallpaystubsandotherevidenceofincomereceivedwithinthe60dayperiodpriortothefilingofthecase.SeeLocalRule1007‐1(c).Debtorsshouldensurethatonlythelastfourdigitsoftheirsocialsecuritynumberarevisibleonthedocument.
7. Ifacreditorrequestsacopyofthetaxreturnatleast15daysbeforethemeetingofcreditors,thedebtor(s)mustprovideacopytothatcreditoratleast7daysbeforethemeeting.SeeFed.R.Bankr.P.4002;LocalRule4002‐1.Debtorsshouldensurethatonlythelastfourdigitsoftheirsocialsecuritynumberarevisibleonthedocuments.Ifthedebtorhasminordependents,redactallbutthelastfourdigitsoftheirsocialsecuritynumberandredacttheirnames;refertothembytheirageonly.
8. Atthemeetingofcreditors,debtorsmustprovidetwoformsofidentification:photoidentificationissuedbyagovernmentunit,suchasadriver’slicenseorpassport,andaproofofsocialsecuritynumber(socialsecuritycard,correspondencefromtheSocialSecurityAdministration,IRSformW‐2or1099).Thetaxreturn,which
2 Debtorsmayalsoprovidethetrusteeand/oracreditorwithatranscriptoftheapplicabletaxreturn.AtranscriptisavailablebymailfromtheInternalRevenueServicebyusingIRSForm4506.Formoreinformation,visittheIRSatwww.irs.gov.
2
referencesthesocialsecuritynumber,willnotsatisfythisrequirement.SeeFed.R.Bankr.P.4002;LocalRule4002‐1.
9. Alldebtorsmustattendthemeetingofcreditorsandbeexaminedunderoathbythetrustee.Creditorsareinvitedtoattendthismeeting.See§341.
10. Alldebtorsmustcooperatewiththetrusteeandrespondtoallreasonablerequestsforinformationanddocuments.
11. Within60daysafterthefirstscheduleddateofthemeetingofcreditors,alldebtorsmustcompleteaFinancialManagementCourseapprovedbytheOfficeoftheUnitedStatesTrusteeandfileacertificateofcompletionwiththeCourt.See§111,§§727(a)(11)and1328(g);seealso,OfficialFormB423
12. InChapter13cases,adebtormustcommencemakingplanpaymentstothetrusteenotlaterthanthirty(30)daysafterthecaseisfiled.See§1326(a).
13. InChapter13cases,adebtormustfileevidenceofcurrentandsufficientliabilityandpropertyinsurancewithrespecttoanyrealpropertyorvehiclesthatthedebtorownsorhasaninterestin.SeeMLBRAppendix1,LocalChapter13Rule13‐2.
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THECONSEQUENCESOFREPEATFILINGS
Abankruptcycasecanbedismissedformanyreasons.Missingadeadline,failingtofiledocumentsandfailingtoobtainthecreditcounselingbriefingorfilethecreditcounselingcertificatearejustsomeofthemanyreasonswhyacasecanbedismissed.Whenacaseisdismissed,thedebtordoesnotreceivethedischarge.Inotherwords,thedebtordoesnotreceivethedebtreliefthattheywereseeking.Perhapsmoresimplystated:thedebtorisbackwheretheystarted.Whileadebtormayfileanothercaseinanefforttoobtainthatdebtrelief,thereareconsequencesofrepeatfilings.
AUTOMATICSTAY
Thefilingofthebankruptcycaseoperatesasastay.Mostdebtcollectionactivitiesmuststop.See§362.However,ifyouhadabankruptcycasependinginthepast12monthswhichwasdismissed,theautomaticstaywilltakeeffectuponthefilingofthesecondcase,butitwilllastforonly30days.Ifyouhavehadtwocasespendinginthepast12months,nostaywilltakeeffectuponthefilingofthenewcase.ReadthecodesectionandtheLocalRulestodeterminewhetherthismayapplytoyou.
Thestaybecomeseffectiveimmediatelyuponthefilingofthepetition.Iftheonecasein12monthruleappliestoyou,youmustfileamotiontoextendthestay,serveacopyofthemotiononallofyourcreditors,andattendahearingbeforethejudge.See§362,andLocalRule4001‐1(d).Ifamotionisnottimelyfiledandheardbythejudge,thestaywillautomaticallyterminate30daysafterthepetitionisfiled.
DISCHARGE
Ifyouhavefiledabankruptcycasepreviouslyandreceivedadischarge,thelawlimitshowoftenyoumayreceiveanotherdischargeofyourdebts.YoumayfileaChapter7caseandreceiveadischargeofdebtsonlyonceevery8years.See§727(a)(8).Thetimeiscalculatedfromthedateoffilingofeachofthecases.YoumayfileaChapter13andreceiveadischargeofdebttwoyearsafterapriorChapter13,butfouryearsafteranyotherchapter.See§1328(f).Ifyoufileanothercasewithinthesetimeframes,thelawstatesthatyouwillnotreceiveadischargeofyourdebtsinthatcase.
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BEFOREFILINGFORBANKRUPTCYPROTECTION
Theinitialgoalofabankruptcyfilingistorelieveanindividualofunmanageabledebtand,throughtheuseoftheallowedexemptions,toleavetheindividualwiththemeanstosupporthimselforherselfandtheirdependents.Anothergoalcanbetoprovideanopportunityforadebtortoreorganizeorofferarepaymentplan.Thelikelihoodofsuccessparticularlyunderchapters11,12and13isseverelydiminishedwithoutcompetentlegalcounsel.
Thebankruptcycoderequiresthatadebtorseekcreditcounselingpriortofilingabankruptcypetition.Inotherwords,exploreotheravenuesofdebtreliefbeforedecidingwhetherbankruptcyisthebestorthedebtor’sonlyoption.TheOfficeoftheUnitedStatesTrusteehasanapprovedlistofcreditcounselingagenciesforeachstate.TheBankruptcyCourt’swebsitehasalinktotheU.S.Trustee’slist.Thislistisupdatedregularly.
Thecreditcounselingbriefingmaybeprovidedinperson,overthetelephoneorviatheinternet.Ifafterthecounselingsessionyoudeterminethatyouneedtoseekbankruptcyprotection,youmustobtainacertificatefromthecounselingagencyattestingtothefactthatyouattendedthebriefingandyoumustfileitwithyourbankruptcypetition.Ifarepaymentplanwasdeveloped,thenyoumustfileitalongwiththecreditcounselingcertificate.
Ifyoumustfileapetitionquicklyandyouhavenotobtainedthecreditcounselingbriefing,thepetitionmaybefiledwithoutit.However,youmustfileastatementof“exigentcircumstances”andmustattendthecounselingwithin30daysofthefilingofthepetition.See§109(h)(3)(A).ThecertificationmustbesatisfactorytotheCourt.See§109(h)(3)(A)(iii).Failuretoobtainthecertificatepriortothefilingofthecase,orthefailuretofilethecertificationofexigentcircumstanceswhichissatisfactorytotheCourtandthenobtainthecounselingwithin30daysofthebankruptcyfilingwillresultinthecasebeingdismissed.
WORKINGWITHPROFESSIONALS
PETITIONPREPARERS
Youmayworkwithabankruptcypetitionpreparerwhowillassistyouwiththenecessarypaperwork.However,apreparerisnotanattorneyandhe/sheisprohibitedfromgivinglegaladvice.Bydefinition,apetitionpreparerisa“aperson,otherthananattorneyforthedebtororanemployeeofsuchattorneyunderthedirectsupervisionofsuchattorney,whopreparesforcompensationa[bankruptcy]documentforfiling.”See§110(a).
PetitionpreparersmustcomplywiththeBankruptcyCodewhichrequiresthemtoprovidetheirtaxidentificationnumberandtodiscloseanyandallcompensationyoupaid
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fortheservices(orwerepaidbysomeoneelseonyourbehalf).Theresponsibilitiesofpetitionpreparerscanbefoundin§110.Whileapreparermayhelpyouwithforms,theyareprohibitedfromadvisingyouonwhichchapteryoumayfile,whatexemptionsyoumayclaim,andhowsecureddebtmaybeaffectedinbankruptcy.Theycannotfiledocumentsforyou.Infact,bankruptcypetitionpreparersareprohibitedfromtellingyouhowtocompletetheforms.Evenwithabankruptcypetitionpreparer,youarestillproseorself‐represented.Evenwhenyouhiretheservicesofabankruptcypetitionpreparer,theresponsibilityforensuringthatalldocumentsarecompletedcorrectlyandfiledtimelyisyours.
Bankruptcypetitionpreparersmaynotaccompanyyoutoameetingofcreditorsnorappearincourtonyourbehalf.Theymaynotpreparepleadings,suchasmotionsorcomplaints.
Inaddition,itisimportantforyoutoknowthatneitherMassachusettsnortheBankruptcyCourthasanycertificationprocessforbankruptcypetitionpreparersorforparalegalsandothernon‐attorneyprofessionalswhomayprovidebankruptcypetitionpreparationservices.
ATTORNEYS
Youmayworkwithalicensedattorneywhocangiveyouspecificlegaladviceandguidance,tailoredtoyourpersonalsituation.
Remember,bankruptcycourtpersonnelcannotgiveyoulegaladvice.Onlyalicensedattorneycan:
Explainthemeaningofastatutoryprovisionorrule; Provideaninterpretationofcaselaw; Explaintheresultoftakingornottakingactioninacase; Helpyoucompleteformsandadviseyouregardingwhatislegallyrequired
whenaformrequiresyoutoprovideinformation; Advisewhetherjurisdictionisproperinacase; Advisewhetheracomplaintproperlypresentsaclaim; Adviseonthebestproceduretoaccomplishaparticulargoal; Advisewhoshouldreceivepropernoticeorserviceofpapers; Appearincourtonyourbehalf; Accompanyyoutothecreditorsmeetingasyourlegalrepresentative.
TolegallypracticelawintheU.S.BankruptcyCourtfortheDistrictofMassachusetts,theattorneymustbeamemberingoodstandingofthebaroftheU.S.DistrictCourtfortheDistrictofMassachusetts.BeforeanattorneycanbecomeamemberofthebaroftheU.S.DistrictCourtfortheDistrictofMassachusetts,theattorneymustbeamemberofthebaroftheCommonwealthofMassachusetts.
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TodeterminewhetherapersonisanattorneylicensedtopracticelawintheCommonwealthofMassachusetts,visittheBoardofBarOverseerswebpage:www.massbbo.org.
Ifyouarenotsurewheretofindacompetentattorney,pleasevisittheBankruptcyCourt’swebpageforlinkstolawyerreferralagencies.YouarealsoencouragedtocontacttheProSeClerkforareferraltoanagency.
SELF‐REPRESENTATION:PROSE
Ifyouplantofileabankruptcypetitionwithouttheassistanceofaprofessional,thefirststepintheprocessistoobtaintheproperforms.Theofficialforms,authorizedbytheJudicialConferenceoftheUnitedStates,areavailableonlineatwww.mab.uscourts.gov.Theyareavailableforfree.
Thefirstproblemyouwillencounteristhatyoumustdeterminewhichtypeofbankruptcyisthebestforyou:Chapter7,Chapter11,Chapter12orChapter13.Basicinformationaboutthesechaptersisincludedinthisguide.
InaChapter7,youturnoveryournonexemptassetstoatrusteewhothenliquidates,orsellsthem,topayyourcreditors.InChapter13,youproposeaplantopayyourcreditorsoveraperiodoftime,nolongerthanfiveyears.See§§1322‐1325.YoumustusetheCourt’sOfficialLocalFormfortheChapter13plan.Also,intheLocalRulesyouwillfindaspecialsectionforChapter13rules.SeeLocalRules,Appendix1.TherearelimitationsontheamountofdebtapersoncanoweinordertofileaChapter13.See§109(e)
IndividualswhohavedebtshigherthantheamountsallowableinChapter13canfileaChapter11andproposeaplantopaycreditorsoveraperiodoftime.Chapter11hasadditionalreportingandaccountingrequirementsandthereispotentialforthecreationofacreditorscommittee,allofwhichcanbeundulyburdensomeandexpensive.Chapter12isdesignedforfamilyfarmersorfisherman.
Becausethisguidecanofferonlybasicinformation,youareencouragedtoobtainlegaladvicefromaqualifiedandexperiencedbankruptcyattorneywhocanbesthelpyoudecidewhichchapterofbankruptcyisrightforyou
PROSECLERK
TheCourthasaProSeClerkwhomaintainsapresenceinallthreeDivisions:Boston(Eastern),Springfield(Western)andWorcester(Central).TheProSeClerkcannotgiveyoulegaladvice.
HerearesomeexamplesofsomebasicquestionsthattheProSeClerkmaybeabletoanswerforyou:
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“WhatdoIneedtodotogetadischarge?” “WhatdoIneedtofiletorespondtoamotion?” “HowdoIamendadocument?” “Whatdocumentsdoesmytrusteerequire?” “HowdoIserveasummons?” “WhatdoIneedtoknowaboutmyMeetingofCreditors?”(The
Section341meeting) “CanIgetfreelegalassistance?”
ContactinformationfortheProSeClerk’sOfficeisfoundattheendofthishandbook.
COMMUNICATINGWITHTHECOURT
AsamatterofstandingpolicyandinkeepingwithFederalBankruptcyRule9003,thelocalrulesofthisCourtandthecanonsofjudicialethics,thejudgemaynotreceiveorparticipateinex‐partecommunicationsfromdebtors,creditors,counsel,trusteesortheircounsel,orthegeneralpublicinconnectionwithpendingorclosedcases.Ifyouneedtocommunicatewiththecourt,contacttheClerkofCourt,theProSeClerkorthecaseadministratorassignedtothecase.
Visitthecourt’swebsiteatwww.mab.uscourts.govandclick“ContactCourtStaff”;click“ContactNumbers”under“Judges’Sessions.”Caseadministratorsareassignedbyjudgeandthelasttwodigitsofthecasenumber.
Apartywhowantsaformofreliefand/orwhowantstoexpressanobjectiontoanother’srequestforreliefmustcommunicateinwritingandintheformofanappropriatepleading.Thepleadingordocumentmustalsobeaccompaniedbyacertificateofservicewhichshowsthatallpartieswhoareentitledtonoticeweremailedacopyofthepleading.Thisprocesshelpsensurethatallconcernedpartiesareprovidedanopportunitytosubmittheirviews.Formoreinformation,pleaseseeFederalRuleofBankruptcyProcedure9013andLocalBankruptcyRule9013‐1and9013‐3.
GETTINGSTARTED
Bankruptcyisacomplexlegalworldthathasavocabularyallitsown.Manycommonlyuseddefinitionsarefoundin§101.Therearesomeothertermsthatyouwillcomeacross.Knowingthesetermswillhelpyouunderstandtheprocess.Forexample:
Estate:theestateisdefinedby§541.Refertothissectiontolearnwhatconstitutes“propertyoftheestate.”
Prepetitionandpost‐petition:Theterm“prepetition”meansbeforethebankruptcypetitionwasfiled.Theterm“post‐petition”meansafterthecasewasfiled.
Inadditiontounderstandingmanyterms,itisveryimportantthatyouprotectyourselfandyourfamily.Almosteverydocumentfiledinabankruptcycaseispublic
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record.Whileyoumustprovidetruthfulandcompleteinformationinyourbankruptcyschedulesandrelateddocuments,youshouldtakecarenottodisclosehighlypersonalandprivateinformation:
Onlyonedocumentrequiresyoutoprovideyourfullsocialsecuritynumber.3Inallotherfilingsyoushouldprovideonlythelastfourdigitsofyoursocialsecuritynumber.
Donotdisclosefullaccountnumbers(includingcreditoraccountnumbers,bankaccountnumbers,brokerageandretirementaccounts,etc.)onanyschedules,statementsordocuments,oronanyotherfilings.Useonlythelastfourdigitsoftheaccountnumber.
Donotidentifyanyminorchildrenand/ordependentsbytheirname.Listthemonlyas“minorson”or“minorstepdaughter”orthelike,andprovidetheirages,oruseonlytheirinitials
Donotdisclosethefulldateofbirthofanyindividual.Useonlytheyearofbirth.
FormoreinformationonprotectingprivacyinfilingsmadewiththebankruptcyseeFed.R.Bankr.P.9037.
PREPARINGYOURPAPERWORK
Onceyouhaveobtainedthenecessaryformsanddeterminedwhichchapteryouwillbefiling,youmustcompletetheofficialforms.Beforedoingthat,gatheryourpaperwork:pastandpresentbills,collectionnotices,paystubs,taxreturns.Obtainacopyofyourcreditreportatwww.annualcreditreport.com.Openyourmail.Getasmuchinformationasyoucanabouthowmuchyouoweandtowhomyouoweit.Asforyourassets,gatherasmuchinformationasyoucan:appraisals,insuranceinformation,andthelike.
Theinformationconcerningtheformsincludedinthisguideisintendedtohelpyouunderstandwhatinformationisrequiredtoproperlyprepareandfileyourdocuments.Ifyouarerepresentingyourself,youareresponsibleforthepropercompletionoftheforms.Reviewtheindividualformsasyoureadtheinformationbelow.
Everyquestiononthepetitionandtheotherdocumentsdiscussedbelowmustbeansweredwithcompleteaccuracyandhonesty.Byyoursignatureyouareswearingunderthepainsandpenaltiesofperjurythateachstatementyoumakeistruthful.Title18oftheU.S.Codeprovidespenalties,includingfinesandincarceration,forfalsifyingbankruptcyschedules,concealingassets,andotherbankruptcyrelatedcrimes.
Importanttips:
Individualormarriedcouples(jointdebtors)willusetheOfficialFormsinthe100series.Soleproprietorswillalsouseformsinthe100series.
3 OfficialFormB121,StatementofSocialSecurityNumber.
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Ifyourunoutofroomonanyform,attachaseparatesheetandwriteyournameandcasenumber(ifknown)atthetop.Also,identifytheformandthelinenumbertowhichtheadditionalinformationapplies.
Ifmarriedpeoplearefilingajointcase,bothareequallyresponsibleforsupplyingthecorrectinformationontheforms.
Donotidentifythenamesofminorchildren.See§112,Fed.R.Bank.P.1007(m),9037.
Keepcopiesofallbankruptcydocumentsandattachmentsyoufile.
TheForms
B101–THEVOLUNTARYPETITIONFORINDIVIDUALSFILINGFORBANKRUPTCY4
Thisformopensthecase.Thepetitionitselfiseightpages(ifyoudonothaveanattorney)andisfairlyself‐explanatory.Youmustanswerallquestionsthatapplytoyou.Onpages6and8,youmustsignthepetition.Ifitisajointpetition,bothspousesmustsign.Anindividualandacorporationmaynotfileajointpetition.
Ifyouownanunincorporatedbusiness,youmayincludethatbusinessnameandthedebtsitowesinyourpetition.Forexample,JohnDoerunsadelicalledJD’sDeli&Subs.Itisnotacorporation.HispetitioncouldidentifyhimasJohnDoed/b/a(doingbusinessas)JD’sDeli&Subs,andincludeanydebtsthatthebusinessowessinceheispersonallyresponsibleforthosedebts.Ifthebusinesswasincorporated,itwouldhavetofileitsownbankruptcypetition.5
‐Part2,B101
Readeachquestioncarefullyandrespondtruthfully.
Forno.8,youarepresentedthreeoptionsforpayingthefilingfee.First,youmaypaythefilingfeeinfull.
Second,youmayapplytopaythefilingfeeininstallments.Ifyouwishtoapplyforinstallments,youwillneedtocompleteOfficialFormB103A.PleasealsoreadLocalBankruptcyRule1006‐2.
Andfinally,ifyouarefilingchapter7,youmayaskthatthefilingfeebewaived.Forthefilingfeetobewaived,youwillalsoneedtocompleteOfficialFormB103B.Thecourtmay(butisnotrequired)towaiveyourchapter7filingfeeifyourincomeis150%ofthe
4Corporations,trusts,LLCsandothernon‐individualentitiesmustuseOfficialFormB201andallrelatednon‐individualforms.Becausetheseentitiesmustberepresentedbyanattorneyinabankruptcycase,theseformsarenotdiscussedinthisguide. 5 Corporationsmaynotappearproseevenwhenthepersonseekingtorepresentitistheonlyofficerand/orstockholder.
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povertyguidelinesandyouareunabletopayininstallments.Povertyguidelineinformationisupdatedannually,andmaybefoundonthecourt’swebsite.
Paymentsoffilingfeesmaybemadebybankcheckormoneyorderonly.Cashisacceptedattheclerk’scounter(butshouldneverbemailed),andastheclerkmaynotmakechange,theexactamountisrequired.
Forno.11,readthequestioncarefully.Ifyourentyourresidenceandifyourlandlordhasobtainedanevictionjudgmentagainstyou(alsoknownasajudgementforpossession),andyouwanttostayinyourresidence,youmustcompleteOfficialFormB101Aandfileitwiththepetition.Readthatformcarefullyandcompletely.ThatformalsoincludesspecificreferencestosectionsoftheU.S.BankruptcyCodewhichyoushouldread.
Ifyouwishtostayinyourrentedresidencebeyondthirtydays,youwillneedtocompleteandfileOfficialFormB101B.
Youarerequiredtoserveacopyofthecompletedformonyourlandlordandyouarerequiredtopayrenttotheclerkasnotedontheinstructionsontheform.
‐Part3and4,FormB101
Pleasereadthesesectionscarefully.Ifthesesectionsapplytoyou,pleaseconsiderspeakingwithanattorney.
‐Part5,FormB101
Readthissectioncarefully.Checkthecorrectboxesandfileitwiththepetition.Ifthecreditcounselingcertificatehasbeenobtained,itshouldbefiledwiththisdocumentalongwithanypaymentplandevelopedwiththeagency.
Ifyouhaveobtainedthebriefingbutdonothavethecertificate,pleaseknowthatyoumustfileacopyofthecertificateandanypaymentplandevelopedwiththeagencywithin14daysofthefilingofthecase.
AvoidCommonmistakes:Youdonothave14daysafterthecaseisfiledtoobtainthebriefing.Youhave14daystofilethecertificateconfirmingyouobtainedabriefingbeforethecasewasfiled.See§109(h)formoreinformation.
Ifexigentcircumstancespreventedyoufromobtainingthebriefing,youmaybeeligiblefora30‐daytemporarywaiver.Torequestthiswaiver,youwillneedtocompleteandfileOfficialLocalForm9.
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‐Part6,FormB101
Readeachquestioncarefully.Ifyoudonotunderstandaquestion,theProSeClerkmightbeabletoanswerit.Ifnot,youmayneedtospeaktoanattorney.
‐Part7,FormB101
Readeachsectioncarefully.Yoursignatureontheseformsisyouracknowledgementthatyouhavereadthepetitionandalloftheinformationontheform.Ifyoupaiddsomeonewhoisnotanattorneytohelpyoucompletetheforms(abankruptcypetitionpreparer),youmustidentifythepersoninthissectionandyoumustcompleteandfileOfficialForm119.
Youarerequiredtoobtainandreadthenoticerequiredby§342(b).ThatnoticecanbefoundinOfficialForm2010:NoticeRequiredby11U.S.C.§342(b)forIndividualsFilingforBankruptcy.Youarenotrequiredtofilethenotice,butwhenyousignPart7ofFormB101,amongotherthings,youcertifythatyouobtainedandreadthenotice.Ifyouhavequestionsabouttheinformationonthatform,pleasespeaktotheProSeClerkortoanattorney.
OFFICIALLOCALFORM121:STATEMENTABOUTYOURSOCIALSECURITYNUMBERS
Unlikeallotherdocumentsfiledinthecase,thisdocumentdoesnotappearonthepublicdocketandisnotmadeavailabletothepublic.Toprotectyourprivacy,thecourtwillmakeonlythelastfourdigitsofyournumberknowntothegeneralpublic.However,thefullsocialsecuritynumberismadeavailabletoyourcreditors,theUnitedStatesTrusteeandthetrusteeassignedtoyourcase.
Avoidcommonmistakes:Doubleandtriplecheckthenumber(s)youdisclosetoensuretheyareaccurateandinthecorrectorder.Ifyoulaterdiscoverthatthenumberwaswrong,youwillhavetoprepare,fileandserveacorrectednotice.SeeFed.R.Bankr.P.1009(b).Thesecostsanddelaysmaybeavoidedwiththoroughpreparationbyyou.
OFFICIALLOCALFORM1:MATRIXOFCREDITORS
TheCourtwillsendanoticeofthemeetingofcreditorstoallofthecreditorsandotherpartiesyoulistonyourschedules,providedthatyoualsolistthosecreditorsandotherpartiesonthematrixofcreditors.Unlikemostoftheformsdiscussedinthisguide,thereisnoformthatyoucandownload,completeandfile.Ratherthisisaformthatyou
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create.Itisatypedlistofallcreditorsandotherpartiesthatshouldreceivenoticeofthebankruptcycase.SeeOfficialLocalForm1.
OfficialLocalForm1isnottechnicallyaform.Rather,itisasetofinstructionsonhowtocompletethelistofcreditors.
Providingnoticeofyourbankruptcyisimportant,bothforyouandforyourcreditors.Acreditorwillnotknowthatitmuststopcollectionactivitiesifitdoesnotknowaboutyourbankruptcyfiling.Perhapsmoreimportantly,adebtmightnotbedischargedifitwasnotscheduledandnoticedproperly.Inaddition,ifyouforgetacreditor,youmayneedtoamendyourcreditormatrix,whichwillrequireanadditionalfee.Ifyourcaseclosesandyouneedtoreopenyourcasetolistanothercreditorclaim,therewillbeevenmorefees,andthereisnoguaranteethattheCourtwillallowyoutoreopenthecaseoramendyourschedulestoaddacreditoryouforgot.Andtocompoundallofthat,ifyouforgettolistacreditorclaiminthecase,yourcasewillexperiencedelay.
Ifyouhavemorethanoneaddressforacreditor,usealladdresses.Ifyouarenotsureifyouoweacreditor,listthemonthecreditormatrixanyway.Therecanbenosuchthingas“toomuchnotice,”especiallywhentheremaybecostlyandlongtermconsequencesforinsufficientnotice.
OFFICIALFORMB106A/B:SCHEDULEA/B:PROPERTY
ScheduleA/Biswhereyoulistallownershipinterestsyouhaveinproperty.Aninterestincludesbutisnotlimitedtoanyjointinterests,futureinterestsorco‐ownershipyoumayhavewithothers.
‐Part1
Ifyouhaveanylegalorequitableinterestinanyrealestate,readthesesectionscarefullyandanswerallofthequestions.Theterm“legalorequitableinterest”isverybroadandincludesmanykindsofpropertyinterests,includingbothtangibleandintangibleproperty.Thesizeofyourownershipinterestisnotrelevant;anyinterestinrealestatemustbedisclosed.Thisincludesland,ahome,investmentproperty,avacationhomeoracondominium(evenifthatcondominiumisaparkingspace).Theseexamples,aswellasthoseintheformitself,aremeanttoprovideanideaofwhattoincludeinthecategory.Theyarenotintendedtobecompletelistsofeverythingwithinthatcategory.
Incertaincategories,currentvaluemaybedifficulttofigureout.Whenyoucannotfindthevaluefromareputablesource(suchasapricingguideforyourcar),estimatethevalueandbepreparedtoexplainhowyoudeterminedit.
Ifyouownnorealestate,check“No”Ifyouleaveitcompletelyblank,theCourtwillviewthisasdeficientandwillissueanorderrequiringyoutofileacompleteschedule.
Avoidcommonmistakes:Whenprovidinginformationaboutthevalueoftheproperty,donotdeducttheamountofanyloanstheremaybe
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againsttheproperty,anddonotdeductanyexemptionsthatyoubelievemayapply.Ifyouownthepropertywithothers,identifythetotalvalueofthepropertyandthevalueoftheportionyouown.
‐Part2
Readthiscarefully:thissectionisself‐explanatory.LikePart1,ifyoudonotownorleasevehicles,check“No.”Otherwise,besureyoucompleteallinformation.
Avoidcommonmistakes:Whenprovidinginformationaboutthevalueofthevehicles,donotdeducttheamountofanyloanstheremaybeagainstthem,anddonotdeductanyexemptionsthatyoubelievemayapply.Ifyouownthevehicles,identifyboththetotalvalueofthepropertyandthevalueoftheportionyouown.
‐Part3
Thissectioniswhereyoulistallpersonalandhouseholdproperty.Thissectionisneverblank.Everyoneownspersonalproperty.Everythingfromtoyourhouseholdgoodsandclothing,toanythingelsenotspecificallylisted.Carefullyreadeachquestionontheleftsideoftheformandanswerithonestlyandcompletely.Ifyouhavenopropertythatfitsintothatparticularcategory,besuretochecktheboxinthe“none”column.
Avoidcommonmistakes:Answering“none”basedontheassumptionthatyouhavenothingofvalue.Youarenotbeingaskedtodiscloseitemsyouhaveofvalue;youarerequiredtodiscloseeverything.
‐Part4
Readeachquestioncarefullyandrespond.Remembernottoincludeaccountnumbers(exceptforthelast4digits).Ifaccountsarejointlyheld,identifythatfact.Atrusteemayrequireyoutoproducestatementsofaccounts.Ifyoudonothavethemonhand,youshouldobtainthemassoonaspossible.Adelayindisclosurewilldelaythecase.
AvoidCommonmistakes:Answering“none”becauseyoudonotunderstandthequestion.Somequestionsareabitcomplicatedanduselegalterms.Ifyouhavequestionsaboutwhataquestionmeans,youshouldspeakwithanattorney.
‐Parts5and6
Ifyouhaveorhadabusiness,includingbutnotlimitedtofarmingorcommercialfishing,reviewthesepartscarefullyandanswereachquestion.
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‐Part7
Thisquestionseekseverythingelse.Thepriorpartsallidentifiedcategoriesofproperty,suchasclothing,householdgoodsandcash.Youmayhavepropertythatyoubelievedoesnotfitintoacategory–andthisiswhereyoushoulddisclosethatproperty.
‐Part8
Addupallofthefigures.Useacalculatortobeaccurate.
OFFICIALFORMB106C:SCHEDULEC:THEPROPERTYYOUCLAIMASEXEMPT
Section541describesthepropertythatconstitutestheestate.However,debtorsarepermittedtoclaimcertainpropertyexempt(orexcluded)fromtheestate.Thisform–anditspropercompletion‐isveryimportant.
Exemptionsarenotautomatic.Forpropertytobeconsideredexempt,youmustlistthepropertyonOfficialFormB106C.Astheformstates,youmust“claim”thepropertyasexempt.Ifyoudonotlisttheproperty,thetrusteemaysellitandpayalloftheproceedstoyourcreditors.Inaddition,youmayunnecessarilylosepropertyifyoudonotclaimexemptionstowhichyouareentitled.Youarestronglyencouragedtohireaqualifiedattorneytoadviseyou.
TheBankruptcyCodeprovidesthatyouusetheexemptionsinthelawofthestatewhereyouhadyourlegalhomefor730daysbeforeyoufileforbankruptcy.Specialrulesmayapplyifyoudidnothavethesamehomestatefor730daysbeforeyoufile.Also,ifyouonlypurchasedoracquiredyourhomeinthe1,215dayperiodpriortofiling,yourhomesteadexemptionmaybelimited.Youshouldspeakwithanattorneyifyoubelievethisappliestoyou.
InMassachusetts,youhaveachoiceofwhichexemptionsyoumayelecttouse:thoseavailableunderfederalbankruptcylaworthoseavailableunderMassachusettslaw.Youmustchooseeitherthefederalorthestateexemptions;youcannotpickandchooseormixandmatch.Ifyouandyourspousearefilingajointpetition,eachofyoumustchoosethesamesetofexemptions,thestateorfederal.
Inaddition,thedecisionofwhichexemptionstoelectandwhatpropertytoclaimasexemptisalegaldecisionthatonlyyoucanmake.Neithercourtpersonnelnorapetitionpreparerispermitted,qualifiedortrainedtogiveyouthiscriticallegaladvice.Youshouldknowthatyoucouldmaylosepropertyifyoudonotusethebestexemptionsforyoursituation.Again,youareurgedtospeakwithanattorney.
Thelistoffederalbankruptcyexemptionsmaybefoundunder§522(d).ThedollaramountsforexemptionsadjusteverythreeyearsandarenextscheduledtoadjustinApril1,2019.
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Forthestateexemptionsapplicabletoyou,refertothesectiononexemptionsunderthestatelawofthestatethatappliestoyou–whichmayormaynotbeMassachusetts,evenifyouarefilinginMassachusetts.Seee.g.§522(b)(3)(A).Whenyouhavemadeyourdecision,checkthebox(no.1)inPart1oftheForm.
OFFICIALFORMB106D:SCHEDULED:CREDITORSHOLDINGSECUREDCLAIMS
Somecreditorsmayholdasecuredclaim.Inotherwords,thecreditorholdsasecurityinterestinproperty,orwhatisalsooftenreferredtoascollateral.Thesecurityinterestgivesthecreditortherighttoseizethepropertywhenyoufailtomakeagreeduponloanpayments.Anexamplemightincludeacarloanormortgageloanonrealestate.Itmightalsoinclude(butnotbelimitedto)householditemsyoupurchase,suchaselectronics,appliances,jewelry,andpowertools.InPart1ofScheduleDyouarerequiredtoidentifyandlistanysecuredinterestthatacreditorholdsinanyofyourproperty.
Certaincreditorsalsowouldbelistedonthisscheduleiftheyhavealienagainstyourproperty,suchasacreditorwhoobtainedacourtjudgmentagainstyouandthenplacedalienorattachmentonyourpropertyto“secure”paymentofthatjudgment.Creditorswhoare“underwater”,thatis,theyareowedmorethanthevalueofthepropertysecuringtheclaim,shouldbeidentifiedonScheduleD.Pleaseremember,thatsecurityinterestswillsurviveabankruptcy(evenifyoumistakenlylistthemonthewrongschedule,orifyouincorrectlyassumethatthereisnosecurityinterest).Ifyouhavequestionsabouttherightsofsecuredcreditorsasitrelatestoyouruniquesituation,youshouldconsultwithanattorney.
Listthedebtonlyonce.InPart2listotherswhoshouldbenotifiedaboutthebankruptcyfilingforadebtyouhavelistedinPart1.Thisincludescollectionagenciesandattorneys.Youneednotcompletethissectioniftherearenoadditionalpartieswhoshouldreceivenotice.Seetheglossaryforinformationonwhatmaybeacontingent,disputedorunliquidatedclaim.
BesurethateverycreditorlistedonScheduleDisalsolistedonthecreditormatrix.Also,refertoAppendix4oftheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusettsfortheaddressestosendnoticestoagenciesoftheUnitedStatesofAmericaandtheCommonwealthofMassachusetts.
OFFICIALFORMB106E/F:SCHEDULEE/F:CREDITORSWHOHAVEUNSECUREDCLAIMS
Unsecuredclaimsarethosewhereacreditordoesnothaveasecurityinterestinpropertyorcollateral.Therearetwotypesofunsecuredclaims:priorityclaimsandnonpriorityclaims.
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‐Part1:ListAllofYourPRIORITYUnsecuredClaims
Informationonpriorityandthosecreditorswhoareentitledtoprioritycanbefoundin§507(a).Creditorsholdingpriorityclaimsinclude,butarenotlimitedto,taxauthorities,domesticsupportobligations6,depositsheldandthelike.Listingprioritycreditorsdoesnotmeanthattheywillbedischarged.Remember,youarerequiredtolistallassetsandallliabilities.
Besurethateverycreditorlistedinthissectionisalsolistedonthecreditormatrix.Also,refertoAppendix4oftheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusettsfortheaddressestosendnoticestoagenciesoftheUnitedStatesofAmericaandtheCommonwealthofMassachusetts.
‐Part2:ListAllofYourNONPRIORITYUnsecuredClaims
Inmostindividualcases,thisschedulehasthelargestnumberofcreditors.Ifacreditorisnotsecuredandisnotentitledtopriority,thenthecreditorhasanunsecurednonpriorityclaimandshouldbelistedhere.Commonexamplesinclude,butarenotlimitedto,creditcardcompanies,utilitycompanies,unsecuredpersonalloans(suchasfromalender,bank,relativeorfriend),debtsowedasaco‐signoronaloan,studentloansandtortclaims(peopleorpropertyinjuredordamagedduetoyourallegedfaultorwrongdoing).Seetheglossaryforinformationonwhatmaybeacontingent,disputedorunliquidatedclaim.
Besurethateverycreditorlistedinthissectionisalsolistedonthecreditormatrix(LocalForm1).Also,refertoAppendix4oftheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusettsfortheaddressestosendnoticestoagenciesoftheUnitedStatesofAmericaandtheCommonwealthofMassachusetts.
InPart3youcanlistotherswhoshouldbenotifiedaboutthebankruptcyfilingforadebtyouhavelistedinParts1and/or2.Thisincludescollectionagenciesandattorneys.Youneednotcompletethissectioniftherearenoadditionalpartieswhoshouldreceivenotice.InPart4,youmayneedtobreakoutsomeoftheclaimsyouidentifiedintothecategoriesreflected.Useacalculatorifyouneedto.
Avoidcommonmistakes:Whenindoubtastowhetherornottoaddorincludeanycreditortoanyoftheseschedules,erronthesideofcautionandincludetheirnameontheappropriateschedule.Amendingitlatermaycausedelayandmayresultinmorefees.Include:
o Relativeandfriendsyouownmoneyto;o Ex‐spouses,formerroommatesandbusinesspartners;o Lendersonaccountsyouco‐signed;
6 Theterm“domesticsupportobligation”canbefoundin101(14A).
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o Peopleorentitiesthathavesuedyou;o Peopleorentitiesthatmaysueyou;o Billcollectors.
OFFICIALFORMB106G:SCHEDULEG:EXECUTORYCONTRACTSANDUNEXPIREDLEASES
Thisscheduleidentifiesallunexpiredleasesandexecutorycontractsthatyouareapartyto,eitherasthelessororlesseeoraparty.Foranindividualthemostcommontypeofleasemightinvolvetheleasingofanautomobile,butapersonmightalsobeinvolvedinaleaseforresidentialorcommercialproperty.Anindividualinvolvedinanunincorporatedbusinessmighthavemanyleasesinvolvingsuchthingsascopiers,computers,equipmentandthelike.Ifabusinessisnotacorporation,thenthedebtorsignedtheleasesasanindividual,anddebtorsshouldlistthoseleasesonthisschedule.
Avoidcommonmistakes:Whenindoubtastowhethertoaddalessor,alesseeoranycreditortoanyoftheschedulesofdebt,erronthesideofcautionandincludetheirnameonthisschedule.Amendingitlatermayresultindelayandmorefees.
OFFICIALFORMB106H:SCHEDULEH:YOURCODEBTORS
Onthisschedule,identifyanypersonorentity(suchasanincorporatedbusiness)thatisaco‐signororajointobligoronanydebt.Youmustlistanyonewhoisresponsiblealongwithyouforrepayingadebt.However,donotidentifyyourspouseasacodebtorifyouarefilingajointcase
OFFICIALFORMB106I:SCHEDULEI:YOURINCOME
Thisformrequiresyoutoindicatetheamountofincomethatyou,andyourspouse,receiveonamonthlybasisfromallsources.Readeachquestionandansweritaccuratelyandtruthfully.Theincomeofthespousemustbeincludedbyjointdebtors,andbyeverymarrieddebtor,regardlessofwhetherajointpetitionisfiled.Donotleaveblanks.Eachlineshouldhaveanumber,evenifthatnumberiszero. Ifyoureceiveincomefrommorethanoneemployer,attachadditionalsheetsandincludethetotal(s)inline8h.
Avoidcommonmistakes:Calculateyourincomeaccurately.Ifyoudonotreceivethesameamountofincomeeachmonthoreachpayperiod,youwillneedtoproratetheincome.Howyoudothatwilldependonthecircumstancesinyourcase.Anothermistake,forgettingornotincludingsupportand/orassistancefromfamilyandfriends.Andfinally,besureyoucompleteline13.
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OFFICIALFORMB106J:SCHEDULEJ:YOUREXPENSES
Thisformrequiresyoutoidentifyanditemizethevariousmonthlyexpensesyouincur.Donotincludepaymentsforcreditcarddebtsoranyotherdischargeabledebt(sincenofurtherpaymentswillbedue).Donotdisclosethenamesofdependents,onlytheirrelationship,ageandwhethertheyresidewithyou.Donotleaveblanks.Eachlineshouldhaveanumber,evenifthatnumberiszero.
Inajointcase,ifoneofthedebtorsmaintainsaseparatehousehold,OfficialFormB106J‐2mustbecompleted.Pleasereadcarefullythedirectionsregardingtheinformationtobereported,includingthatofdependents.
Avoidcommonmistakes:Ifyourexpensesarenotthesameeverymonth(asmaybethecasewithcertainutilities),proratetheexpense.Howyoudothatwilldependonthecircumstancesinyourcase.Anothermistake:ifthereisacategoryofexpensesthatyoudonotsee,orifyouarenotsurewhichcategoryanexpenseisin,attachaseparatesheetandincludethetotalonline21.Andfinally,besureyoucompleteline24.
OFFICIALFORMB106SUM:SUMMARYOFYOURASSETSANDLIABILITIESANDCERTAINSTATISTICALINFORMATION
ThisformmightbetheeasiestformtocompleteifyouhaveproperlycompletedtheinformationontheSchedules.Eachlineineachparttellsfromwhereontheschedulestheinformationisfound.InformationisalsorequiredfromtheStatementofYourCurrentMonthlyIncome,whichisdiscussedfurtheronpage____.
OFFICIALFORMB106DEC:DECLARATIONCONCERNINGDEBTOR’SSCHEDULES
Providetherequestedinformationontheform.YousignthisformattestingunderthepainsofperjurythattheschedulesyouarefilingwiththeCourtare“trueandcorrecttothebestof[your]knowledge,informationandbelief.”
OFFICIALFORMB107:STATEMENTOFFINANCIALAFFAIRSFORINDIVIDUALSFILINGFORBANKRUPTCY
AlldebtorsprovideinformationinParts1through11.Readeachquestionandansweritaccuratelyandtruthfully.Useadditionalsheetsiftheyareneededtofullyrespondtothequestions.Ifaquestiondoesnotapplytoyou,besureyouchecktheboxthatsays“No.”Donotleaveanyquestionblank.Afterallpartshavebeencompleted,gotoPart12tocomplete,dateandsign.
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Avoidcommonmistakes:Readthequestioncarefully.Thequestionsareintendedtoelicitinformationfromyou.Donotassumethatthequestionisaskingforsomethingthatisnotclearlyrequested.IfyouhavequestionsaboutanypartoftheStatementofFinancialAffairs,theProSeClerkmaybeabletoprovideguidance,oryoumaywishorneedtospeakwithanattorney.
OFFICIALFORMB108:STATEMENTOFINTENTIONFORINDIVIDUALSFILINGUNDERCHAPTER7
Thisformasksyoutostatewhatyouplantodowithanypropertythatissecured(i.e.,thepropertyyouproperlyidentifiedonScheduleD)oranypropertysubjecttoalease(ScheduleG).Pleasenote,thattherearedeadlinesbywhichyoumustfulfillyourstatedintentions.Failuretodosowillterminatetheautomaticstayastothepropertyinvolved.See,§362(h).
Ifyouarenotsurewhatyoushoulddowithregardtothisformoryourintentions,youmustspeakwithanattorney.
OFFICIALFORMB119:BANKRUPTCYPETITIONPREPARER’SNOTICE,DECLARATION,ANDSIGNATURE
Ifyoureceivedtheassistanceofabankruptcypetitionpreparer,thisformmustbecompletedandfiled.Youthedebtormustreceiveacopyofthisform.Abankruptcypetitionpreparerisdefinedin§110..
‐Part1
Thenoticeclearlystateswhatabankruptcypetitionpreparerisprohibitedfromdoing.Ifyouusetheservicesofapreparer,theymustgiveyouthedebtoracopyofthisformandyoumustsignitbeforetheyprepareanydocumentsforfilingoracceptcompensation.Besureyourpetitionpreparer’sidentityisdisclosedwhereindicated.YousignanddatePart1.
‐Part2
Thebankruptcypetitionpreparermustcomplete,signanddatePart2.Atthebottomofthepage,thepreparermustdisclosetheirfullsocialsecuritynumber.Section110requiresbankruptcypetitionpreparerstodisclosethisnumberonthispublicdocument.
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OFFICIALFORMB122A‐1:CHAPTER7STATEMENTOFYOURCURRENTMONTHLYINCOME
OFFICIALFORMB122A‐1SUPP:STATEMENTOFEXEMPTIONFROMPRESUMPTIONOFABUSEUNDER§707(B)(2)
OFFICIALFORMB122A‐2:CHAPTER7MEANSTESTCALCULATION
OFFICIALFORMB122B:CHAPTER11STATEMENTOFYOURCURRENTMONTHLYINCOME
OFFICIALFORMB122C‐1:CHAPTER13STATEMENTOFYOURCURRENTMONTHLYINCOMEANDCALCULATIONOFCOMMITMENTPERIOD
OFFICIALFORMB122C‐2:CALCULATIONOFYOURDISPOSABLEINCOME
In2005,CongressenactedtheBankruptcyAbusePreventionandConsumerProtectionAct,orBAPCPA.Underthislaw,a“meanstest”wascreatedthatdetermineswhetherthereisa“presumptionofabuse”inachapter7filingandthelengthofthe“applicablecommitmentperiod”and“disposableincome”inachapter13filing.See§1325(b)(2).Thelawalsocreatedanewterminbankruptcy:“currentmonthlyincome”whichisdefinedin§101(10A).
Theseformsarecomplexandtheywillrequiremuchefforttocompleteaccurately.Tocompletetheformapplicabletoyourcase,youwillneedtoknowthemedianfamilyincomeinyourlocation,andyoumayneedtoknowtheIRSGuidelinesforexpensesandallowances.ThisinformationcanbefoundontheCourt’swebsite(www.mab.uscourts.gov)orfromtheOfficeoftheU.S.Trustee(www.justice.gov/ust).
DebtorswhofileChapter11mustcompleteandfileFormB122B;
DebtorswhofileChapter7mustcompleteandfileFormB122A‐1(andinsomecases,B122A‐2)unlesstheyareexempt,inwhichcaseB122A‐1Suppmustbecompletedandfiled;DebtorswhofileChapter13mustcompleteFormB122C.Alongwithpropercompletionoftheforms,Chapter7and13debtorsmayhaveadditionalconsiderationsandissues.
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‐CHAPTER7
Allchapter7debtorsmustfirstdeterminewhattheir“CurrentlyMonthlyIncome”orCMIis.CurrentlyMonthlyIncomeisnotnecessarilywhathasbeendisclosedonScheduleB106J.IftheCMIfallsbelowtheState’smedianincomefigures,youonlyneedtocompleteOfficialFormB122A‐1.Toensureyouhavecompletedthiscorrectly,completetheformonestepatatimeandcarefullyfollowtheinstructions.CompleteParts1and2,andifbox14aischecked,turnbacktothefrontpage,checktheboxthatsays“Thereisnopresumptionofabuse.””
IfaftercompletingParts1and2youfindthattheboxinline14bischeckedyouhavetwopossibleoptions:FormB122A‐1SupporFormB122A‐2.
‐‐FormB122A‐1Supp.
Somechapter7debtorsareexemptfromanydeterminationofwhetherthereisa“presumptionofabuse.”FormB122A‐1Suppisdesignedtoobtaininformationtohelpdeterminewhetheryouareexempt.Readtheformcarefully.Ifyouareexempt,youonlyneedfilethisformandFormB122A‐1.
‐‐FormB122A‐2
Ifyoucannotcheckbox1that“[t]hereisnopresumptionofabuse,”andyoudidnothaveany“qualifiedmilitaryservice”asdescribedonFormB122A‐1Supp,youmustcompletethisform.
Toproperlycompletethisform,youwillneedtoknowyour“currentmonthlyincome”andtheIRSNationalandLocalStandardsforcertainexpenseamounts.Alinkto“MeansTestInformation”isfoundonthecourt’swebsite.
Simplystated,theChapter7MeansTestCalculationmaybeverydifficulttocomplete.Ifyouhaveconcernsaboutcompletingthisformproperly,orabouttherebeingapresumptionofabuse,youshouldspeaktoacompetentandexperiencedbankruptcyattorney.
‐CHAPTER11
Ifyoufileunderchapter11andyouareasmallbusinessdebtor,inadditiontofilingtheChapter11StatementofYourCurrentMonthlyIncome(OfficialFormB122‐B),youmustalsofileyourmostrecentbalancesheet,statementofoperations,cash‐flowstatement,andfederalincometaxreturns.
Chapter11isverycomplicatedandrequiresyoutofileadditionaldocumentsthatarebeyondthescopeofthisguide;youareurgedtoconsultacompetentandexperiencedbankruptcyattorney.
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‐CHAPTER13
‐‐FormB122C‐1
Readtheformandtheinstructionscarefully.Iftheformisnotaccurate,youmayberequiredtoamend.Theinformationonthisformdeterminesanimportantfactor:thelengthofyourchapter13plan.
Allchapter13debtorsmustdeterminewhattheircurrentmonthlyincome(CMI)is.CurrentlyMonthlyIncomeisnotnecessarilywhathasbeendisclosedonSchedule106J.IftheCMIfallsbelowtheState’smedianincomefigures,yourapplicablecommitmentperiodasdefinedby§1325(b)(4)willbenolessthanthreeyears.IftheCMIisoverthemedian,yourapplicablecommitmentperiodisnomorethan5years.
‐‐FormB122C‐2
Debtorswithanapplicablecommitmentperiodofnolessthanthreeyearsdonotneedtocompletethisform.Iftheapplicablecommitmentperiodisnomorethan5years,thisformmustbecompleted.Readtheformandtheinstructionscarefully.Thisformdeterminestheamountofyour“disposableincome.”Thisamountmaybetheminimumamountyou,asthedebtor,mustpaymonthlyinachapter13plan.
THEPLAN
Adebtorwhofilesacaseunderchapter12or13mustfileaplan.See§§1221,1321.Adebtorinchapter11mayfileaplan.See§1121.TheDistrictofMassachusettsusesaformplanforchapter13cases.SeeOfficialLocalForm3and3A.
Chapters11,12and13havespecificprovisionsonwhataplanmaydoandwhataplanmustdo.TheCourtstronglyurgesallChapter11,12and13debtorstoretaincounsel.
INCOMPLETEFILINGS
Ifyoufileyourbankruptcypetitionanddonothavealloftherequiredforms,schedules,theentirefilingfee,orthecreditormatrix,theCourtwillissueanOrdertoUpdate.Thisorderwillsetforthspecificdeadlinestofilemissingdocuments.
Formostitems,youwillhave14daystofileyourdocuments,butthecreditormatrixmustbefiledinnomorethan5days;theStatementofSocialSecurityNumbermustbefiledin3days.IfyoudonotfileanydocumentbythedeadlinereflectedintheOrdertoUpdate,yourcasecanbedismissed.TheOrdertoUpdateisjustthat:anOrderfromtheBankruptcyCourt.FailingtocomplywiththeorderalsomeansthatyouhavefailedtoadheretotherequirementsoftheBankruptcyCode.Remember,ifyourcaseisdismissed,thismayimpactyourrightsinanyfuturecaseyouneedtofile.
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AMENDMENTS
Ifyoudiscoverthatadocumentneedstobecorrectedorthatacreditororclaimneedstobeadded,youmayfileanamendment.Youmayneedtofileamotionoranoticetoamend,andyoumayneedtoservethedocumentsonsomeorallofyourcreditors.Formoreinformationonamendments,pleasereviewFed.R.Bankr.P.1009andLocalBankruptcyRule1009‐1.
Ifamendingschedules,youwillalsoneedtoincludeamendedSummariesaswellasaverification(OfficialFormsB106SumandB106Dec).
FILINGTHEPETITION
Oncealltheformsarecompleted,youshoulddelivertheminhand,ormailthemtotheU.S.BankruptcyCourt.Filingsareacceptedbetween8:30a.m.and4:30p.m.onbusinessdays,buttheofficeisopenuntil5:00p.m.TheaddressesfortheCourtare:
EasternDivision/Boston: CentralDivision/Worcester:
UnitedStatesBankruptcyCourt UnitedStatesBankruptcyCourtJohnW.McCormackPostOfficeandCourtHouse DonohueFederalBuilding5PostOfficeSquare,Suite1150 595MainStreetBoston,MA02109‐3945 Worcester,MA01608‐2076
WesternDivision/Springfield:
UnitedStatesBankruptcyCourtUnitedStatesCourthouse300StateStreetSpringfield,MA01105
WhiletheBankruptcyCourtholdshearingsinHyannis,theHyannislocationdoesnotacceptanypleadingsforfiling.ForcasesassignedtotheCapedivision,allpleadingsmustbefiledintheBostonCourt.
Todeterminewhichdivisiontomaildocuments,pleaserefertotheOrdersyoumayhavereceivedfromtheCourt,orrefertoAppendix5oftheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusetts.TheserulescanbefoundontheCourt’swebsite:www.mab.uscourts.gov.Pleasenote,youmayfileacaseinanyoftheCourts,butyourcasewillbeassignedtotheDivisionprovidedforintheLocalRules.
Important:DocumentsareconsideredfiledwhentheyarereceivedbytheClerk.
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CASENUMBER
AllcasesfiledwiththeCourtareassignedacasenumber.Thecasenumberisbrokendownintosections.Forexample,casenumber11‐22665MSH:the“11”istheyearthatthecasewasfiled.Inthiscase,itwasfiledin2011.The“22665”isthenumberassignedtothecase.“MSH”indicatesthejudgetowhomthecasewasassigned.Inthiscase,itwasassignedtoChiefMelvinS.Hoffman.
AllpleadingsanddocumentsfiledwiththeCourtmusthavethecasenumberonthecase.Whenspeakingtoanycourtpersonnel,includingtheProSeClerk,besureyouhavethisinformationhandy.
CAPTION
Allfilings,withtheexceptionofOfficialForms,shouldhaveacaption.ExamplesofwhatacaptionlookslikecanbefoundinOfficialFormB416A,BandD.
ELECTRONICFILING
TheCourtallowsonlyregisteredECFusers(attorneysandforsomelimitedpurposes,creditors),tofilebankruptcydocumentselectronically.AllprosedebtorsmustfiletheirdocumentsmanuallybyeithermailingthemorbybringingthemtotheCourt.
Whileprosedebtorsmaynotfiledocumentselectronically,youmayviewallCourtfilingsinyourcaseonthepubliccomputerterminalslocatedintheClerk’sofficeineachDivision.YoumayalsoobtainaPACERloginandpassword,whichwouldenableyoutoviewdocumentsfromanycomputer,ordownloadandsavedocumentsdirectlytoyourcomputer.ToobtainaPACERloginandpassword,youmustvisitwww.pacer.govandclickthelinkforCaseSearchOnlyRegistration,andcompletetheon‐lineregistrationform.Thisserviceisnotfree;thereisachargeof$.10foreverypagethatyouview.However,coststoaccessasingledocumentiscappedat$3.00andbyJudicialConferencepolicy,feesarewaivedifyourusagedoesnotexceed$15.00inaquarter.Thiscapdoesnotapplytonamesearches,reportsthatarenotcase‐specific,andtranscriptsoffederalcourtproceedings.
THEBANKRUPTCYPROCESS
MEETINGOFCREDITORSPURSUANTTO§341(a)
Shortlyafteryourbankruptcycaseisfiled,theCourtwillsendyou,thetrustee,theU.S.trusteeandallcreditorslistedonyourcreditormatrixa“NoticeofChapter___Case,
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MeetingofCreditors,andDeadlines.”Inthespaceafterchapter,thenoticewillindicatewhichchapteryoufiled:7,11,12or13.Thisnoticealertscreditorsthatyouhavefiledabankruptcypetitionandtheymaybeprohibitedfromtakingcertainactionsagainstyouoryourpropertytocollectadebt.Italsoinformsthemofkeydeadlines,suchas:
ThetimewithinwhichtheyhavetofileaProofofClaim,ifthecaseisachapter12or13,orinachapter7ifitappearsthattherewouldbeassetsthatthetrusteecanliquidatetopaycreditors;
Thetimewithinwhichtofileacomplaintobjectingtothedischargeoftheirparticulardebtunder§522(a)orobjectingtothedischargeofalldebtsunder§727(a);and
ThetimewithinwhichtoobjecttothepropertyyouclaimedasexemptonScheduleC.
Thereversesideofthatnoticehasimportantinformationthatyoushouldread.
Thenoticeofthemeetingofcreditorsinformsyouandthecreditorsofaspecificdate,timeandlocationforthemeeting,whichcreditorsareinvitedtoattend.Thenoticealsoinformseveryonethatatrusteehasbeenassignedtothecase,andthename,addressandothercontactinformationforthetrustee.Itisthetrustee’sroletoexamineyouatthemeetingofcreditorsregardingyourfinancialsituationtodetermineifthereareanyassetsthatyouhavethatmaynotbeexemptandthatheorshecouldliquidate(i.e.,sell)togeneratecashtopaycreditors.
PREPARINGFORTHEMEETINGOFCREDITORS
TheBankruptcyCodeandtheLocalRulesrequirethatyouprovidethetrusteewithacopyofyourmostrecentlyfiledfederalincometaxreturnnolessthan7dayspriortothescheduledMeetingofCreditors.DonotfilethesedocumentswithyourpetitionandschedulesunlessexpresslyorderedbytheCourttodoso.Also,ifacreditorrequestsacopyofyourtaxreturnatleast15daysbeforetheMeetingofCreditors,thenyoumustalsoprovideacopyofyourreturntothatcreditor.
Inbothinstances,youmustdeleteorblackoutcertainprivateinformation,suchasthenamesofyourchildren,accountnumbers(exceptthelast4digits),datesofbirth(excepttheyear),andyoumustonlygivethelastfourdigitsofyoursocialsecuritynumber.Failuretoprovidethetaxreturntimelycanresultindelayonyourcase.Failuretoprovidethetaxreturnasrequiredbylawmayresultindismissalofyourbankruptcycase.Andremember,dismissalmayimpacttheimpositionorlengthoftheautomaticstayinanysubsequentcasefiledwithin12months.
Youmustbringtwoformsofidentificationwithyoutothemeeting.Thefirstisphotoidentification:driver’slicense,passport,etc.Thesecondissomethingwithyoursocialsecuritynumberonit:asocialsecuritycard,aW‐2,anIRSForm1099.Yourincometaxreturnwillnotsufficebecauseitisadocumentpreparedbyyou(evenifyouretaineda
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professionaltopreparethereturn).Thesedocumentswillbereviewedbythetrusteetoconfirmthatyouarewhoyousayyouareinthepetition.
All§341Meetingsarerecordedonaudiotapeorbydigitalrecorder.Afteryouareadministeredanoath7,thetrusteewillthenaskyoutoverifythatyoucompletedthepetitionandschedulesandthattheyaretruthfulandaccurate.Youcanexpectotherquestionstobeasked.Youareresponsibleforansweringthemtruthfullyandaccurately.
Assumingyouhavemadecomplete,truthfulandaccuratedisclosures,andthatthetrusteeissatisfiedwiththeresponsestothequestionsposedattheMeetingofCreditorsandtherearenoassetsthatheorshemaysell,thenheorshewillfilea“noassetreport”withtheCourt.ThisreporttellstheCourtandeveryoneelsethatthetrusteehasexaminedyouandhasfoundnononexemptassetsthatcanbesoldforthebenefitofcreditors.
AFTERTHEMEETINGOFCREDITORS
Creditorsandthetrusteehaveadeadlineof60daysfollowingthedateofthefirstscheduledcreditor’smeetingtofileacomplaintobjectingtoyourdischarge.ExtensionsofthatdeadlinemaybeallowedifrequestedbyfilingatimelymotionwiththeCourt.Youwillreceivenoticefromthepartyseekinganextensionoftimetofileacomplaint.Thedeadlineisstatedonthecreditor’smeetingnoticesenttoyoushortlyafterfiling.Ifthatdeadlinepassesandthereisnocomplaintobjectingtoyourdischarge,andnoextensionoftimehasbeenallowed,thecourtwillenteradischarge.Simplystated,thedischargerelievesyouofanypersonalliabilityforalldischargeabledebtslistedinyourbankruptcyschedules.Thedischargeisexplainedinmoredetailonp.___.
Creditorsandthetrusteehaveadeadlineof30daysfollowingtheconclusionofthecreditor’smeetingtoobjecttoanyclaimedexemptions.ExtensionsofthatdeadlinemaybeallowedifrequestedbyfilingatimelymotionwiththeCourt.Youwillreceivenoticefromthepartyfilinganymotiontoextendtime.
FINANCIALMANAGEMENTCOURSE
Youwillnotreceiveadischargeunlessyouhavetakenacourseinpersonalfinancialmanagement.YoumustfileacertificateofcompletionwiththeCourtwithinthe60dayperiodfollowingthedateofthefirstscheduledcreditors’meeting.Asapracticalmatter,youcantakethecourseandfilethecertificateofcompletionatanytimeafteryouhavefiledyourcaseandreceivedacasenumber..However,ifyoudonotcompletethiscourse,andifyoudonotfilethecertificatebeforethedeadlinetoobjecttoyourdischargeexpires,yourcasewillclosewithoutthedischargebeingentered.Youwillthenneedtofilea
7 Remember,anyquestionthatyoufailtoanswertruthfullymaysubjectyoutofederalprosecutionforperjuryoritcanleadtoadenialofyourdischarge.
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MotiontoReopenyourcaseandpaythefilingfeesoyoumayfileyourcertificateandreceiveyourdischarge.Thiscostcanbeavoidedifyouadheretothedeadlines.
Somefinancialmanagementproviderswillfilethecertificateonyourbehalf.Verifywithyourproviderthattheywilldothat;donotassumetheywill.
Insteadofacertificate,youarepermittedtofileOfficialFormB423.Theinformationontheformisthesameasappearingonthecertificateandyouwillneedthecertificatetocompletetheform.
BANKRUPTCYCRIME
Ifyouhideassetsorpropertyfromthetrustee,orfailtodiscloseinformationaccuratelyandcompletelyonyourschedules,youmaybeprosecutedbytheUnitedStatesAttorneyforabankruptcycrimeunderTitle18oftheU.S.Code.Bankruptcyfraudisaseriouscrime;youcouldbefinedandimprisonedifyoucommitfraudinyourbankruptcycase.Makingafalsestatement,concealingproperty,orobtainingmoneyorpropertybyfraudinconnectionwithabankruptcycasecanresultinfinesofupto$250,000orimprisonmentforupto20years,orboth.See18U.S.C.§§152,1341,1519and3571.
Thetrusteerepresentstheestateforthepurposesofensuringamaximumdistributiontocreditors.Youarerequiredbylawtocooperatewiththetrusteeandtodiscloseallassets,whereverlocatedandbywhomeverheld,thatyoumayhaveanyinterestinwhatsoever.Failuretocooperatewiththetrusteemaycausethetrusteetofileacomplaintobjectingtoyourdischargeunder§727(a).Ifacomplaintisfiledagainstyoubyanypartychallengingyourdischarge,thatcomplaintwouldbeheardbythebankruptcyjudgeassignedtoyourcase.
MOTIONS,HEARINGSANDCOURTAPPEARANCES
Duringabankruptcycase,circumstancesmaycallforyoutoobtainanorderfromtheCourt.Forexample,ifyouhavereceivedanOrdertoUpdatethatrequiresyoutofileadocumentbyacertaindate,andyouneedmoretimetofileit,youmustrequestanextensionoftime.Thisisaccomplishedbyamotion.
Amotionisarequesttothejudgeforreliefofsomesortorforadecisiononaparticularmatter.Thepartyfilingthemotionisgenerallyreferredtoasthe“movingparty”orthe“movant.”Somemotionsorrequestsmaybemadeorallyinopencourt,butinbankruptcy,mostmotionsmustbemadeinwriting.
Inthewrittenmotion,themovingpartymakestherequestandthenexplainstothecourtwhythereliefisrequested.TheCourtmayactonthemotionwithoutahearingunderappropriatecircumstances.
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TheFederalRulesofBankruptcyProcedureaswellastheLocalRulesoftheU.S.BankruptcyCourtfortheDistrictofMassachusettshaveavarietyprovisionsdealingwithmotions,aswellasprovisionsonhowtorespondtomotions.Ifyouneedtofileamotion,orifyouneedtorespondtoamotion,itisveryimportantthatyoubecomeacquaintedwiththoserules.VirtuallyallmotionshavenoOfficialorLocalform.However,theProSeClerkmaybeabletoprovideguidanceonhowyourmotionmaybeformatted.Pleaseremember,theClerk’sofficecannotprovidelegaladvice,andthisincludesadvisingyouhowtophraseordraftyourrequestforrelief.
Toavoiddelayofthereliefbeingsought,ortoavoidthemotionbeingdenied,itisveryimportanttoensurethatyourmotionisappropriatelyservedonthepartiesentitledtonotice.
CERTIFICATESOFSERVICE
AcertificateofserviceisawrittenstatementfiledwiththeCourtindicatingthatyoumailedcopiesofaparticularpleading,noticeormotiontoallpartiesentitledtonotice.Todeterminewhoisentitledtonotice,youshoulddetermine(1)whohasfiledanappearanceinyourcase;(2)whoisthetrusteeassignedtoyourcase;(3)whohasrequestednoticeinyourcase;and(4)whattheFederalRulesofBankruptcyProcedureandtheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusettsprovideasthenecessaryandappropriatepartiestoserveinyourcase.
Certificatesofserviceareimportant.TheyprovidetheCourtwithclearproofthatservicehasbeenaccomplishedandthatpartieshavebeennotifiedoftheirrightsandtheiropportunitytobeheard.Motionscanbedenied,andhearingsmaybedelayed,ifacertificateofserviceisdeficientorwasneverfiled.
Acertificateofservicemustbeincludedwiththepleadingyouarefilinganditmustbesignedbyyou.Thecertificatemuststatethefollowing:
Thedateofservice,thatis,thedatethatyoumaileditordeliveredittothepersonbeingserved;
Thenameofthedocumentserved; Themethodofservice(mail,overnightcourier,fax,email,byhand,etc.); Thenamesandaddressesofthepartiesserved.
ForadditionalreadingonCertificatesofService,pleaseseeLocalRule9013‐3andFed.R.Bankr.P.2002.
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HEARINGS
Fromtimetotime,theCourtwillscheduleahearingonamotion.Whenthatoccurs,theCourtwillnotifyyou.Ifyouarethepartywhofiledthemotion,alsoreferredtoasthemovingparty,youwillreceiveanoticeofhearing.Inmostcircumstances,thenoticeofhearingwilldirectyoutoserveacopyofthenoticeofhearingonallpartiesandtofileacertificateofservicedemonstratingthatyoucomplied.
Timeanddatesofhearingsarescheduleddaysandsometimesweeksinadvance.Ifyouhaveaconflict,youshouldimmediatelyrequestanewdatebyfilingaMotiontoContinueHearingandservingallparties.IfyouhavenotheardbackfromtheCourtpriortothescheduledhearingdate,youarethenencouragedtocalltheCaseAdministratortoseeifyourMotiontoContinueHearingwasallowedordenied.IftheMotiontoContinueHearingwasdenied,youwillneedtoappearatthehearing.
TolearnwhoyourCaseAdministratoris,goto“ContactCourtStaff”>“PhoneNumbers”ontheCourt’swebsite:www.mab.uscourts.gov.TheCaseAdministratorisassignedbyjudgeandthelasttwonumbersinthecase.
COURTAPPEARANCES
ArrivetoCourtontime.Besureyoudressappropriately:yourhearingwillbeinaU.S.BankruptcyCourtandthedecisionmadebyaU.S.BankruptcyJudge.Considerwearingwhatyoumightwearifyouweretoattendareligiousserviceonaholiday,orifyouweretoattendanimportantjobinterview.
Pleaseplanaccordinglyforweather,traffic,publictransportationandparking.Insteadofbringingsmallchildrentocourt,considermakingalternativechildcarearrangementssoyourattentioncanbefocusedexclusivelyonthelegalandfactualissuesthatarescheduledtobeheardbythecourt.Allcourtbuildingshavesecurity,andinBoston,youwillneedtogothroughtwosecurityscreenings:onefortheFederalBuilding,andonefortheCourt.Youmayberequiredtoremovebeltsandothermetalandyourbagsmaybesubjecttosearch.Prosedebtorsandthegeneralpublicareprohibitedfrombringingcameras,pagers,cellphones,laptopcomputers,tablets,recordingdevicesandotherelectronicdevicesintoanyCourt.Youwillberequiredtoleavethemwithbuilding/courtsecurity.
Ifyouarriveinthecourtroomandthejudgehasnotyettakenthebench,youmaywanttospeaktotheCourtroomDeputy(whomaybesittingatadeskinfrontofthejudge’sbench)tocheckin.Ifthejudgesittingonthebench,courtisinsessionandyoushouldquietlytakeaseatandwaitforyourcasetobecalled.
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Infederalcourts,partiesspeakfromapodiumwhichisusuallylocatedbetweentwotablesinthecourtroom.Partiesshouldspeakonlyfromthepodium,andintothemicrophone.
Thecourtusesdigitalaudiotechnology.Itisveryimportantthatyouidentifyyourselfbeforespeakingforthefirsttime(forexample,“JohnSmith,creditor”)andthatyouspeakclearly.
BepreparedtoanswertheCourt’squestionsandtorespondtoanyargumentsorstatementsmadebyotherparties.Becourteousandrespectfulatalltimes.Whileyoumaybeprose,youareexpectedtocomporttothelevelofdignityanddecorumexpectedofanyoneappearingbeforetheCourt.YouarealsoexpectedtohaveanunderstandingofthelawandfactsthatconcerntheissuethatisbeforetheCourt.
ADVERSARYPROCEEDINGS
ADVERSARYPROCEEDINGS
Adversaryproceedingsareaseparateprocessinabankruptcy.Inanadversaryproceeding,thereisaplaintiffandadefendant,ratherthanacreditorandadebtor.Theplaintiffinitiatestheadversaryproceeding,andthedefendantistherespondingordefendingparty.
TherulesthatgovernadversaryproceedingsarefoundinPartVIIoftheFederalRulesofBankruptcyProcedure.Fed.R.Bankr.P.7001identifiesthetypesofactionsthatwouldbeconsideredadversaryproceedings.Acreditormayfinditselfasadefendantinanadversaryproceedingifthetrusteebelievestheyreceivedapreferentialpaymentorifthedebtorseekstodeterminewhetheraparticulardebtisdischarged.Acreditormayalsobeaplaintiffinanadversaryproceedingifthecreditorseeksadeterminationofnondischargeabilityoftheirparticulardebt.
Whetheryouarebringinganadversaryproceedingorfindyourselfdefendinganadversaryproceeding,itisimportanttoknowthatadversaryproceedingscanbeexceptionallycomplicated.TheproceduralrulesareidenticalinmostrespectstotheFederalRulesofCivilProcedure.Discoverymechanismssuchasdepositionsandrequestsforproductionmightbeutilized.
Assumingthereisnolegalbasistodismisstheclaimsearlyon,theCourt’sfinaldecisionswillbebasedonevidence.Thosefinaldecisionsmaycomeaftermotionshavebeenfiled(seee.g.Fed.R.Bankr.P.7056)oratrial,wherewitnessesareexaminedandcrossexaminedanddocumentsareadmittedintoevidence.TherulesrelatingtoevidenceadmissibilityarefoundintheFederalRulesofEvidence(separatefromtheFederalRulesofBankruptcyProcedure).Ifyouarecontemplatingbringinganadversaryproceeding,orifyoufindyourselfasapartyinanadversaryproceeding,youarestronglyencouragedtoconferwithlegalcounselortheProseClerk.
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Chapter7:LiquidationundertheBankruptcyCode
ThechapteroftheBankruptcyCodeprovidingfor"liquidation,"(i.e.,thesaleofadebtor'snonexemptpropertyandthedistributionoftheproceedstocreditors.)
AlternativestoChapter7
Debtorsshouldbeawarethatthereareseveralalternativestochapter7relief.Forexample,debtorswhoareengagedinbusiness,includingcorporations,partnerships,andsoleproprietorships,mayprefertoremaininbusinessandavoidliquidation.Suchdebtorsshouldconsiderfilingapetitionunderchapter11oftheBankruptcyCode.Underchapter11,thedebtormayseekanadjustmentofdebts,eitherbyreducingthedebtorbyextendingthetimeforrepayment,ormayseekamorecomprehensivereorganization.Soleproprietorshipsmayalsobeeligibleforreliefunderchapter13oftheBankruptcyCode.
Inaddition,individualdebtorswhohaveregularincomemayseekanadjustmentofdebtsunderchapter13oftheBankruptcyCode.Aparticularadvantageofchapter13isthatitprovidesindividualdebtorswithanopportunitytosavetheirhomesfromforeclosurebyallowingthemto"catchup"pastduepaymentsthroughapaymentplan.Moreover,thecourtmaydismissachapter7casefiledbyanindividualwhosedebtsareprimarilyconsumerratherthanbusinessdebtsifthecourtfindsthatthegrantingofreliefwouldbeanabuseofchapter7.11U.S.C.§ 707(b).
Ifthedebtor's"currentmonthlyincome"1ismorethanthestatemedian,theBankruptcyCoderequiresapplicationofa"meanstest"todeterminewhetherthechapter7filingispresumptivelyabusive.Abuseispresumedifthedebtor'saggregatecurrentmonthlyincomeover5years,netofcertainstatutorilyallowedexpenses,ismorethan(i)$12,850,or(ii)25%ofthedebtor'snonpriorityunsecureddebt,aslongasthatamountisatleast$7,700.2Thedebtormayrebutapresumptionofabuseonlybyashowingofspecialcircumstancesthatjustifyadditionalexpensesoradjustmentsofcurrentmonthlyincome.Unlessthedebtorovercomesthepresumptionofabuse,thecasewillgenerallybeconvertedtochapter13(withthedebtor'sconsent)orwillbedismissed.11U.S.C.§707(b)(1).
1 The "current monthly income" received by the debtor is a defined term in the Bankruptcy Code and means the average monthly income received over the six calendar months before commencement of the bankruptcy case, including regular contributions to household expenses from nondebtors and including income from the debtor's spouse if the petition is a joint petition, but not including social security income or certain payments made because the debtor is the victim of certain crimes. 11 U.S.C. § 101(10A).
2 To determine whether a presumption of abuse arises, all individual debtors with primarily consumer debts who file a chapter 7 case must complete Official Bankruptcy Form B122A‐1, entitled "Chapter 7 Statement of Your Current Monthly Income ." They may also have to complete Official Form 122A‐2 “Chapter 7 Means Test Calculation.” (The Official Forms may downloaded from the internet at www.mab.uscourts.gov.)Pleasenote,theseamountsadjusteverythreeyears.TheyarenextscheduledtoadjustonApril1,2019.
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Debtorsshouldalsobeawarethatout‐of‐courtagreementswithcreditorsordebtcounselingservicesmayprovideanalternativetoabankruptcyfiling.However,debtorsshouldinvestigatetheseservices.Formoreinformation,see“CopingwithDebt”availableonthewebsiteoftheFederalTradeCommission.3
Background
Achapter7bankruptcycasedoesnotinvolvethefilingofaplanofrepaymentasinchapter13.Instead,thebankruptcytrusteegathersandsellsthedebtor'snonexemptassetsandusestheproceedsofsuchassetstopayholdersofclaims(creditors)inaccordancewiththeprovisionsoftheBankruptcyCode.Partofthedebtor'spropertymaybesubjecttoliensandmortgagesthatpledgethepropertytoothercreditors.Inaddition,theBankruptcyCodewillallowthedebtortokeepcertain"exempt"property;butatrusteewillliquidatethedebtor'sremainingassets.Accordingly,potentialdebtorsshouldrealizethatthefilingofapetitionunderchapter7mayresultinthelossofproperty.
Eligibility
Toqualifyforreliefunderchapter7oftheBankruptcyCode,thedebtormaybeanindividual,apartnership,oracorporationorotherbusinessentity.11U.S.C.§§101(41),109(b).Subjecttothemeanstestdescribedaboveforindividualdebtors,reliefisavailableunderchapter7irrespectiveoftheamountofthedebtor'sdebtsorwhetherthedebtorissolventor
3 See http://www.consumer.ftc.gov/articles/0150‐coping‐debt
insolvent.Anindividualcannotfileunderchapter7oranyotherchapter,however,ifduringthepreceding180daysapriorbankruptcypetitionwasdismissedduetothedebtor'swillfulfailuretoappearbeforethecourtorcomplywithordersofthecourt,orthedebtorvoluntarilydismissedthepreviouscaseaftercreditorssoughtrelieffromthebankruptcycourttorecoverpropertyuponwhichtheyholdliens.11U.S.C.§§109(g),362(d)and(e).
Inaddition,noindividualmaybeadebtorunderchapter7oranychapteroftheBankruptcyCodeunlessheorshehas,within180daysbeforefiling,receivedcreditcounselingfromanapprovedcreditcounselingagencyeitherinanindividualorgroupbriefing.11U.S.C.§§109,111.ThereareexceptionsinemergencysituationsorwheretheU.S.trustee(orbankruptcyadministrator)hasdeterminedthatthereareinsufficientapprovedagenciestoprovidetherequiredcounseling.Ifadebtmanagementplanisdevelopedduringrequiredcreditcounseling,itmustbefiledwiththecourt.
Oneoftheprimarypurposesofbankruptcyistodischargecertaindebtstogiveanhonestindividualdebtora"freshstart."Thedebtorhasnoliabilityfordischargeddebts.Inachapter7case,however,adischargeisonlyavailabletoindividualdebtors,nottopartnershipsorcorporations.11U.S.C.§727(a)(1).Althoughanindividualchapter7caseusuallyresultsinadischargeofdebts,therighttoadischargeisnotabsolute,andsometypesofdebtsarenotdischarged.Moreover,abankruptcydischargedoesnotextinguishalienproperty,suchasamortgageforexample.
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HowChapter7Works
Achapter7casebeginswiththedebtorfilingapetitionwiththebankruptcycourtservingtheareawheretheindividuallivesorwherethebusinessdebtorisorganizedorhasitsprincipalplaceofbusinessorprincipalassets.4Inadditiontothepetition,thedebtormustalsofilewiththecourt:(1)schedulesofassetsandliabilities;(2)schedulesofcurrentincomeandexpenditures;(3)astatementoffinancialaffairs;and(4)ascheduleofexecutorycontractsandunexpiredleases.Fed.R.Bankr.P.1007(b).Debtorsmustalsoprovidetheassignedcasetrusteewithacopyofthetaxreturnortranscriptsforthemostrecenttaxyearaswellastaxreturnsfiledduringthecase(includingtaxreturnsforprioryearsthathadnotbeenfiledwhenthecasebegan).11U.S.C.§521.
Individualdebtorswithprimarilyconsumerdebtshaveadditionaldocumentfilingrequirements.Theymustfile:acertificateofcreditcounselingandacopyofanydebtrepaymentplandevelopedthroughcreditcounseling;evidenceofpaymentfromemployers,ifany,received60daysbeforefiling;astatementofmonthlynetincomeandanyanticipatedincreaseinincomeorexpensesafterfiling;andarecordofanyinterestthedebtorhasinfederalorstatequalifiededucationortuitionaccounts.Id.Individualsmayfileapetition,oramarriedcouplemayfileajointpetition.11U.S.C.§302(a).Eveniffilingjointly,bothspousesaresubjecttoallofthedocumentfilingrequirementsofindividualdebtors.(TheOfficialForms
4 An involuntary chapter 7 case may be commenced under certain circumstances by a petition filed by creditors holding claims against the debtor. 11 U.S.C. § 303.
maydownloadedfromtheinternetatwww.uscourts.gov/bkforms/index.html.FormsarealsoavailableattheCourt.)
Thecourtsmustchargeafilingfee.Forinformationaboutfilingfees,pleasevisitthecourt’swebsite,www.mab.uscourts.gov.Normally,thefeesmustbepaidtotheclerkofthecourtuponfiling.Withthecourt'spermission,however,individualdebtorsmaypayininstallments.28U.S.C.§1930(a);Fed.R.Bankr.P.1006(b);LocalRules1006‐1,1006‐2;5andLocalRules,Appendix3.Thenumberofinstallmentsislimitedtofour,andthedebtormustmakethefinalinstallmentnolaterthan120daysafterfilingthepetition.Fed.R.Bankr.P.1006.Forcauseshown,thecourtmayextendthetimeofanyinstallment,providedthatthelastinstallmentispaidnotlaterthan180daysafterfilingthepetition.Id.Debtorsshouldbeawarethatfailuretopaythesefeesmayresultindismissalofthecase.11U.S.C.§707(a).
Ifthedebtor'sincomeislessthan150%ofthepovertylevel(asdefinedintheBankruptcyCode),andthedebtorisunabletopaythechapter7feesevenininstallments,thecourtmay,butisnotrequiredto,waivetherequirementthatthefeesbepaid.28U.S.C.§1930(f).
InordertocompletetheOfficialBankruptcyFormsthatmakeupthepetition,statementoffinancialaffairs,andschedules,thedebtormustprovidethefollowinginformation:
Alistofallcreditorsandtheamountandnatureoftheirclaims;
5 The term “Local Rule” refers to the Local Bankruptcy Rules, United States Bankruptcy Court for the District of Massachusetts.
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Thesource,amount,andfrequencyofthedebtor'sincome;
Alistofallofthedebtor'sproperty;and
Adetailedlistofthedebtor'smonthlylivingexpenses,i.e.,food,clothing,shelter,utilities,taxes,transportation,medicine,etc.
Marriedindividualsmustgatherthisinformationfortheirspouseregardlessofwhethertheyarefilingajointpetition,separateindividualpetitions,orevenifonlyonespouseisfiling.Inasituationwhereonlyonespousefiles,theincomeandexpensesofthenon‐filingspousearerequiredsothatthecourt,thetrusteeandcreditorscanevaluatethehousehold'sfinancialposition.
Amongtheschedulesthatanindividualdebtorwillfileisascheduleof"exempt"property.TheBankruptcyCodeallowsanindividualdebtor6toprotectsomepropertyfromtheclaimsofcreditorsunderfederalbankruptcylaworunderthelawsofthedebtor'shomestate.11U.S.C.§522(b).ManystateshavetakenadvantageofaprovisionintheBankruptcyCodethatpermitseachstatetoadoptitsownexemptionlawinplaceofthefederalexemptions.Inotherjurisdictions,theindividualdebtorhastheoptionofchoosingbetweenafederalpackageofexemptionsortheexemptionsavailableunderstatelaw.Thus,whethercertainpropertyisexemptandmaybekeptbythedebtorisoftenaquestionofstatelaw.Thedebtorshouldconsultanattorneytodeterminetheexemptionsavailableinthestatewherethedebtorlives.
6 Each debtor in a joint case can claim exemptions under the federal bankruptcy laws. 11 U.S.C. § 522(m).
Filingapetitionunderchapter7"automaticallystays"(stops)mostcollectionactionsagainstthedebtororthedebtor'sproperty.11U.S.C.§362.Butfilingthepetitiondoesnotstaycertaintypesofactionslistedunder11U.S.C.§362(b),andthestaymaybeeffectiveonlyforashorttimeinsomesituations.See11U.S.C.§362(c).Thestayarisesbyoperationoflawandrequiresnojudicialaction.Aslongasthestayisineffect,creditorsgenerallymaynotinitiateorcontinuelawsuits,wagegarnishments,oreventelephonecallsdemandingpayments.Thebankruptcyclerkgivesnoticeofthebankruptcycasetoallcreditorswhosenamesandaddressesareprovidedbythedebtor.
Between20and40daysafterthepetitionisfiled,thecasetrustee(describedbelow)willholdameetingofcreditors.IftheU.S.trusteeorbankruptcyadministratorschedulesthemeetingataplacethatdoesnothaveregularU.S.trusteeorbankruptcyadministratorstaffing,themeetingmaybeheldnomorethan60daysaftertheorderforrelief.Fed.R.Bankr.P.2003(a).Duringthismeeting,thetrusteeplacesthedebtorunderoath,andboththetrusteeandcreditorsmayaskquestions.Thedebtormustattendthemeetingandanswerquestionsregardingthedebtor'sfinancialaffairsandproperty.11U.S.C.§343.Ifajointpetitionisfiled,bothspousesmustattendthecreditors'meetingandanswerquestions.Within10daysofthecreditors'meeting,theU.S.trusteewillreporttothecourtwhetherthecaseshouldbepresumedtobeanabuseunderthemeanstestdescribedin11U.S.C.§704(b).
Itisimportantforthedebtortocooperatewiththetrusteeandtoprovideanyfinancialrecordsordocumentsthatthe
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trusteerequests.TheBankruptcyCoderequiresthetrusteetoaskthedebtorquestionsatthemeetingofcreditorstoensurethatthedebtorisawareofthepotentialconsequencesofseekingadischargeinbankruptcysuchastheeffectoncredithistory,theabilitytofileapetitionunderadifferentchapter,theeffectofreceivingadischarge,andtheeffectofreaffirmingadebt.Sometrusteesprovidewritteninformationonthesetopicsatorbeforethemeetingtoensurethatthedebtorisawareofthisinformation.Inordertopreservetheirindependentjudgment,bankruptcyjudgesareprohibitedfromattendingthemeetingofcreditors.11U.S.C.§341(c).
Inordertoaccordthedebtorcompleterelief,theBankruptcyCodeallowsthedebtortoconvertachapter7casetoacaseunderchapter11,12,or137aslongasthedebtoriseligibletobeadebtorunderthenewchapter.However,aconditionofthedebtor'svoluntaryconversionisthatthecasehasnotpreviouslybeenconvertedtochapter7fromanotherchapter.11U.S.C.§706(a).Thus,thedebtorwillnotbepermittedtoconvertthecaserepeatedlyfromonechaptertoanother.
TheRoleoftheChapter7Trustee
Whenachapter7petitionisfiled,theU.S.trusteeappointsanimpartialcasetrusteetoadministerthecaseandliquidatethedebtor'snonexemptassets.11U.S.C.§§701,704.Ifallthedebtor'sassetsareexemptorsubjecttovalidliens,the
7 A fee is charged for converting, on request of the debtor, a case under chapter 7 to a case under chapter 11. There is no fee for converting from chapter 7 to chapter 13. For additional information about fees, please visit www.mab.uscourts.gov.
trusteewillnormallyfilea"noasset"reportwiththecourt,andtherewillbenodistributiontounsecuredcreditors.Mostchapter7casesinvolvingindividualdebtorsarenoassetcases.Butifthecaseappearstobean"asset"caseattheoutset,unsecuredcreditors8mustfiletheirclaimswiththecourtwithin90daysafterthefirstdatesetforthemeetingofcreditors.Fed.R.Bankr.P.3002(c).Agovernmentalunit,however,has180daysfromthedatethecaseisfiledtofileaclaim.11U.S.C.§502(b)(9).
Inthetypicalnoassetchapter7case,thereisnoneedforcreditorstofileproofsofclaimbecausetherewillbenodistribution.Ifthetrusteelaterrecoversassetsfordistributiontounsecuredcreditors,theBankruptcyCourtwillprovidenoticetocreditorsandwillallowadditionaltimetofileproofsofclaim.Althoughasecuredcreditordoesnotneedtofileaproofofclaiminachapter7casetopreserveitssecurityinterestorlien,theremaybeotherreasonstofileaclaim.Acreditorinachapter7casewhohasalienonthedebtor'spropertyshouldconsultanattorneyforadvice.
Commencementofabankruptcycasecreatesan"estate."Theestatetechnicallybecomesthetemporarylegalownerofallthedebtor'sproperty.Itconsistsofalllegalorequitableinterestsofthedebtorinpropertyasofthecommencementofthecase,includingpropertyownedorheldbyanotherpersonifthedebtorhasaninterestintheproperty.Generally
8 Unsecured debts generally may be defined as those for which the extension of credit was based purely upon an evaluation by the creditor of the debtor's ability to pay, as opposed to secured debts, for which the extension of credit was based upon the creditor's right to seize collateral on default, in addition to the debtor's ability to pay.
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speaking,thedebtor'screditorsarepaidfromnonexemptpropertyoftheestate.
Theprimaryroleofachapter7trusteeinanassetcaseistoliquidatethedebtor'snonexemptassetsinamannerthatmaximizesthereturntothedebtor'sunsecuredcreditors.Thetrusteeaccomplishesthisbysellingthedebtor'spropertyifitisfreeandclearofliens(aslongasthepropertyisnotexempt)orifitisworthmorethananysecurityinterestorlienattachedtothepropertyandanyexemptionthatthedebtorholdsintheproperty.
Thetrusteemayalsoattempttorecovermoneyorpropertyunderthetrustee's"avoidingpowers."Thetrustee'savoidingpowersincludethepowerto:setasidepreferentialtransfersmadetocreditorswithin90daysbeforethepetition;undosecurityinterestsandotherprepetitiontransfersofpropertythatwerenotproperlyperfectedundernonbankruptcylawatthetimeofthepetition;andpursuenonbankruptcyclaimssuchasfraudulentconveyanceandbulktransferremediesavailableunderstatelaw.Inaddition,ifthedebtorisabusiness,thebankruptcycourtmayauthorizethetrusteetooperatethebusinessforalimitedperiodoftime,ifsuchoperationwillbenefitcreditorsandenhancetheliquidationoftheestate.11U.S.C.§721.
Section726oftheBankruptcyCodegovernsthedistributionofthepropertyoftheestate.Under§726,therearesixclassesofclaims;andeachclassmustbepaidinfullbeforethenextlowerclassispaidanything.Thedebtorisonlypaidifallclassesofclaimshavebeenpaidinfull.Accordingly,thedebtorisnotparticularlyinterestedinthetrustee'sdispositionoftheestateassets,exceptwithrespecttothepaymentofthosedebtswhichfor
somereasonarenotdischargeableinthebankruptcycase.Theindividualdebtor'sprimaryconcernsinachapter7casearetoretainexemptpropertyandtoreceiveadischargethatcoversasmanydebtsaspossible.
TheChapter7Discharge
Adischargereleasesindividualdebtorsfrompersonalliabilityformostdebtsandpreventsthecreditorsowedthosedebtsfromtakinganycollectionactionsagainstthedebtor.Becauseachapter7dischargeissubjecttomanyexceptions,debtorsshouldconsultcompetentlegalcounselbeforefilingtodiscussthescopeofthedischarge.Generally,excludingcasesthataredismissedorconverted,individualdebtorsreceiveadischargeinmorethan99percentofchapter7cases.Inmostcases,unlessapartyininterestfilestimelyacomplaintobjectingtothedischargeoramotiontoextendthetimetoobject,thebankruptcycourtwillissueadischargeorderrelativelyearlyinthecase–generally,60to90daysafterthedatefirstsetforthemeetingofcreditors.Fed.R.Bankr.P.4004(c).
Thegroundsfordenyinganindividualdebtoradischargeinachapter7casearenarrowandareconstruedagainstthemovingparty.Amongotherreasons,thecourtmaydenythedebtoradischargeifitfindsthatthedebtor:failedtokeeporproduceadequatebooksorfinancialrecords;failedtoexplainsatisfactorilyanylossofassets;committedabankruptcycrimesuchasperjury;failedtoobeyalawfulorderofthebankruptcycourt;fraudulentlytransferred,concealed,ordestroyedpropertythatwouldhavebecomepropertyoftheestate;orfailedtocompleteanapproved
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instructionalcourseconcerningfinancialmanagement.11U.S.C.§727;Fed.R.Bankr.P.4005.
Securedcreditorsmayretainsomerightstoseizepropertysecuringanunderlyingdebtevenafteradischargeisgranted.Dependingonindividualcircumstances,ifadebtorwishestokeepcertainsecuredproperty(suchasanautomobile),heorshemaydecideto"reaffirm"thedebt.Areaffirmationisanagreementbetweenthedebtorandthecreditorthatthedebtorwillremainliableandwillpayalloraportionofthemoneyowed,eventhoughthedebtwouldotherwisebedischargedinthebankruptcy.Inreturn,thecreditorpromisesthatitwillnotrepossessortakebacktheautomobileorotherpropertysolongasthedebtorcontinuestopaythedebt.
Ifthedebtordecidestoreaffirmadebt,heorshemustdosobeforethedischargeisentered.Thedebtormustsignawrittenreaffirmationagreementandfileitwiththecourt.11U.S.C.§524(c).TheBankruptcyCoderequiresthatreaffirmationagreementscontainanextensivesetofdisclosuresdescribedin11U.S.C.§524(k);seealsoLocalRule,OfficialLocalForm6.Amongotherthings,thedisclosuresmustadvisethedebtoroftheamountofthedebtbeingreaffirmedandhowitiscalculatedandthatreaffirmationmeansthatthedebtor'spersonalliabilityforthatdebtwillnotbedischargedinthebankruptcy.Thedisclosuresalsorequirethedebtortosignandfileastatementofhisorhercurrentincomeandexpenseswhichshowsthatthebalanceofincomepayingexpensesissufficienttopaythereaffirmeddebt.Ifthebalanceisnotenoughtopaythedebttobereaffirmed,thereisapresumptionofunduehardship,andthecourtmay
decidenottoapprovethereaffirmationagreement.Unlessthedebtorisrepresentedbyanattorney,thebankruptcyjudgemustapprovethereaffirmationagreement.
Ifthedebtorwasrepresentedbyanattorneyinconnectionwiththereaffirmationagreement,theattorneymustcertifyinwritingthatheorsheadvisedthedebtorofthelegaleffectandconsequencesoftheagreement,includingadefaultundertheagreement.Theattorneymustalsocertifythatthedebtorwasfullyinformedandvoluntarilymadetheagreementandthatreaffirmationofthedebtwillnotcreateanunduehardshipforthedebtororthedebtor'sdependents.11U.S.C.§524(k).TheBankruptcyCoderequiresareaffirmationhearingifthedebtorhasnotbeenrepresentedbyanattorneyduringthenegotiatingoftheagreement,orifthecourtdisapprovesthereaffirmationagreement.11U.S.C.§524(d)and(m).Thedebtormayrepayanydebtvoluntarily,however,whetherornotareaffirmationagreementexists.11U.S.C.§524(f).
Whenanindividualreceivesadischargeinachapter7bankruptcycase,creditorsmaynolongerinitiateorcontinueanylegalorotheractionagainstthedebtortocollectadischargeddebt.Butnotallofanindividual'sdebtsaredischargedinchapter7.
Debtsnotdischargedincludedebtsforalimonyandchildsupport,certaintaxes,debtsforcertaineducationalbenefitoverpaymentsorloansmadeorguaranteedbyagovernmentalunit,debtsforwillfulandmaliciousinjurybythedebtortoanotherentityortothepropertyofanotherentity,debtsfordeathorpersonalinjurycausedbythe
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debtor'soperationofamotorvehiclewhilethedebtorwasintoxicatedfromalcoholorothersubstances,anddebtsforcertaincriminalrestitutionorders.11U.S.C.§523(a).Thedebtorwillcontinuetobeliableforthesetypesofdebtstotheextentthattheyarenotpaidinthechapter7case.
Debtsformoneyorpropertyobtainedbyfalsepretenses,debtsforfraudordefalcationwhileactinginafiduciarycapacity,anddebtsforwillfulandmaliciousinjurybythedebtortoanotherentityortothepropertyofanotherentitywillbedischargedunlessacreditortimelyfilesandprevailsinanactiontohavesuchdebtsdeclarednondischargeable.11U.S.C.§523(c);Fed.R.Bankr.P.4007(c).
Thecourtmayrevokeachapter7dischargeontherequestofthetrustee,acreditor,ortheU.S.trusteeifthedischargewasobtainedthroughfraudbythedebtor,ifthedebtoracquiredpropertythatispropertyoftheestateandknowinglyandfraudulentlyfailedtoreporttheacquisitionofsuchpropertyortosurrenderthepropertytothetrustee,orifthedebtor(withoutasatisfactoryexplanation)makesamaterialmisstatementorfailstoprovidedocumentsorotherinformationinconnectionwithanauditofthedebtor'scase.11U.S.C.§727(d).
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WhatIndividualDebtorsNeedtoKnowAboutChapter11:Reorganizationunderthe
BankruptcyCode
ThechapteroftheBankruptcyCodeproviding(generally)forreorganization,usuallyinvolvingacorporationorpartnership.(Achapter11debtorusuallyproposesaplanofreorganizationtokeepitsbusinessaliveandpaycreditorsovertime.Peopleinbusinessorindividualscanalsoseekreliefinchapter11.)1
Background
Acasefiledunderchapter11oftheUnitedStatesBankruptcyCodeisfrequentlyreferredtoasa"reorganization"bankruptcy.
Anindividualcannotfileunderchapter11oranyotherchapterif,duringthepreceding180days,apriorbankruptcypetitionwasdismissedduetothedebtor'swillfulfailuretoappearbeforethecourtorcomplywithordersofthecourt,orwasvoluntarilydismissedaftercreditorssoughtrelieffromthebankruptcycourttorecoverpropertyuponwhichtheyholdliens.See11U.S.C.§§109(g),362(d)‐(e).
Inaddition,noindividualmaybeadebtorunderchapter11oranychapteroftheBankruptcyCodeunlessheorshehas,within180daysbeforefiling,receivedcreditcounselingfromanapprovedcreditcounselingagencyeitherinanindividualorgroupbriefing.11U.S.C.§§109,111.
1Thissectionisintendedforindividualdebtors.Non‐individualdebtorsarerequiredtohavelegalcounsel.SeeMLBR9010‐1(c).
ThereareexceptionsinemergencysituationsorwheretheU.S.trustee(orbankruptcyadministrator)hasdeterminedthatthereareinsufficientapprovedagenciestoprovidetherequiredcounseling.Ifadebtmanagementplanisdevelopedduringrequiredcreditcounseling,itmustbefiledwiththecourt.
HowChapter11Works
Achapter11casebeginswiththefilingofapetitionwiththebankruptcycourtservingtheareawherethedebtorhasadomicileorresidence.Apetitionmaybeavoluntarypetition,whichisfiledbythedebtor,oritmaybeaninvoluntarypetition,whichisfiledbycreditorsthatmeetcertainrequirements.11U.S.C.§§301,303.AvoluntarypetitionmustadheretotheformatofOfficialFormB101oftheOfficialFormsprescribedbytheJudicialConferenceoftheUnitedStates.Unlessthecourtordersotherwise,thedebtoralsomustfilewiththecourt:(1)schedulesofassetsandliabilities;(2)schedulesofcurrentincomeandexpenditures;(3)ascheduleofexecutorycontractsandunexpiredleases;and(4)astatementoffinancialaffairs.Fed.R.Bankr.P.1007(b).
Ifthedebtorisanindividual(includingjointdebtorsifamarriedcouplefilestogether),thereareadditionaldocumentfilingrequirements.Suchdebtorsmustfile:acertificateofcreditcounselingandacopyofanydebtrepaymentplandevelopedthroughcreditcounseling;evidenceofpaymentfromemployers,ifany,received60daysbeforefiling;astatementofmonthlynetincomeandanyanticipatedincreaseinincomeorexpensesafterfiling;andarecordofany
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interestthedebtorhasinfederalorstatequalifiededucationortuitionaccounts.11U.S.C.§521.Individualsmayfileapetition,ormarriedcouplesmayfileajointpetition.11U.S.C.§302(a).(TheOfficialFormsmaybedownloadedatwww.mab.uscourts.gov.)
Thecourtsarerequiredtochargeafilingfee.Informationaboutfilingfeesmaybefoundonthecourt’swebsite.Thefeesmustbepaidtotheclerkofthecourtuponfilingormay,withthecourt'spermission,bepaidbyindividualdebtorsininstallments.See28U.S.C.§1930(a);Fed.R.Bankr.P.1006(b);BankruptcyCourtMiscellaneousFeeSchedule,Item8.Fed.R.Bankr.P.1006(b)limitstofourthenumberofinstallmentstopaythefilingfee.Thefinalinstallmentmustbepaidnotlaterthan120daysafterfilingthepetition.Forcauseshown,thecourtmayextendthetimeofanyinstallment,providedthatthelastinstallmentispaidnotlaterthan180daysafterthefilingofthepetition.Fed.R.Bankr.P.1006(b).Debtorsshouldbeawarethatfailuretopaythesefeesmayresultindismissalofthecase.11U.S.C.§1112(b)(10).
Thevoluntarypetitionwillincludestandardinformationconcerningthedebtor'sname(s),lastfourdigitsofsocialsecuritynumberortaxidentificationnumber,residence,locationofprincipalassets(ifabusiness),andarequestforreliefundertheappropriatechapteroftheBankruptcyCode.Uponfilingavoluntarypetitionforreliefunderchapter11or,inaninvoluntarycase,theentryofanorderforrelief,thedebtorautomaticallyassumesanadditionalidentityasthe"debtorinpossession."11U.S.C.§1101.Thetermreferstoadebtorthatkeepspossessionandcontrolofitsassetswhileundergoingareorganization
underchapter11,withouttheappointmentofacasetrustee.Adebtorwillremainadebtorinpossessionuntilthedebtor'splanofreorganizationisconfirmed,thedebtor'scaseisdismissedorconvertedtochapter7,orachapter11trusteeisappointed.
Theappointmentorelectionofatrusteeoccursonlyinasmallnumberofcases.Generally,thedebtor,as"debtorinpossession,"operatesthebusinessandperformsmanyofthefunctionsthatatrusteeperformsincasesunderotherchapters.11U.S.C.§1107(a).
Generally,awrittendisclosurestatementandaplanofreorganizationmustbefiledwiththecourt.See11U.S.C.§§1121,1125.Thedisclosurestatementisadocumentthatmustcontaininformationconcerningtheassets,liabilities,andbusinessaffairsofthedebtorsufficienttoenableacreditortomakeaninformedjudgmentaboutthedebtor'splanofreorganization.11U.S.C.§1125.Theinformationrequiredisgovernedbyjudicialdiscretionandthecircumstancesofthecase.Ina"smallbusinesscase"(discussedbelow)thedebtormaynotneedtofileaseparatedisclosurestatementifthecourtdeterminesthatadequateinformationiscontainedintheplan.11U.S.C.§1125(f).
Thecontentsoftheplanmustincludeaclassificationofclaimsandmustspecifyhoweachclassofclaimswillbetreatedundertheplan.See11U.S.C.§1123.Creditorswhoseclaimsare"impaired,"i.e.,thosewhosecontractualrightsaretobemodifiedorwhowillbepaidlessthanthefullvalueoftheirclaimsundertheplan,voteontheplanbyballot.See11U.S.C.§1126.Afterthedisclosurestatementisapprovedbythecourtandtheballotsarecollectedandtallied,the
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courtwillconductaconfirmationhearingtodeterminewhethertoconfirmtheplan.11U.S.C.§1128.
Theindividualchapter11casebearssomesimilaritiestochapter13.Forexample,propertyoftheestateforanindividualdebtorincludesthedebtor'searningsandpropertyacquiredbythedebtorafterfilinguntilthecaseisclosed,dismissedorconverted;fundingoftheplanmaybefromthedebtor'sfutureearnings;andtheplancannotbeconfirmedoveracreditor'sobjectionwithoutcommittingallofthedebtor'sdisposableincomeoverfiveyearsunlesstheplanpaystheclaiminfull,withinterest,overashorterperiodoftime.11U.S.C.§§1115,1123(a)(8),1129(a)(15).
TheChapter11DebtorinPossession
Chapter11isoftenusedtoreorganizeabusiness,whichmaybeacorporation,partnershiporsoleproprietorship.Acorporationexistsseparateandapartfromitsowners,thestockholders.Thechapter11bankruptcycaseofacorporation(corporationasdebtor)doesnotputthepersonalassetsofthestockholdersatriskotherthanthevalueoftheirinvestmentinthecompany'sstock.
Likeacorporation,apartnershipexistsseparateandapartfromitspartners.Inapartnershipbankruptcycase(partnershipasdebtor),however,thepartners'personalassetsmay,insomecases,beusedtopaycreditorsinthebankruptcycaseorthepartners,themselves,maybeforcedtofileforbankruptcyprotection.
Asoleproprietorship(ownerasdebtor),ontheotherhand,doesnothaveanidentityseparateanddistinctfromits
owner(s).Accordingly,abankruptcycaseinvolvingasoleproprietorshipincludesboththebusinessandpersonalassetsoftheowners‐debtors.2
Section1107oftheBankruptcyCodeplacesthedebtorinpossessioninthepositionofafiduciary,withtherightsandpowersofachapter11trustee,anditrequiresthedebtortoperformallbuttheinvestigativefunctionsanddutiesofatrustee.Theseduties,setforthintheBankruptcyCodeandFederalRulesofBankruptcyProcedure,includeaccountingforproperty,examiningandobjectingtoclaims,andfilinginformationalreportsasrequiredbythecourtandtheU.S.trusteeorbankruptcyadministrator(discussedbelow),suchasmonthlyoperatingreports.11U.S.C.§§1106,1107;Fed.R.Bankr.P.2015(a).Thedebtorinpossessionalsohasmanyoftheotherpowersanddutiesofatrustee,includingtheright,withthecourt'sapproval,toemployattorneys,accountants,appraisers,auctioneers,orotherprofessionalpersonstoassistthedebtorduringitsbankruptcycase.Otherresponsibilitiesincludefilingtaxreturnsandreportswhichareeithernecessaryororderedbythecourtafterconfirmation,suchasafinalaccounting.TheU.S.trusteeisresponsibleformonitoringthecomplianceofthedebtorinpossessionwiththereportingrequirements.
RailroadreorganizationshavespecificrequirementsundersubsectionIVofchapter11,whichwillnotbeaddressedhere.Inaddition,stockandcommoditybrokersareprohibitedfromfilingunderchapter11andarerestrictedtochapter7. 11U.S.C.§109(d).
2Althoughstronglydiscouraged,soleproprietorsmayrepresentthemselvesprose.
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TheU.S.Trustee
TheU.S.trusteeplaysamajorroleinmonitoringtheprogressofachapter11caseandsupervisingitsadministration.TheU.S.trusteeisresponsibleformonitoringthedebtorinpossession'soperationofthebusinessandthesubmissionofoperatingreportsandpaymentofrequiredquarterlyfees.Additionally,theU.S.trusteereviewsapplicationsforcompensationandreimbursementfiledbyprofessionalshiredinthecase,anyplansanddisclosurestatementsfiledwiththecourt,andappointsthecreditors'committees.TheU.S.trusteeconductsameetingofthecreditors,oftenreferredtoasthe"section341meeting,"inachapter11case.11U.S.C.§341.TheU.S.trusteeandcreditorsmayquestionthedebtorunderoathatthesection341meetingconcerningthedebtor'sacts,conduct,property,andtheadministrationofthecase.
TheU.S.trusteealsoimposescertainrequirementsonthedebtorinpossessionconcerningmatterssuchasreportingitsmonthlyincomeandoperatingexpenses,establishingnewbankaccounts,andpayingcurrentemployeewithholdingandothertaxes.Bylaw,thedebtorinpossessionmustpayaquarterlyfeetotheU.S.trusteeforeachquarterofayearuntilthecaseisconvertedordismissed.28U.S.C.§1930(a)(6).Theamountofthefee,whichmayrangefrom$250to$10,000,dependsontheamountofthedebtor'sdisbursementsduringeachquarter.ShouldadebtorinpossessionfailtocomplywiththereportingrequirementsoftheU.S.trusteeorordersofthebankruptcycourt,orfailtotakethe
appropriatestepstobringthecasetoconfirmation,theU.S.trusteemayfileamotionwiththecourttohavethedebtor'schapter11caseconvertedtoanotherchapteroftheBankruptcyCodeortohavethecasedismissed.
Creditors’Committees
Creditors'committeescanplayamajorroleinchapter11cases.ThecommitteeisappointedbytheU.S.trusteeandordinarilyconsistsofunsecuredcreditorswhoholdthesevenlargestunsecuredclaimsagainstthedebtor.11U.S.C.§1102.Amongotherthings,thecommittee:consultswiththedebtorinpossessiononadministrationofthecase;investigatesthedebtor'sconductandoperationofthebusiness;andparticipatesinformulatingaplan.11U.S.C.§1103.Acreditors'committeemay,withthecourt'sapproval,hireanattorneyorotherprofessionalstoassistintheperformanceofthecommittee'sduties.Acreditors'committeecanbeanimportantsafeguardtothepropermanagementofthebusinessbythedebtorinpossession.
TheSmallBusinessCaseandtheSmallBusinessDebtor
InsomesmallercasestheU.S.trusteemaybeunabletofindcreditorswillingtoserveonacreditors'committee,orthecommitteemaynotbeactivelyinvolvedinthecase.TheBankruptcyCodeaddressesthisissuebytreatinga"smallbusinesscase"somewhatdifferentlythanaregularbankruptcycase.Asmallbusinesscaseisdefinedasacasewitha"smallbusinessdebtor."11U.S.C.§101(51C).Determinationofwhetheradebtorisa"smallbusinessdebtor"requiresapplicationofatwo‐parttest.
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First,thedebtormustbeengagedincommercialorbusinessactivities(otherthanprimarilyowningoroperatingrealproperty)withtotalnon‐contingentliquidatedsecuredandunsecureddebtsof$2,566,0503orless.Second,thedebtor'scasemustbeoneinwhichtheU.S.trusteehasnotappointedacreditors'committee,orthecourthasdeterminedthecreditors'committeeisinsufficientlyactiveandrepresentativetoprovideoversightofthedebtor.11U.S.C.§101(51D).
Inasmallbusinesscase,thedebtorinpossessionmust,amongotherthings,attachthemostrecentlypreparedbalancesheet,statementofoperations,cash‐flowstatementandmostrecentlyfiledtaxreturntothepetitionorprovideastatementunderoathexplainingtheabsenceofsuchdocumentsandmustattendcourtandtheU.S.trusteemeetingthroughseniormanagementpersonnelandcounsel.Thesmallbusinessdebtormustmakeongoingfilingswiththecourtconcerningitsprofitabilityandprojectedcashreceiptsanddisbursements,andmustreportwhetheritisincompliancewiththeBankruptcyCodeandtheFederalRulesofBankruptcyProcedureandwhetherithaspaiditstaxesandfileditstaxreturns.11U.S.C.§§308,1116.
Incontrasttootherchapter11debtors,thesmallbusinessdebtorissubjecttoadditionaloversightbytheU.S.trustee.Earlyinthecase,thesmallbusinessdebtormustattendan"initialinterview"withtheU.S.trusteeatwhichtimetheU.S.trusteewillevaluatethedebtor'sviability,inquireaboutthedebtor'sbusinessplan,andexplaincertaindebtorobligations
3ThisamountappliestocasesfiledonorafterApril1,2016andadjustseverythreeyears.ItisscheduledtoadjustonApril1,2019.
includingthedebtor'sresponsibilitytofilevariousreports.28U.S.C.§586(a)(7).TheU.S.trusteewillalsomonitortheactivitiesofthesmallbusinessdebtorduringthecasetoidentifyaspromptlyaspossiblewhetherthedebtorwillbeunabletoconfirmaplan.
Becausecertainfilingdeadlinesaredifferentandextensionsaremoredifficulttoobtain,acasedesignatedasasmallbusinesscasenormallyproceedsmorequicklythanotherchapter11cases.Forexample,onlythedebtormayfileaplanduringthefirst180daysofasmallbusinesscase.11U.S.C.§1121(e).This"exclusivityperiod"maybeextendedbythecourt,butonlyto300days,andonlyifthedebtordemonstratesbyapreponderanceoftheevidencethatthecourtwillconfirmaplanwithinareasonableperiodoftime.Whenthecaseisnotasmallbusinesscase,however,thecourtmayextendtheexclusivityperiod"forcause"upto18months.
TheSingleAssetRealEstateDebtor
SingleassetrealestatedebtorsaresubjecttospecialprovisionsoftheBankruptcyCode.Theterm"singleassetrealestate"isdefinedas"asinglepropertyorproject,otherthanresidentialrealpropertywithfewerthanfourresidentialunits,whichgeneratessubstantiallyallofthegrossincomeofadebtorwhoisnotafamilyfarmerandonwhichnosubstantialbusinessisbeingconductedbyadebtorotherthanthebusinessofoperatingtherealpropertyandactivitiesincidentalthereto."11U.S.C.§ 101(51B).TheBankruptcyCodeprovidescircumstancesunderwhichcreditorsofasingleassetrealestatedebtormayobtainrelieffromthe
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automaticstaywhicharenotavailabletocreditorsinordinarybankruptcycases.11U.S.C.§362(d).Onrequestofacreditorwithaclaimsecuredbythesingleassetrealestateandafternoticeandahearing,thecourtwillgrantrelieffromtheautomaticstaytothecreditorunlessthedebtorfilesafeasibleplanofreorganizationorbeginsmakinginterestpaymentstothecreditorwithin90daysfromthedateofthefilingofthecase,orwithin30daysofthecourt'sdeterminationthatthecaseisasingleassetrealestatecase.Theinterestpaymentsmustbeequaltothenon‐defaultcontractinterestrateonthevalueofthecreditor'sinterestintherealestate.11U.S.C.§362(d)(3).
AppointmentorElectionofaCaseTrustee
Althoughtheappointmentofacasetrusteeisararityinachapter11case,apartyininterestortheU.S.trusteecanrequesttheappointmentofacasetrusteeorexamineratanytimepriortoconfirmationinachapter11case.Thecourt,onmotionbyapartyininterestortheU.S.trusteeandafternoticeandhearing,shallordertheappointmentofacasetrusteeforcause,includingfraud,dishonesty,incompetence,orgrossmismanagement,orifsuchanappointmentisintheinterestofcreditors,anyequitysecurityholders,andotherinterestsoftheestate.11U.S.C.§1104(a).Moreover,theU.S.trusteeisrequiredtomoveforappointmentofatrusteeiftherearereasonablegroundstobelievethatanyofthepartiesincontrolofthedebtor"participatedinactualfraud,dishonestyorcriminalconductinthemanagementofthedebtororthedebtor'sfinancialreporting."11U.S.C.§1104(e).
ThetrusteeisappointedbytheU.S.trustee,afterconsultationwithpartiesininterestandsubjecttothecourt'sapproval.Fed.R.Bankr.P.2007.1.Alternatively,atrusteeinacasemaybeelectedifapartyininterestrequeststheelectionofatrusteewithin30daysafterthecourtorderstheappointmentofatrustee.Inthatinstance,theU.S.trusteeconvenesameetingofcreditorsforthepurposeofelectingapersontoserveastrusteeinthecase.11U.S.C.§1104(b).
Thecasetrusteeisresponsibleformanagementofthepropertyoftheestate,operationofthedebtor'sbusiness,and,ifappropriate,thefilingofaplanofreorganization.Section1106oftheBankruptcyCoderequiresthetrusteetofileaplan"assoonaspracticable"or,alternatively,tofileareportexplainingwhyaplanwillnotbefiledortorecommendthatthecasebeconvertedtoanotherchapterordismissed.11U.S.C.§1106(a)(5).
UpontherequestofapartyininterestortheU.S.trustee,thecourtmayterminatethetrustee'sappointmentandrestorethedebtorinpossessiontomanagementofbankruptcyestateatanytimebeforeconfirmation.11U.S.C.§1105.
TheRoleofanExaminer
Theappointmentofanexaminerinachapter11caseisrare.Theroleofanexaminerisgenerallymorelimitedthanthatofatrustee.Theexaminerisauthorizedtoperformtheinvestigatoryfunctionsofthetrusteeandisrequiredtofileastatementofanyinvestigationconducted.Iforderedtodosobythecourt,however,anexaminermaycarryoutanyotherdutiesofatrusteethatthecourtordersthedebtorinpossessionnot
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toperform.11U.S.C.§1106.Eachcourthastheauthoritytodeterminethedutiesofanexaminerineachparticularcase.Insomecases,theexaminermayfileaplanofreorganization,negotiateorhelpthepartiesnegotiate,orreviewthedebtor'sschedulestodeterminewhethersomeoftheclaimsareimproperlycategorized.Sometimes,theexaminermaybedirectedtodetermineifobjectionstoanyproofsofclaimshouldbefiledorwhethercausesofactionhavesufficientmeritsothatfurtherlegalactionshouldbetaken.Theexaminermaynotsubsequentlyserveasatrusteeinthecase.11U.S.C.§321.
TheAutomaticStay
Theautomaticstayprovidesaperiodoftimeinwhichalljudgments,collectionactivities,foreclosures,andrepossessionsofpropertyaresuspendedandmaynotbepursuedbythecreditorsonanydebtorclaimthatarosebeforethefilingofthebankruptcypetition.AswithcasesunderotherchaptersoftheBankruptcyCode,astayofcreditoractionsagainstthechapter11debtorautomaticallygoesintoeffectwhenthebankruptcypetitionisfiled.11U.S.C.§362(a).Thefilingofapetition,however,doesnotoperateasastayforcertaintypesofactionslistedunder11U.S.C.§362(b).Thestayprovidesabreathingspellforthedebtor,duringwhichnegotiationscantakeplacetotrytoresolvethedifficultiesinthedebtor'sfinancialsituation.
Underspecificcircumstances,thesecuredcreditorcanobtainanorderfromthecourtgrantingrelieffromtheautomaticstay.Forexample,whenthedebtorhasnoequityinthepropertyandthepropertyisnotnecessaryforaneffectivereorganization,thesecuredcreditorcan
seekanorderofthecourtliftingthestaytopermitthecreditortoforecloseontheproperty,sellit,andapplytheproceedstothedebt.11U.S.C.§362(d).
TheBankruptcyCodepermitsapplicationsforfeestobemadebycertainprofessionalsduringthecase.Thus,atrustee,adebtor'sattorney,oranyprofessionalpersonappointedbythecourtmayapplytothecourtatintervalsof120daysforinterimcompensationandreimbursementpayments.Inverylargecaseswithextensivelegalwork,thecourtmaypermitmorefrequentapplications.Althoughprofessionalfeesmaybepaidifauthorizedbythecourt,thedebtorcannotmakepaymentstoprofessionalcreditorsonprepetitionobligations,i.e.,obligationswhicharosebeforethefilingofthebankruptcypetition.Theordinaryexpensesoftheongoingbusiness,however,continuetobepaid.
WhoCanFileaPlan
Thedebtor(unlessa"smallbusinessdebtor")hasa120‐dayperiodduringwhichithasanexclusiverighttofileaplan.11U.S.C.§1121(b).Thisexclusivityperiodmaybeextendedorreducedbythecourt,butinnoeventmaytheexclusivityperiod,includingallextensions,belongerthan18months.11U.S.C.§1121(d).Aftertheexclusivityperiodhasexpired,acreditororthecasetrusteemayfileacompetingplan.TheU.S.trusteemaynotfileaplan.11U.S.C.§307.
Achapter11casemaycontinueformanyyearsunlessthecourt,theU.S.trustee,thecommittee,oranotherpartyininterestactstoensurethecase'stimelyresolution.Thecreditors'righttofileacompetingplanprovidesincentiveforthe
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debtortofileaplanwithintheexclusivityperiodandactsasacheckonexcessivedelayinthecase.
AvoidableTransfers
Thedebtorinpossessionorthetrustee,asthecasemaybe,haswhatarecalled"avoiding"powers.11U.S.C.§547(b).Thesepowersmaybeusedtoundoatransferofmoneyorpropertymadeduringacertainperiodoftimebeforethefilingofthebankruptcypetition.Byavoidingaparticulartransferofproperty,thedebtorinpossessioncancancelthetransactionandforcethereturnor"disgorgement"ofthepaymentsorproperty,whichthenareavailabletopayallcreditors.Generally,andsubjecttovariousdefenses,11U.S.C.§547(c),thepowertoavoidtransfersiseffectiveagainsttransfersmadebythedebtorwithin90daysbeforefilingthepetition.Buttransfersto"insiders"(i.e.,relatives,generalpartners,anddirectorsorofficersofthedebtor)madeuptoayearbeforefilingmaybeavoided.11U.S.C.§§101(31),101(54),547,548.Inaddition,under11U.S.C.§544,thetrusteeisauthorizedtoavoidtransfersunderapplicablestatelaw,whichoftenprovidesforlongertimeperiods.Avoidingpowerspreventunfairprepetitionpaymentstoonecreditorattheexpenseofallothercreditors.
CashCollateral,AdequateProtectionandOperatingCapital
Althoughthepreparation,confirmation,andimplementationofaplanofreorganizationisattheheartofachapter11case,otherissuesmayarisethatmustbeaddressedbythedebtorinpossession.
Thedebtorinpossessionmayuse,sell,orleasepropertyoftheestateintheordinarycourseofitsbusiness,withoutpriorapproval,unlessthecourtordersotherwise.11U.S.C.§363(c).Iftheintendedsaleoruseisoutsidetheordinarycourseofitsbusiness,thedebtormustobtainpermissionfromthecourt.
Adebtorinpossessionmaynotuse"cashcollateral"withouttheconsentofthesecuredpartyorauthorizationbythecourt,whichmustfirstexaminewhethertheinterestofthesecuredpartyisadequatelyprotected.11U.S.C.§363.Section363defines"cashcollateral"ascash,negotiableinstruments,documentsoftitle,securities,depositaccounts,orothercashequivalents,wheneveracquired,inwhichtheestateandanentityotherthantheestatehaveaninterest.Itincludestheproceeds,products,offspring,rents,orprofitsofpropertyandthefees,charges,accountsorpaymentsfortheuseoroccupancyofroomsandotherpublicfacilitiesinhotels,motels,orotherlodgingpropertiessubjecttoacreditor'ssecurityinterest.
When"cashcollateral"isused(spent),thesecuredcreditorsareentitledtoreceiveadditionalprotectionundersection363oftheBankruptcyCode.Thedebtorinpossessionmustfileamotionrequestinganorderfromthecourtauthorizingtheuseofthecashcollateral.Pendingconsentofthesecuredcreditororcourtauthorizationforthedebtorinpossession'suseofcashcollateral,thedebtorinpossessionmustsegregateandaccountforallcashcollateralinitspossession.11U.S.C.§363(c)(4).Apartywithaninterestinpropertybeingusedbythedebtormayrequestthatthecourtprohibitorconditionthisusetothe
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extentnecessarytoprovide"adequateprotection"tothecreditor.
Adequateprotectionmayberequiredtoprotectthevalueofthecreditor'sinterestinthepropertybeingusedbythedebtorinpossession.Thisisespeciallyimportantwhenthereisadecreaseinvalueoftheproperty.Thedebtormaymakeperiodicorlumpsumcashpayments,orprovideanadditionalorreplacementlienthatwillresultinthecreditor'spropertyinterestbeingadequatelyprotected.11U.S.C.§361.
Whenachapter11debtorneedsoperatingcapital,itmaybeabletoobtainitfromalenderbygivingthelenderacourt‐approved"superpriority"overotherunsecuredcreditorsoralienonpropertyoftheestate.11U.S.C.§364.
Motions
Beforeconfirmationofaplan,severalactivitiesmaytakeplaceinachapter11case.Continuedoperationofthedebtor'sbusinessmayleadtothefilingofanumberofcontestedmotions.Themostcommonarethoseseekingrelieffromtheautomaticstay,theuseofcashcollateral,ortoobtaincredit.Theremayalsobelitigationoverexecutory(i.e.,unfulfilled)contractsandunexpiredleasesandtheassumptionorrejectionofthoseexecutorycontractsandunexpiredleasesbythedebtorinpossession.11U.S.C.§365.Delaysinformulating,filing,andobtainingconfirmationofaplanoftenpromptcreditorstofilemotionsforrelieffromstay,toconvertthecasetochapter7,ortodismissthecasealtogether.
AdversaryProceedings
Frequently,thedebtorinpossessionwillinstitutealawsuit,knownasanadversaryproceeding,torecovermoneyorpropertyfortheestate.Adversaryproceedingsmaytaketheformoflienavoidanceactions,actionstoavoidpreferences,actionstoavoidfraudulenttransfers,oractionstoavoidpost‐petitiontransfers.TheseproceedingsaregovernedbyPartVIIoftheFederalRulesofBankruptcyProcedure.Attimes,acreditors'committeemaybeauthorizedbythebankruptcycourttopursuetheseactionsagainstinsidersofthedebtoriftheplanprovidesforthecommitteetodosoorifthedebtorhasrefusedademandtodoso.Creditorsmayalsoinitiateadversaryproceedingsbyfilingcomplaintstodeterminethevalidityorpriorityofalien,revokeanorderconfirmingaplan,determinethedischargeabilityofadebt,obtainaninjunction,orsubordinateaclaimofanothercreditor.
Claims
TheBankruptcyCodedefinesaclaimas:(1)arighttopayment;(2)orarighttoanequitableremedyforafailureofperformanceifthebreachgivesrisetoarighttopayment.11U.S.C.§101(5).Generally,anycreditorwhoseclaimisnotscheduled(i.e.,listedbythedebtoronthedebtor'sschedules)orisscheduledasdisputed,contingent,orunliquidatedmustfileaproofofclaim(andattachevidencedocumentingtheclaim)inordertobetreatedasacreditorforpurposesofvotingontheplananddistributionunderit.Fed.R.Bankr.P.3003(c)(2).Butfilingaproofofclaimisnotnecessaryifthecreditor'sclaimisscheduled(butisnotlistedasdisputed,contingent,or
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unliquidatedbythedebtor)becausethedebtor'sschedulesaredeemedtoconstituteevidenceofthevalidityandamountofthoseclaims.11U.S.C.§1111.Ifascheduledcreditorchoosestofileaclaim,aproperlyfiledproofofclaimsupersedesanyschedulingofthatclaim.Fed.R.Bankr.P.3003(c)(4).Itistheresponsibilityofthecreditortodeterminewhethertheclaimisaccuratelylistedonthedebtor'sschedules.InotherchaptersoftheBankruptcyCodeacreditormustfileaclaiminanassetcase,thusifthechapter11convertstoanotherchapteracreditormustfileaclaimintheconvertedcase.Notethataclaimfiledinthechapter11caseretainsitsstatusasaclaimintheeventthatthecaseisconvertedtoanotherchapterundertheBankruptcyCode.Relyingonwhatacreditorislistedforintheschedulesappliesonlyinchapter11cases.
Thedebtormustprovidenotificationtothosecreditorswhosenamesareaddedandwhoseclaimsarelistedasaresultofanamendmenttotheschedules.Thenotificationalsoshouldadvisesuchcreditorsoftheirrighttofileproofsofclaimandthattheirfailuretodosomaypreventthemfromvotinguponthedebtor'splanofreorganizationorparticipatinginanydistributionunderthatplan.Whenadebtoramendsthescheduleofliabilitiestoaddacreditororchangethestatusofanyclaimstodisputed,contingent,orunliquidated,thedebtormustprovidenoticeoftheamendmenttoanyentityaffected.Fed.R.Bankr.P.1009(a).
EquitySecurityHolders
Anequitysecurityholderisaholderofanequitysecurityofthedebtor.Examplesof
anequitysecurityareashareinacorporation,aninterestofalimitedpartnerinalimitedpartnership,orarighttopurchase,sell,orsubscribetoashare,security,orinterestofashareinacorporationoraninterestinalimitedpartnership.11U.S.C.§101(16),(17).Anequitysecurityholdermayvoteontheplanofreorganizationandmayfileaproofofinterest,ratherthanaproofofclaim.Aproofofinterestisdeemedfiledforanyinterestthatappearsinthedebtor'sschedules,unlessitisscheduledasdisputed,contingent,orunliquidated.11U.S.C.§1111.Anequitysecurityholderwhoseinterestisnotscheduledorisscheduledasdisputed,contingent,orunliquidatedmustfileaproofofinterestinordertobetreatedasacreditorforpurposesofvotingontheplananddistributionunderit.Fed.R.Bankr.P.3003(c)(2).Aproperlyfiledproofofinterestsupersedesanyschedulingofthatinterest.Fed.R.Bankr.P.3003(c)(4).Generally,mostoftheprovisionsthatapplytoproofsofclaim,asdiscussedabove,arealsoapplicabletoproofsofinterest.
ConversionorDismissal
Adebtorinacaseunderchapter11hasaone‐timeabsoluterighttoconvertthechapter11casetoacaseunderchapter7unless:(1)thedebtorisnotadebtorinpossession;(2)thecaseoriginallywascommencedasaninvoluntarycaseunderchapter11;or(3)thecasewasconvertedtoacaseunderchapter11otherthanatthedebtor'srequest.11U.S.C.§1112(a).Adebtorinachapter11casedoesnothaveanabsoluterighttohavethecasedismisseduponrequest.
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Apartyininterestmayfileamotiontodismissorconvertachapter11casetoachapter7case"forcause."Generally,ifcauseisestablishedafternoticeandhearing,thecourtmustconvertordismissthecase(whicheverisinthebestinterestsofcreditorsandtheestate)unlessitspecificallyfindsthattherequestedconversionordismissalisnotinthebestinterestofcreditorsandtheestate.11U.S.C.§1112(b).Alternatively,thecourtmaydecidethatappointmentofachapter11trusteeoranexaminerisinthebestinterestsofcreditorsandtheestate.11U.S.C.§1104(a)(3).Section1112(b)(4)oftheBankruptcyCodesetsforthnumerousexamplesofcausethatwouldsupportdismissalorconversion.Forexample,themovingpartymayestablishcausebyshowingthatthereissubstantialorcontinuinglosstotheestateandtheabsenceofareasonablelikelihoodofrehabilitation;grossmismanagementoftheestate;failuretomaintaininsurancethatposesarisktotheestateorthepublic;orunauthorizeduseofcashcollateralthatissubstantiallyharmfultoacreditor.
Causefordismissalorconversionalsoincludesanunexcusedfailuretotimelycomplywithreportingandfilingrequirements;failuretoattendthemeetingofcreditorsorattendanexaminationwithoutgoodcause;failuretotimelyprovideinformationtotheU.S.trustee;andfailuretotimelypaypost‐petitiontaxesortimelyfilepost‐petitionreturnsFed.R.Bankr.P.2004.Additionally,failuretofileadisclosurestatementortofileandconfirmaplanwithinthetimefixedbytheBankruptcyCodeororderofthecourt;inabilitytoeffectuateaplan;denialorrevocationofconfirmation;inabilitytoconsummateaconfirmedplanrepresent"cause"for
dismissalunderthestatute.Inanindividualcase,failureofthedebtortopaypost‐petitiondomesticsupportobligationsconstitutes"cause"fordismissalorconversion.
Section1112(c)oftheBankruptcyCodeprovidesanimportantexceptiontotheconversionprocessinachapter11case.Underthisprovision,thecourtisprohibitedfromconvertingacaseinvolvingafarmerorcharitableinstitutiontoaliquidationcaseunderchapter7unlessthedebtorrequeststheconversion.
TheDisclosureStatement
Generally,thedebtor(oranyplanproponent)mustfileandgetcourtapprovalofawrittendisclosurestatementbeforetherecanbeavoteontheplanofreorganization.Thedisclosurestatementmustprovide"adequateinformation"concerningtheaffairsofthedebtortoenabletheholderofaclaimorinteresttomakeaninformedjudgmentabouttheplan.11U.S.C.§1125.Inasmallbusinesscase,however,thecourtmaydeterminethattheplanitselfcontainsadequateinformationandthataseparatedisclosurestatementisunnecessary.11U.S.C.§1125(f).Afterthedisclosurestatementisfiled,thecourtmustholdahearingtodeterminewhetherthedisclosurestatementshouldbeapproved.Acceptanceorrejectionofaplanusuallycannotbesoliciteduntilthecourthasfirstapprovedthewrittendisclosurestatement.11U.S.C.§1125(b).Anexceptiontothisruleexistsiftheinitialsolicitationofthepartyoccurredbeforethebankruptcyfiling,aswouldbethecaseinso‐called"prepackaged"
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bankruptcyplans(i.e.,wherethedebtornegotiatesaplanwithsignificantcreditorconstituenciesbeforefilingforbankruptcy).Continuedpost‐filingsolicitationofsuchpartiesisnotprohibited.Afterthecourtapprovesthedisclosurestatement,thedebtororproponentofaplancanbegintosolicitacceptancesoftheplan,andcreditorsmayalsosolicitrejectionsoftheplan.
Uponapprovalofadisclosurestatement,theplanproponentmustmailthefollowingtotheU.S.trusteeandallcreditorsandequitysecurityholders:(1)theplan,oracourtapprovedsummaryoftheplan;(2)thedisclosurestatementapprovedbythecourt;(3)noticeofthetimewithinwhichacceptancesandrejectionsoftheplanmaybefiled;and(4)suchotherinformationasthecourtmaydirect,includinganyopinionofthecourtapprovingthedisclosurestatementoracourt‐approvedsummaryoftheopinion.Fed.R.Bankr.P.3017(d).Inaddition,thedebtormustmailtothecreditorsandequitysecurityholdersentitledtovoteontheplanorplans:(1)noticeofthetimefixedforfilingobjections;(2)noticeofthedateandtimeforthehearingonconfirmationoftheplan;and(3)aballotforacceptingorrejectingtheplanand,ifappropriate,adesignationforthecreditorstoidentifytheirpreferenceamongcompetingplans.Id.Butinasmallbusinesscase,thecourtmayconditionallyapproveadisclosurestatementsubjecttofinalapprovalafternoticeandacombineddisclosurestatement/planconfirmationhearing.11U.S.C.§1125(f).
AcceptanceofthePlanofReorganization
Asnotedearlier,onlythedebtormayfileaplanofreorganizationduringthefirst120‐dayperiodafterthepetitionisfiled(orafterentryoftheorderforrelief,ifaninvoluntarypetitionwasfiled).Thecourtmaygrantanextensionofthisexclusiveperiodupto18monthsafterthepetitiondate.Inaddition,thedebtorhas180daysafterthepetitiondateorentryoftheorderforrelieftoobtainacceptancesofitsplan.11U.S.C.§1121.Thecourtmayextend(upto20months)orreducethisacceptanceexclusiveperiodforcause.11U.S.C.§1121(d).Inpractice,debtorstypicallyseekextensionsofboththeplanfilingandplanacceptancedeadlinesatthesametimesothatanyordersoughtfromthecourtallowsthedebtortwomonthstoseekacceptancesafterfilingaplanbeforeanycompetingplancanbefiled.
Iftheexclusiveperiodexpiresbeforethedebtorhasfiledandobtainedacceptanceofaplan,otherpartiesininterestinacase,suchasthecreditors'committeeoracreditor,mayfileaplan.Suchaplanmaycompetewithaplanfiledbyanotherpartyininterestorbythedebtor.Ifatrusteeisappointed,thetrusteemustfileaplan,areportexplainingwhythetrusteewillnotfileaplan,orarecommendationforconversionordismissalofthecase.11U.S.C.§1106(a)(5).Aproponentofaplanissubjecttothesamerequirementsasthedebtorwithrespecttodisclosureandsolicitation.
Inachapter11case,aliquidatingplanispermissible.Suchaplanoftenallowsthedebtorinpossessiontoliquidatethebusinessundermoreeconomically
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advantageouscircumstancesthanachapter7liquidation.
Section1123(a)oftheBankruptcyCodeliststhemandatoryprovisionsofachapter11plan,andsection1123(b)liststhediscretionaryprovisions.Section1123(a)(1)providesthatachapter11planmustdesignateclassesofclaimsandinterestsfortreatmentunderthereorganization.Generally,aplanwillclassifyclaimholdersassecuredcreditors,unsecuredcreditorsentitledtopriority,generalunsecuredcreditors,andequitysecurityholders.
Undersection1126(c)oftheBankruptcyCode,anentireclassofclaimsisdeemedtoacceptaplaniftheplanisacceptedbycreditorsthatholdatleasttwo‐thirdsinamountandmorethanone‐halfinnumberoftheallowedclaimsintheclass.Undersection1129(a)(10),ifthereareimpairedclassesofclaims,thecourtcannotconfirmaplanunlessithasbeenacceptedbyatleastoneclassofnon‐insiderswhoholdimpairedclaims(i.e.,claimsthatarenotgoingtobepaidcompletelyorinwhichsomelegal,equitable,orcontractualrightisaltered).Moreover,undersection1126(f),holdersofunimpairedclaimsaredeemedtohaveacceptedtheplan.
Undersection1127(a)oftheBankruptcyCode,theplanproponentmaymodifytheplanatanytimebeforeconfirmation,buttheplanasmodifiedmustmeetalltherequirementsofchapter11.Whenthereisaproposedmodificationafterballotinghasbeenconducted,andthecourtfindsafterahearingthattheproposedmodificationdoesnotadverselyaffectthetreatmentofanycreditorwhohasnotacceptedthemodificationinwriting,themodificationisdeemedtohavebeenacceptedbyallcreditorswhopreviously
acceptedtheplan.Fed.R.Bankr.P.3019.Ifitisdeterminedthattheproposedmodificationdoeshaveanadverseeffectontheclaimsofnon‐consentingcreditors,thenanotherballotingmusttakeplace.
Becausemorethanoneplanmaybesubmittedtothecreditorsforapproval,everyproposedplanandmodificationmustbedatedandidentifiedwiththenameoftheentityorentitiessubmittingtheplanormodification.Fed.R.Bankr.P.3016(b).Whencompetingplansarepresentedthatmeettherequirementsforconfirmation,thecourtmustconsiderthepreferencesofthecreditorsandequitysecurityholdersindeterminingwhichplantoconfirm.
Anypartyininterestmayfileanobjectiontoconfirmationofaplan.TheBankruptcyCoderequiresthecourt,afternotice,toholdahearingonconfirmationofaplan.Ifnoobjectiontoconfirmationhasbeentimelyfiled,theBankruptcyCodeallowsthecourttodeterminewhethertheplanhasbeenproposedingoodfaithandaccordingtolaw.Fed.R.Bankr.P.3020(b)(2).Beforeconfirmationcanbegranted,thecourtmustbesatisfiedthattherehasbeencompliancewithalltheotherrequirementsofconfirmationsetforthinsection1129oftheBankruptcyCode,evenintheabsenceofanyobjections.Inordertoconfirmtheplan,thecourtmustfind,amongotherthings,that:(1)theplanisfeasible;(2)itisproposedingoodfaith;and(3)theplanandtheproponentoftheplanareincompliancewiththeBankruptcyCode.Inordertosatisfythefeasibilityrequirement,thecourtmustfindthatconfirmationoftheplanisnotlikelytobefollowedbyliquidation(unlesstheplanisaliquidatingplan)ortheneedforfurtherfinancialreorganization.
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TheDischarge
Section1141(d)(1)generallyprovidesthatconfirmationofaplandischargesadebtorfromanydebtthatarosebeforethedateofconfirmation.Aftertheplanisconfirmed,thedebtorisrequiredtomakeplanpaymentsandisboundbytheprovisionsoftheplanofreorganization.Theconfirmedplancreatesnewcontractualrights,replacingorsupersedingpre‐bankruptcycontracts.
Thereare,ofcourse,exceptionstothegeneralrulethatanorderconfirmingaplanoperatesasadischarge.Confirmationofaplanofreorganizationdischargesanytypeofdebtor–corporation,partnership,orindividual–frommosttypesofprepetitiondebts.Itdoesnot,however,dischargeanindividualdebtorfromanydebtmadenondischargeablebysection523oftheBankruptcyCode.4Moreover,exceptinlimitedcircumstances,adischargeisnotavailabletoanindividualdebtorunless
4Debtsnotdischargedincludedebtsforalimonyandchildsupport,certaintaxes,debtsforcertaineducationalbenefitoverpaymentsorloansmadeorguaranteedbyagovernmentalunit,debtsforwillfulandmaliciousinjurybythedebtortoanotherentityortothepropertyofanotherentity,debtsfordeathorpersonalinjurycausedbythedebtor'soperationofamotorvehiclewhilethedebtorwasintoxicatedfromalcoholorothersubstances,anddebtsforcertaincriminalrestitutionorders.11U.S.C.§523(a).Thedebtorwillcontinuetobefinanciallyresponsibleforthesetypesofdebtstotheextentthattheyarenotpaidinthechapter11case.Debtsformoneyorpropertyobtainedbyfalsepretenses,debtsforfraudordefalcationwhileactinginafiduciarycapacity,anddebtsforwillfulandmaliciousinjurybythedebtortoanotherentityortothepropertyofanotherentitywillbedischargedunlessacreditortimelyfilesandprevailsinanactiontohavesuchdebtsdeclarednondischargeable.11U.S.C.§523(c);Fed.R.Bankr.P.4007(c).
anduntilallpaymentshavebeenmadeundertheplan.11U.S.C.§1141(d)(5).Confirmationdoesnotdischargethedebtoriftheplanisaliquidationplan,asopposedtooneofreorganization,unlessthedebtorisanindividual.Whenthedebtorisanindividual,confirmationofaliquidationplanwillresultinadischarge(afterplanpaymentsaremade)unlessgroundswouldexistfordenyingthedebtoradischargeifthecasewereproceedingunderchapter7insteadofchapter11.11U.S.C.§§727(a),1141(d).
PostconfirmationModificationofthePlan
Atanytimeafterconfirmationandbefore"substantialconsummation"ofaplan,theproponentofaplanmaymodifytheplanifthemodifiedplanwouldmeetcertainBankruptcyCoderequirements.11U.S.C.§ 1127(b).Thisshouldbedistinguishedfrompreconfirmationmodificationoftheplan.Amodifiedpostconfirmationplandoesnotautomaticallybecometheplan.Amodifiedpostconfirmationplaninachapter11casebecomestheplanonly"ifcircumstanceswarrantsuchmodification"andthecourt,afternoticeandhearing,confirmstheplanasmodified.Ifthedebtorisanindividual,theplanmaybemodifiedpostconfirmationupontherequestofthedebtor,thetrustee,theU.S.trustee,ortheholderofanallowedunsecuredclaimtomakeadjustmentstopaymentsdueundertheplan.11U.S.C.§1127(e).
PostconfirmationAdministration
Notwithstandingtheentryoftheconfirmationorder,thecourthastheauthoritytoissueanyotherorder
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necessarytoadministertheestate.Fed.R.Bankr.P.3020(d).Thisauthoritywouldincludethepostconfirmationdeterminationofobjectionstoclaimsoradversaryproceedings,whichmustberesolvedbeforeaplancanbefullyconsummated.Sections1106(a)(7)and1107(a)oftheBankruptcyCoderequireadebtorinpossessionoratrusteetoreportontheprogressmadeinimplementingaplanafterconfirmation.Achapter11trusteeordebtorinpossessionhasanumberofresponsibilitiestoperformafterconfirmation,includingconsummatingtheplan,reportingonthestatusofconsummation,andapplyingforafinaldecree.
RevocationofConfirmationOrder
Revocationoftheconfirmationorderisanundoingorcancellationoftheconfirmationofaplan.Arequestforrevocationofconfirmation,ifmadeatall,mustbemadebyapartyininterestwithin180daysofconfirmation.Thecourt,afternoticeandhearing,may
revokeaconfirmationorder"ifandonlyifthe[confirmation]orderwasprocuredbyfraud."11U.S.C.§1144.
TheFinalDecree
Afinaldecreeclosingthecasemustbeenteredaftertheestatehasbeen"fullyadministered."Fed.R.Bankr.P.3022.Localbankruptcycourtpoliciesgenerallydeterminewhenthefinaldecreeisenteredandthecaseclosed.
ProseDebtors
Whileeverycaseisuniqueandeverydebtorhastheirowncircumstancesthatcausesthemtoseekreliefinthebankruptcycourt,Chapter11isverycomplicated.Inadditiontofinancialprofessionalssuchasaccountantsandtaxpreparers,thebenefitsofhavingcompetentlegalcounselcannotbeunderstated.
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WhatDebtorsShouldKnowAboutChapter12:FamilyFarmeror
FamilyFishermanBankruptcy
ThechapteroftheBankruptcyCodeprovidingforadjustmentofdebtsofa"familyfarmer,"ora"familyfisherman"asthosetermsaredefinedintheBankruptcyCode.BackgroundChapter12isdesignedfor"familyfarmers"or"familyfishermen"with"regularannualincome."Itenablesfinanciallydistressedfamilyfarmersandfishermentoproposeandcarryoutaplantorepayallorpartoftheirdebts.Underchapter12,debtorsproposearepaymentplantomakeinstallmentstocreditorsoverthreetofiveyears.Generally,theplanmustprovideforpaymentsoverthreeyearsunlessthecourtapprovesalongerperiod"forcause."Butunlesstheplanproposestopay100%ofdomesticsupportclaims(i.e.,childsupportandalimony)ifanyexist,itmustbeforfiveyearsandmustincludeallofthedebtor'sdisposableincome.Innocasemayaplanprovideforpaymentsoveraperiodlongerthanfiveyears.11U.S.C.§1222(b)‐(c).Intailoringbankruptcylawtomeettheeconomicrealitiesoffamilyfarmingandthefamilyfisherman,chapter12eliminatesmanyofthebarrierssuchdebtorswouldfaceifseekingtoreorganizeundereitherchapter11or13oftheBankruptcyCode.Forexample,chapter12ismorestreamlined,lesscomplicated,andlessexpensivethanchapter11,whichisbettersuitedtolargecorporatereorganizations.Inaddition,
fewfamilyfarmersorfishermenfindchapter13tobeadvantageousbecauseitisdesignedforwageearnerswhohavesmallerdebtsthanthosefacingfamilyfarmers.Inchapter12,CongresssoughttocombinethefeaturesoftheBankruptcyCodewhichcanprovideaframeworkforsuccessfulfamilyfarmerandfishermanreorganizations.TheBankruptcyCodeprovidesthatonlyafamilyfarmerorfamilyfishermanwith"regularannualincome"mayfileapetitionforreliefunderchapter12.See11U.S.C.§§101(18),101(19A),109(f).Thepurposeofthisrequirementistoensurethatthedebtor'sannualincomeissufficientlystableandregulartopermitthedebtortomakepaymentsunderachapter12plan.Butchapter12makesallowanceforsituationsinwhichfamilyfarmersorfishermenhaveincomethatisseasonalinnature.Reliefunderchapter12isvoluntary,andonlythedebtormayfileapetitionunderthechapter.UndertheBankruptcyCode,"familyfarmers"and"familyfishermen"fallintotwocategories:(1)anindividualorindividualandspouseand(2)acorporationorpartnership.Farmersorfishermenfallingintothefirstcategorymustmeeteachofthefollowingfourcriteriaasofthedatethepetitionisfiledinordertoqualifyforreliefunderchapter12:
Inajointcase,individualspousesmustbeengagedinafarmingoperationoracommercialfishingoperation.
Thetotaldebts(securedandunsecured)oftheoperationmustnotexceed$4,153,150(ifafarmingoperation)or
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$1,924,550(ifacommercialfishingoperation).1
Ifafamilyfarmer,atleast50%,andiffamilyfishermanatleast80%,ofthetotaldebtsthatarefixedinamount(exclusiveofdebtforthedebtor'shome)mustberelatedtothefarmingorcommercialfishingoperation.
Morethan50%ofthegrossincomeoftheindividualorthemarrieddebtorsfortheprecedingtaxyear(or,forfamilyfarmersonly,foreachofthe2ndand3rdpriortaxyears)musthavecomefromthefarmingorcommercialfishingoperation.
Inorderforacorporationorpartnershiptofallwithinthesecondcategoryofdebtorseligibletofileasfamilyfarmersorfamilyfishermen,thecorporationorpartnershipmustmeeteachofthefollowingcriteriaasofthedateofthefilingofthepetition:
Morethanone‐halftheoutstandingstockorequityinthecorporationorpartnershipmustbeownedbyonefamilyorbyonefamilyanditsrelatives.
Thefamilyorthefamilyanditsrelativesmustconductthefarmingorcommercialfishingoperation.
Morethan80%ofthevalueofthecorporateorpartnershipassetsmustberelatedtothefarmingorfishingoperation.
Thetotalindebtednessofthecorporationorpartnershipmustnotexceed$4,153,150(ifafarmingoperation)or$1,924,550
1 Thesedollaramountsareadjustedeverythreeyears.ThenextscheduleadjustmentdateisApril1,2019.
(ifacommercialfishingoperation).
Atleast50%forafarmingoperationor80%forafishingoperationofthecorporation'sorpartnership’stotaldebtswhicharefixedinamount(exclusiveofdebtforonehomeoccupiedbyashareholder)mustberelatedtothefarmingorfishingoperation.
Ifthecorporationissuesstock,thestockcannotbepubliclytraded.
Adebtorcannotfileunderchapter12(oranyotherchapter)ifduringthepreceding180daysapriorbankruptcypetitionwasdismissedduetothedebtor'swillfulfailuretoappearbeforethecourtorcomplywithordersofthecourtorwasvoluntarilydismissedaftercreditorssoughtrelieffromthebankruptcycourttorecoverpropertyuponwhichtheyholdliens.11U.S.C.§§109(g),362(d)and(e).Inaddition,noindividualmaybeadebtorunderchapter12oranychapteroftheBankruptcyCodeunlessheorshehas,within180daysbeforefiling,receivedcreditcounselingfromanapprovedcreditcounselingagencyeitherinanindividualorgroupbriefing.11U.S.C.§§109,111.ThereareexceptionsinemergencysituationsorwheretheU.S.trusteehasdeterminedthatthereareinsufficientapprovedagenciestoprovidetherequiredcounseling.Ifadebtmanagementplanisdevelopedduringrequiredcreditcounseling,itmustbefiledwiththecourt.
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HowChapter12WorksAchapter12casebeginsbyfilingapetitionwiththebankruptcycourtservingtheareawheretheindividuallivesorwherethecorporationorpartnershipdebtorhasitsprincipalplaceofbusinessorprincipalassets.Unlessthecourtordersotherwise,thedebtoralsoshallfilewiththecourt(1)schedulesofassetsandliabilities,(2)ascheduleofcurrentincomeandexpenditures,(3)ascheduleofexecutorycontractsandunexpiredleases,and(4)astatementoffinancialaffairs.Fed.R.Bankr.P.1007(b).Anindividualpetitionmaybefiled,ormarrieddebtorsmayfileajointpetition.11U.S.C.§302(a).(TheOfficialFormsmaybedownloadedfromthecourt’swebsiteatwww.mab.uscourts.gov.)Thecourtsmustchargeafilingfee.Normallythefeesshouldbepaidtotheclerkofthecourtuponfiling.Withthecourt'spermission,however,individualdebtorsmaypaythefeeininstallments.28U.S.C.§1930(a);Fed.R.Bankr.P.1006(b);BankruptcyCourtMiscellaneousFeeSchedule,Item8(availableatwww.mab.uscourts.gov).Thenumberofsuchinstallmentsislimitedtofourandthedebtormustmakethefinalinstallmentnolaterthan120daysafterfilingthepetition.Fed.R.Bankr.P.1006(b).Forcauseshown,thecourtmayextendthetimeofanyinstallment,providedthatthelastinstallmentispaidnotlaterthan180daysafterthefilingofthepetition.Id.2Ifajointpetitionisfiled,onlyonefilingfeeischarged.Debtorsshouldbeawarethatfailuretopaythesefeesmayresultindismissalofthecase.11U.S.C.§1208(c)(2).
2 Onlyindividualdebtorsareentitledtorequestthefilingfeesbepaidininstallments.
InordertocompletetheOfficialBankruptcyFormswhichmakeupthepetition,statementoffinancialaffairs,andschedules,thedebtorwillneedtocompilethefollowinginformation:
Alistofallcreditorsandtheamountsandnatureoftheirclaims;
Thesource,amount,andfrequencyofthedebtor'sincome;
Alistofallofthedebtor'sproperty;and
Adetailedlistofthedebtor'smonthlyfarmingandlivingexpenses,i.e.,food,shelter,utilities,taxes,transportation,medicine,feed,fertilizer,etc.
Marriedindividualsmustgatherthisinformationforeachspouseregardlessofwhethertheyarefilingajointpetition,separateindividualpetitions,orevenifonlyonespouseisfiling.Inasituationwhereonlyonespousefiles,theincomeandexpensesofthenon‐filingspousearerequiredsothatthecourt,thetrustee,andthecreditorscanevaluatethehousehold'sfinancialposition.Whenachapter12petitionisfiled,animpartialtrusteeisappointedtoadministerthecase.11U.S.C.§1202.Insomedistricts,theU.S.trusteeappointsastandingtrusteetoserveinallchapter12cases.28U.S.C.§586(b).Asinchapter13,thetrusteebothevaluatesthecaseandservesasadisbursingagent,collectingpaymentsfromthedebtorandmakingdistributionstocreditors.11U.S.C.§1202.
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Filingthepetitionunderchapter12"automaticallystays"(stops)mostcollectionactionsagainstthedebtororthedebtor'sproperty.11U.S.C.§362.Filingthepetitiondoesnot,however,staycertaintypesofactionslistedunder11U.S.C.§362(b).Undercertaincircumstances,thestaymaybelimited,ormaynottakeeffectatall.11U.S.C.§362(c).Thestayarisesbyoperationoflawandrequiresnojudicialaction.Aslongasthestayisineffect,creditorsgenerallycannotinitiateorcontinueanylawsuits,wagegarnishments,oreventelephonecallsdemandingpayments.Thebankruptcyclerkgivesnoticeofthebankruptcycasetoallcreditorswhosenamesandaddressesareprovidedbythedebtor.Chapter12alsocontainsaspecialautomaticstayprovisionthatprotectscodebtors.Unlessthebankruptcycourtauthorizesotherwise,acreditormaynotseektocollecta"consumerdebt"fromanyindividualwhoisliablewiththedebtor.11U.S.C.§1201(a).Consumerdebtsarethoseincurredbyanindividualprimarilyforapersonal,family,orhouseholdpurpose.11U.S.C.§101(8).Between20to35daysafterthepetitionisfiled,thechapter12trusteewillholda"meetingofcreditors."IftheU.S.trusteeorbankruptcyadministratorschedulesthemeetingataplacethatdoesnothaveregularU.S.trusteeorbankruptcyadministratorstaffing,themeetingmaybeheldnomorethan60daysafterthedebtorfilesthepetition.Duringthemeetingthetrusteeputsthedebtorunderoathandboththetrusteeandcreditorsmayaskquestions.Thedebtormustattendthemeetingandanswerquestionsregardingthedebtor'sfinancialaffairs
andtheproposedtermsofthedebtor'srepaymentplan.11U.S.C.§343;Fed.R.Bankr.P.4002.Ifajointpetitionhasbeenfiled,bothdebtorsmustattendthecreditors'meeting.Inordertopreservetheirindependentjudgment,bankruptcyjudgesareprohibitedfromattending.11U.S.C.§341(c).Thepartiestypicallyresolveproblemswiththeplaneitherduringorshortlyafterthecreditors'meeting.Generally,thedebtorcanavoidproblemsbymakingsurethatthepetitionandplanarecompleteandaccurate,andbyconsultingwiththetrusteepriortothemeeting.Inachapter12case,toparticipateindistributionsfromthebankruptcyestate,unsecuredcreditorsmustfiletheirclaimswiththecourtwithin90daysafterthefirstdatesetforthemeetingofcreditors.Fed.R.Bankr.P.3002(c).Agovernmentalunit,however,has180daysfromthedatethecaseisfiledtofileaproofofclaim.11U.S.C.§502(b)(9).Afterthemeetingofcreditors,thedebtor,thechapter12trustee,andinterestedcreditorswillattendahearingonconfirmationofthedebtor'schapter12repaymentplan.TheChapter12PlanandConfirmationHearingUnlessthecourtgrantsanextension,thedebtormustfileaplanofrepaymentwiththepetitionorwithin90daysafterfilingthepetition.11U.S.C.§1221.Theplan,whichmustbesubmittedtothecourtforapproval,providesforpaymentsoffixedamountstothetrusteeonaregularbasis.Thetrusteethendistributesthefundstocreditorsaccordingtothetermsofthe
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plan,whichtypicallyofferscreditorslessthanfullpaymentontheirclaims.Therearethreetypesofclaims:priority,secured,andunsecured.Priorityclaimsarethosegrantedspecialstatusbythebankruptcylaw,suchasmosttaxesandthecostsofbankruptcyproceeding.3Securedclaimsarethoseforwhichthecreditorhastherighttoliquidatecertainpropertyifthedebtordoesnotpaytheunderlyingdebt,forexample,amortgageonahouseoraloanonacar.Incontrasttosecuredclaims,unsecuredclaimsaregenerallythoseforwhichthecreditorhasnospecialrightstocollectagainstparticularpropertyownedbythedebtor.Achapter12planusuallylaststhreetofiveyears.Itmustprovideforfullpaymentofallpriorityclaims,unlessaprioritycreditoragreestodifferenttreatmentoftheclaimor,inthecaseofadomesticsupportobligation,unlessthedebtorcontributesall"disposableincome"‐discussedbelow‐toafive‐yearplan.11U.S.C.§1222(a)(2),(4).Securedcreditorsmustbepaidatleastasmuchasthevalueofthecollateralpledgedforthedebt.OneofthefeaturesofChapter12isthatpaymentstosecuredcreditorscansometimescontinuelongerthanthethree‐to‐five‐yearperiodoftheplan.Forexample,ifthedebtor'sunderlyingdebtobligationwasscheduledtobepaidovermorethanfiveyears(i.e.,anequipmentloanoramortgage),thedebtormaybeabletopaytheloanoffovertheoriginalloanrepaymentscheduleaslongasanyarrearageismadeupduringtheplan.
3 Section507setsforth10categoriesofunsecuredclaimswhichCongresshas,forpublicpolicy
Theplandoesnothavetopayunsecuredclaimsinfull,aslongasitcommitsallofthedebtor'sprojected"disposableincome"(orpropertyofequivalentvalue)toplanpaymentsovera3to5yearperiod,andaslongastheunsecuredcreditorsaretoreceiveatleastasmuchastheywouldreceiveifthedebtor'snonexemptassetswereliquidatedunderchapter7.11U.S.C.§1225."Disposableincome"isdefinedasincomenotreasonablynecessaryforthemaintenanceorsupportofthedebtorordependentsorformakingpaymentsneededtocontinue,preserve,andoperatethedebtor'sbusiness.11U.S.C.§1225(b)(2).Within45daysafterfilingtheplan,thepresidingbankruptcyjudgedecidesata"confirmationhearing"whethertheplanisfeasibleandmeetsthestandardsforconfirmationundertheBankruptcyCode.11U.S.C.§§1224,1225.Creditors,whoreceive20days'notice,mayappearatthehearingandobjecttoconfirmation.Fed.R.Bankr.P.2002(a)(8).Whileavarietyofobjectionsmaybemade,thetypicalargumentsarethatpaymentsofferedundertheplanarelessthancreditorswouldreceiveifthedebtor'sassetswereliquidated,orthattheplandoesnotcommitallofthedebtor'sdisposableincomeforthethree‐to‐five‐yearperiodoftheplan.Ifthecourtconfirmstheplan,thechapter12trusteewilldistributefundsreceivedinaccordancewiththetermsoftheplan.11U.S.C.§1226(a).Ifthecourtdoesnotconfirmtheplan,thedebtormayfileamodifiedplan.11U.S.C.§1223.The
reasons,givenpriorityofdistributionoverotherunsecuredclaims.
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debtormayalsoconvertthecasetoaliquidationunderchapter7.411U.S.C.§1208(a).Ifthedebtorfailstoconfirmaplanandthecaseisdismissed,thecourtmayauthorizethetrusteetokeepsomeofthefundsforcosts,butthetrusteemustreturnallremainingfundstothedebtor(otherthanfundsalreadydisbursedtocreditors).11U.S.C.§1226(a).Onoccasion,changedcircumstanceswillaffectthedebtor'sabilitytomakeplanpayments.Acreditormayobjectorthreatentoobjecttoaplan,orthedebtormayinadvertentlyhavefailedtolistallcreditors.Insuchinstances,theplanmaybemodifiedeitherbeforeorafterconfirmation.11U.S.C.§§1223,1229.Modificationafterconfirmationisnotlimitedtoaninitiativebythedebtor,butmayalsobemadeattherequestofthetrusteeoranunsecuredcreditor.11U.S.C.§1229(a).MakingthePlanWorkTheprovisionsofaconfirmedplanbindthedebtorandeachcreditor.11U.S.C.§1227.Oncethecourtconfirmstheplan,thedebtormustmaketheplansucceed.Thedebtormustmakeregularpaymentstothetrustee,whichwillrequireadjustmenttolivingonafixedbudgetforaprolongedperiod.Furthermore,whileconfirmationoftheplanentitlesthedebtortoretainpropertyaslongaspaymentsaremade,thedebtormaynotincuranysignificantnewdebtwithoutconsultingthetrustee,becauseadditional
4Afeeischargedforconvertingacasetoacaseunderchapter7.Foradditionalinformationonfees,pleasevisitwww.mab.uscourts.gov.
debtmaycompromisethedebtor'sabilitytocompletetheplan.11U.S.C.§§1222(a)(1),1227.Inanyevent,failuretomaketheplanpaymentsmayresultindismissalofthecase.11U.S.C.§1208(c).Inaddition,thecourtmaydismissthecaseorconvertthecasetoaliquidationcaseunderchapter7oftheBankruptcyCodeuponashowingthatthedebtorhascommittedfraudinconnectionwiththecase.11U.S.C.§1208(d).TheChapter12DischargeThecourtmaygranta"hardshipdischarge"toachapter12debtoreventhoughthedebtorhasfailedtocompleteplanpayments.11U.S.C.§1228(b).Generally,ahardshipdischargeisavailableonlytoadebtorwhosefailuretocompleteplanpaymentsisduetocircumstancesbeyondthedebtor'scontrolandthroughnofaultofthedebtor.Creditorsmusthavereceivedatleastasmuchastheywouldhavereceivedinachapter7liquidationcase,andthedebtormustbeunabletomodifytheplan.Forexample,injuryorillnessthatprecludesemploymentsufficienttofundevenamodifiedplanmayserveasthebasisforahardshipdischarge.Thehardshipdischargedoesnotapplytoanydebtsthatarenondischargeableinachapter7case.See11U.S.C.§523
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WhatDebtorsShouldKnowAboutChapter13:
IndividualDebtAdjustment
ThechapteroftheBankruptcyCodeprovidingforadjustmentofdebtsofanindividualwithregularincome.(Chapter13allowsadebtortokeeppropertyandpaydebtsovertime,usuallythreetofiveyears.)
Background
Achapter13bankruptcyisalsocalledawageearner'splan.Itenablesindividualswithregularincometodevelopaplantorepayallorpartoftheirdebts.Underthischapter,debtorsproposearepaymentplantomakeinstallmentpaymentstocreditorsoverthreetofiveyears.Ifthedebtor'scurrentmonthlyincomeislessthantheapplicablestatemedian,theplanwillbeforthreeyearsunlessthecourtapprovesalongerperiod"forcause."1Ifthedebtor'scurrentmonthlyincomeisgreaterthantheapplicablestatemedian,theplangenerallymustbeforfiveyears.Innocasemayaplanprovideforpaymentsoveraperiodlongerthanfiveyears.11U.S.C.§1322(d).Duringthistimethelawforbidscreditorsfromstartingorcontinuingcollectionefforts.
Thissectiondiscussessixaspectsofachapter13proceeding:theadvantagesof
1 The"currentmonthlyincome"receivedbythedebtorisadefinedtermintheBankruptcyCodeandmeanstheaveragemonthlyincomereceivedoverthesixcalendarmonthsbeforecommencementofthebankruptcycase,includingregular
choosingchapter13;thechapter13eligibilityrequirements;howachapter13proceedingworks;makingtheplanwork;andthespecialchapter13discharge.
AdvantagesofChapter13
Chapter13offersindividualsanumberofadvantagesoverliquidationunderchapter7.Perhapsmostsignificantly,chapter13offerssomeindividualsanopportunitytosavetheirhomesfromforeclosure.Byfilingunderthischapter,individualscanstopforeclosureproceedingsandmaycuredelinquentmortgagepaymentsovertime.Inaddition,debtorsmuststillmakeallmortgagepaymentsthatcomedueduringthechapter13plan.Anotheradvantageofchapter13isthatitallowsindividualstoreschedulepaymentsofsecureddebts(otherthanamortgagefortheirprimaryresidence)andextendthemoverthelifeofthechapter13plan.Doingthismaylowerthepayments.Chapter13alsohasaspecialprovisionthatprotectsthirdpartieswhoareliablewiththedebtoron"consumerdebts."Thisprovisionmayprotectco‐signers.Finally,chapter13actslikeaconsolidationloan(butitisnotaloan)underwhichtheindividualmakestheplanpaymentstoachapter13trusteewhothendistributespaymentstocreditors.Individualswillhavenodirectcontactwithcreditorswhileunderchapter13protection.
contributionstohouseholdexpensesfromnondebtorsandincludingincomefromthedebtor'sspouseifthepetitionisajointpetition,butnotincludingsocialsecurityincomeorcertainpaymentsmadebecausethedebtoristhevictimofcertaincrimes.See11U.S.C.§101(10A).
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Chapter13Eligibility
Anyindividual,evenifself‐employedoroperatinganunincorporatedbusiness,iseligibleforchapter13reliefaslongastheindividual'sunsecureddebtsarelessthan$394,725andsecureddebtsarelessthan$1,184,200.11U.S.C.§109(e).2Theseamountsareadjustedperiodicallytoreflectchangesintheconsumerpriceindex.Acorporationorpartnershipmaynotbeachapter13debtor.Id.
Anindividualcannotfileunderchapter13oranyotherchapterif,duringthepreceding180days,apriorbankruptcypetitionwasdismissedduetothedebtor'swillfulfailuretoappearbeforethecourtorcomplywithordersofthecourtorwasvoluntarilydismissedaftercreditorssoughtrelieffromthebankruptcycourttorecoverpropertyuponwhichtheyholdliens.11U.S.C.§§109(g),362(d)and(e).
Inaddition,noindividualmaybeadebtorunderchapter13oranychapteroftheBankruptcyCodeunlessheorshehas,within180daysbeforefiling,receivedcreditcounselingfromanapprovedcreditcounselingagencyeitherinanindividualorgroupbriefing.11U.S.C.§§109,111.ThereareexceptionsinemergencysituationsorwheretheU.S.trusteehasdeterminedthatthereareinsufficientapprovedagenciestoprovidetherequiredcounseling.Ifadebt
2 ThesedollaramountsareeffectiveforcasesfiledafterApril1,2016.TheserateschangeonApril1ofeverythirdyear;theyareduetochangeagainonApril1,2019.
managementplanisdevelopedduringrequiredcreditcounseling,itmustbefiledwiththecourt.
HowChapter13Works
Achapter13casebeginsbyfilingapetitionwiththebankruptcycourtservingtheareawherethedebtorhasadomicileorresidence.Unlessthecourtordersotherwise,thedebtormustalsofilewiththecourt:(1)schedulesofassetsandliabilities;(2)ascheduleofcurrentincomeandexpenditures;(3)ascheduleofexecutorycontractsandunexpiredleases;and(4)astatementoffinancialaffairs.Fed.R.Bankr.P.1007(b).
Thedebtormustalsofileacertificateofcreditcounselingandacopyofanydebtrepaymentplandevelopedthroughcreditcounseling;evidenceofpaymentfromemployers,ifany,received60daysbeforefiling;astatementofmonthlynetincomeandanyanticipatedincreaseinincomeorexpensesafterfiling;andarecordofanyinterestthedebtorhasinfederalorstatequalifiededucationortuitionaccounts.11U.S.C.§521.Thedebtormustfileevidenceofcurrentandsufficientliabilityandpropertyinsurancewithrespecttoanyrealestateormotorvehiclethatthedebtorhasaninterestin.3Thisdoesnotincludeinsurancethatmayhavebeenobtainedbyapartyholdingasecurityinterestintheproperty(sometimesreferredtoasforce‐placedinsurance).
3 SeeLocalRules,Appendix1,Chapter13Rule13‐2.
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Thedebtormustprovidethechapter13trusteewithacopyofthetaxreturnortranscriptsforthemostrecenttaxyearaswellastaxreturnsfiledduringthecase(includingtaxreturnsforprioryearsthathadnotbeenfiledwhenthecasebegan).Id.Creditorsmayalsorequestthisinformationfromthedebtor.11U.S.C.§521(e)(2)(A).Individualsmayfileapetition;marriedcouplesmayfileajointpetition.11U.S.C.§302(a).(TheOfficialFormsmaybedownloadedfromtheInternetatwww.mab.uscourts.gov.Theyarealsoavailablefromthecourtsubjecttoprintingcosts.)
Thecourtsmustchargeafilingfee.Normallythefeesmustbepaidtotheclerkofthecourtuponfiling.Withthecourt'spermission,however,theymaybepaidininstallments.28U.S.C.§1930(a);Fed.R.Bankr.P.1006(b);BankruptcyCourtMiscellaneousFeeSchedule,Item8.Thenumberofinstallmentsislimitedtofour,andthedebtormustmakethefinalinstallmentnolaterthan120daysafterfilingthepetition.Fed.R.Bankr.P.1006(b);seealso,MLBR1006‐1,1006‐2.Forcauseshown,thecourtmayextendthetimeofanyinstallment,aslongasthelastinstallmentispaidnolaterthan180daysafterfilingthepetition.Id.Debtorsshouldbeawarethatfailuretopaythefilingfeemayresultindismissalofthecase.11U.S.C.§1307(c)(2).
InordertocompletetheOfficialBankruptcyFormsthatmakeupthepetition,statementoffinancialaffairs,andschedules,thedebtormustcompilethefollowinginformation:
Alistofallcreditorsandtheamountsandnatureoftheirclaims;
Thesource,amount,andfrequencyofthedebtor'sincome;
Alistofallofthedebtor'sproperty;and
Adetailedlistofthedebtor'smonthlylivingexpenses,i.e.,food,clothing,shelter,utilities,taxes,transportation,medicine,etc.
Marriedindividualsmustgatherinformationfortheirspouseiftheyarefilingajointpetition,separateindividualpetitions,orifonlyonespouseisfiling.Inasituationwhereonlyonespousefiles,theincomeandexpensesofthenon‐filingspouseisrequiredsothatthecourt,thetrusteeandcreditorscanevaluatethehousehold'sfinancialposition.
Whenanindividualfilesachapter13petition,animpartialtrusteeisappointedtoadministerthecase.11U.S.C.§1302.Insomedistricts,theU.S.trusteeappointsastandingtrusteetoserveinallchapter13cases.28U.S.C.§586(b).Thechapter13trusteebothevaluatesthecaseandservesasadisbursingagent,collectingpaymentsfromthedebtorandmakingdistributionstocreditors.11U.S.C.§1302(b).
Filingthepetitionunderchapter13"automaticallystays"(stops)mostcollectionactionsagainstthedebtororthedebtor'sproperty.11U.S.C.§362.Filingthepetitiondoesnot,however,staycertaintypesofactionslistedunder11U.S.C.§362(b),andthestaymaybeeffectiveonlyforashorttimeinsomesituations.Seee.g.,11U.S.C.§362(c).Thestayarisesbyoperationoflawandrequiresnojudicialaction.Aslongasthestayisineffect,creditorsgenerallymaynotinitiateorcontinuelawsuits,wagegarnishments,orevenmaketelephonecallsdemandingpayments.Thebankruptcyclerkgivesnoticeofthe
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bankruptcycasetoallcreditorswhosenamesandaddressesareprovidedbythedebtor.
Chapter13alsocontainsaspecialautomaticstayprovisionthatprotectsco‐debtors.Unlessthebankruptcycourtauthorizesotherwise,acreditormaynotseektocollecta"consumerdebt"fromanyindividualwhoisliableforthedebtalongwiththedebtor.11U.S.C.§1301(a).Consumerdebtsarethoseincurredbyanindividualprimarilyforapersonal,family,orhouseholdpurpose.11U.S.C.§101(8).
Individualsmayuseachapter13proceedingtosavetheirhomefromforeclosure.Theautomaticstaystopstheforeclosureproceedingassoonastheindividualfilesthechapter13petition.Theindividualmaythenbringthepast‐duepaymentscurrentoverareasonableperiodoftime.Nevertheless,thedebtormaystilllosethehomeifthemortgagecompanycompletestheforeclosuresaleunderstatelawbeforethedebtorfilesthepetition.11U.S.C.§1322(c).Thedebtormayalsolosethehomeifheorshefailstomaketheregularmortgagepaymentsthatcomedueafterthechapter13filing.
Between20and50daysafterthedebtorfilesthechapter13petition,thechapter13trusteewillholdameetingofcreditors.Duringthismeeting,thetrusteeplacesthedebtorunderoath,andboththetrusteeandcreditorsmayaskquestions.Thedebtormustattendthemeetingandanswerquestionsregardinghisorherfinancialaffairsandtheproposedtermsoftheplan.11U.S.C.§343.Ifamarriedcouplefilesajointpetition,bothdebtorsmustattendthecreditors'meetingandanswerquestions.Inordertopreservetheirindependentjudgment,bankruptcyjudgesare
prohibitedfromattendingthecreditors'meeting.11U.S.C.§341(c).Thepartiestypicallyresolveproblemswiththeplaneitherduringorshortlyafterthecreditors'meeting.Generally,thedebtorcanavoidproblemsbymakingsurethatthepetitionandplanarecompleteandaccuratebyconsultingwiththetrusteepriortothemeetingandbymakingsurethatthechapter13trusteehasalldocumentsrequiredbeforethemeeting.
Inachapter13case,toparticipateindistributionsfromthebankruptcyestate,allcreditorsmustfiletheirclaimswiththecourtwithin90daysafterthefirstdatesetforthemeetingofcreditors.Fed.R.Bankr.P.3002(c).Agovernmentalunit,however,has180daysfromthedatethecaseisfiledtofileaproofofclaim.11U.S.C.§502(b)(9).Seee.g.,Fed.R.Bankr.P.3001,etseq.;MLBR,Appendix1,Chapter13Rule13‐13.
Ifacreditorhasnotfiledaclaim,adebtorortrusteemayfileaclaimonbehalfofthatcreditor.Ifasecuredcreditorhasnotfiledaclaim,andtheplanprovidesfortreatmentofthatsecuredclaim,thedebtororthetrusteemustfileaclaimonbehalfofthatcreditor.SeeFed.R.Bank.P.3004;MLBR,Appendix1,Chapter13Rule13‐13.
Chapter13PlanandConfirmationHearing
Unlessthecourtgrantsanextension,thedebtormustfilearepaymentplanwiththepetitionorwithin14daysafterthepetitionisfiled.Fed.R.Bankr.P.3015.Aplanmustbesubmittedforcourtapproval(or“confirmation”)andmustprovideforpaymentsoffixedamountsto
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thetrusteeonaregularbasis,typicallymonthly.
Afteraplanisconfirmedthetrusteedistributesthefundstocreditorsaccordingtothetermsoftheconfirmedplan,whichmayoffercreditorslessthanfullpaymentontheirclaims.
Therearethreetypesofclaims:priority,secured,andunsecured.Priorityclaimsarethosegrantedspecialstatusbythebankruptcylaw,suchasmosttaxesandthecostsofbankruptcyproceeding.4Securedclaimsarethoseforwhichthecreditorhastherighttakebackcertainproperty(i.e.,thecollateral,suchasahouseorautomobile)ifthedebtordoesnotpaytheunderlyingdebt.Incontrasttosecuredclaims,unsecuredclaimsaregenerallythoseforwhichthecreditorhasnospecialrightstocollectagainstparticularpropertyownedbythedebtor.
Theplanmustpaypriorityclaimsinfullunlessaparticularprioritycreditoragreestodifferenttreatmentoftheclaimor,inthecaseofadomesticsupportobligation,unlessthedebtorcontributesall"disposableincome"‐discussedbelow‐toafive‐yearplan.11U.S.C.§1322(a).
Ifthedebtorwantstokeepthecollateralsecuringaparticularclaim,theplanmustprovidethattheholderofthesecuredclaimreceiveatleastthevalueofthecollateral.Iftheobligationunderlyingthesecuredclaimwasusedtobuythecollateral(e.g.,acarloan),andthedebtwasincurredwithincertaintimeframesbeforethebankruptcyfiling,theplanmustprovideforfullpaymentofthedebt,notjustthevalueofthecollateral(whichmaybelessduetodepreciation).Paymentstocertainsecuredcreditors
4 Section507setsforth10categoriesofunsecuredclaimswhichCongresshas,for
(i.e.,thehomemortgagelender),maybemadeovertheoriginalloanrepaymentschedule(whichmaybelongerthantheplan)solongasanyarrearageismadeupduringtheplan.Thedebtorshouldconsultanattorneytodeterminethepropertreatmentofsecuredclaimsintheplan.
Theplanneednotpayunsecuredclaimsinfullaslongitprovidesthatthedebtorwillpayallprojected"disposableincome"overan"applicablecommitmentperiod,"andaslongasunsecuredcreditorsreceiveatleastasmuchundertheplanastheywouldreceiveifthedebtor'sassetswereliquidatedunderchapter7.11U.S.C.§ 1325.Inchapter13,"disposableincome"isincome(otherthanchildsupportpaymentsreceivedbythedebtor)lessamountsreasonablynecessaryforthemaintenanceorsupportofthedebtorordependentsandlesscharitablecontributionsupto15%ofthedebtor'sgrossincome.Ifthedebtoroperatesabusiness,thedefinitionofdisposableincomeexcludesthoseamountswhicharenecessaryforordinaryoperatingexpenses.11U.S.C.§1325(b)(2)(A)and(B).
The"applicablecommitmentperiod"dependsonthedebtor'scurrentmonthlyincome.Theapplicablecommitmentperiodmustbethreeyearsifcurrentmonthlyincomeislessthanthestatemedianincomeforafamilyofthesamesize‐andfiveyearsifthecurrentmonthlyincomeisgreaterthanthestatemedianincomeforafamilyofthesamesize.11U.S.C.§1325(d).Theplanmaybelessthantheapplicablecommitmentperiod
publicpolicyreasons,givenpriorityofdistributionoverotherunsecuredclaims.
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(threeorfiveyears)onlyifunsecureddebtispaidinfulloverashorterperiod.
Within30daysafterfilingthebankruptcycase,eveniftheplanhasnotyetbeenapprovedbythecourt,thedebtormuststartmakingplanpaymentstothechapter13trustee.11U.S.C.§1326(a)(1).Ifanysecuredloanpaymentsorleasepaymentscomeduebeforethedebtor'splanisconfirmed(typicallythehomemortgageandautomobilepayments),thedebtormustmakeadequateprotectionpaymentsdirectlytothesecuredlenderorlessor‐deductingtheamountpaidfromtheamountthatwouldotherwisebepaidtothetrustee.Id.
ObjectionstoConfirmationandModifications
Creditorsmayobjecttoconfirmationoftheplaneither30daysafterthefirstdatesetofthefirstmeetingofcreditors,or30daysafterthereceiptofanamendedplan.TheprocedureisfoundintheLocalRules,Appendix1,Chapter13Rule13‐8.Fed.R.Bankr.P.2002(b).Whileavarietyofobjectionsmaybemade,themostfrequentonesarethatpaymentsofferedundertheplanarelessthancreditorswouldreceiveifthedebtor'sassetswereliquidatedorthatthedebtor'splandoesnotcommitallofthedebtor'sprojecteddisposableincomeforthethreeorfiveyearapplicablecommitmentperiod.Ifthecourtconfirmstheplan,thechapter13trusteewilldistributefundsreceivedundertheplan"assoonasispracticable."11U.S.C.§1326(a)(2).Ifthecourtdeclinestoconfirmtheplan,thedebtormayfileamodifiedplan.11U.S.C.§1323.Thedebtormayalsoconvertthecasetoa
5 Thereisafeechargedforconvertingacaseunderchapter13toacaseunderchapter7.
liquidationcaseunderchapter7.511U.S.C.§1307(a).Ifthecourtdeclinestoconfirmtheplanorthemodifiedplanandinsteaddismissesthecaseorconvertthecasetochapter7,thecourtmayauthorizethetrusteetokeepsomefundsforcosts,butthetrusteemustreturnallremainingfundstothedebtor(otherthanfundsalreadydisbursedorduetocreditors).See11U.S.C.§1326(a)(2).Ifthecaseisconverted,thechapter13trustee’sdutiesend,andanewtrusteeisappointedunderthechapter7case.
Occasionally,achangeincircumstancesmaycompromisethedebtor'sabilitytomakeplanpayments.Forexample,acreditormayobjectorthreatentoobjecttoaplan,orthedebtormayinadvertentlyhavefailedtolistallcreditors.Insuchinstances,theplanmaybemodifiedeitherbeforeorafterconfirmation.11U.S.C.§§1323,1329.Modificationafterconfirmationisnotlimitedtoaninitiativebythedebtor,butmaybeattherequestofthetrusteeoranunsecuredcreditor.11U.S.C.§1329(a).
TheDebtorMakingthePlanWork
Theprovisionsofaconfirmedplanbindthedebtorandeachcreditor.11U.S.C.§1327.Oncethecourtconfirmstheplan,thedebtormustmaketheplansucceed.Thedebtormustmakeregularpaymentstothetrustee,whichwillrequireadjustmenttolivingonafixedbudgetforaprolongedperiod.
Furthermore,whileconfirmationoftheplanentitlesthedebtortoretainpropertyaslongaspaymentsaremade,thedebtormaynotincurnewdebtwithout
Forinformationaboutfees,visitwww.mab.uscourts.gov.
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consultingthetrustee(andlikelyobtainingcourtapproval),becauseadditionaldebtmaycompromisethedebtor'sabilitytocompletetheplan.11U.S.C.§§1305(c),1322(a)(1),1327.
Ifthedebtorfailstomakethepaymentsdueundertheconfirmedplan,thecourtmaydismissthecaseorconvertittoaliquidationcaseunderchapter7oftheBankruptcyCode.11U.S.C.§1307(c).Thecourtmayalsodismissorconvertthedebtor'scaseifthedebtorfailstopayanypost‐filingdomesticsupportobligations(i.e.,childsupport,alimony),orfailstomakerequiredtaxfilingsduringthecase.11U.S.C.§§1307(c)and(e),1308,521.
PaymentstoCreditors
Planpaymentsaremadetothetrustee,andthetrusteedistributestheplanpaymentspursuanttothetermsoftheconfirmedchapter13plan.Unlessthecourtordersotherwise,thetrusteedoesnotmakedisbursementsuntilthecourtconfirmstheplan.
TheCourthasnoroleinthedisbursementofpayments.TheCourtdoesnotacceptplanpaymentsanddoesnotdisbursefunds.QuestionsaboutpaymentsshouldbemadedirectlytotheofficeoftheChapter13Trusteeassignedtothecase.
TheChapter13Discharge
Thebankruptcylawregardingthescopeofthechapter13dischargeiscomplexandcontinuestoevolve.Therefore,debtorsshouldconsultcompetentlegalcounselpriortofilingregardingthescopeofthechapter13discharge.
Achapter13debtorisentitledtoadischargeuponcompletionofallpaymentsunderthechapter13plansolongasthedebtor:(1)certifies(ifapplicable)thatalldomesticsupportobligationsthatcameduepriortomakingsuchcertificationhavebeenpaid;(2)hasnotreceivedadischargeinapriorcasefiledwithinacertaintimeframe(twoyearsforpriorchapter13casesandfouryearsforpriorchapter7,11and12cases);and(3)hascompletedanapprovedcourseinfinancialmanagement(iftheU.S.trusteeforthedebtor'sdistricthasdeterminedthatsuchcoursesareavailabletothedebtor).11U.S.C.§1328.Thecourtwillnotenterthedischarge,however,untilitdetermines,afternoticeandahearing,thatthereisnoreasontobelievethereisanypendingproceedingthatmightgiverisetoalimitationonthedebtor'shomesteadexemption.11U.S.C.§ 1328(h).
Thedischargereleasesthedebtorfromalldebtsprovidedforbytheplanordisallowed(undersection502),withlimitedexceptions.Creditorsprovidedforinfullorinpartunderthechapter13planmaynolongerinitiateorcontinueanylegalorotheractionagainstthedebtortocollectthedischargedobligations.
Asageneralrule,thedischargereleasesthedebtorfromalldebtsprovidedforbytheplanordisallowed,withtheexceptionofcertaindebtsdescribedin11U.S.C.§1328.Debtsnotdischargedinchapter13includecertainlongtermobligations(suchasahomemortgage);debtsforalimonyorchildsupport;certaintaxes;debtsformostgovernmentfundedorguaranteededucationalloansorbenefitoverpayments;debtsarisingfromdeathorpersonalinjurycausedbydrivingwhileintoxicatedorundertheinfluence
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ofdrugs;anddebtsforrestitutionoracriminalfineincludedinasentenceonthedebtor'sconvictionofacrime.Totheextentthattheyarenotfullypaidunderthechapter13plan,thedebtorwillstillberesponsibleforthesedebtsafterthebankruptcycasehasconcluded.Debtsformoneyorpropertyobtainedbyfalsepretenses,debtsforfraudordefalcationwhileactinginafiduciarycapacity,anddebtsforrestitutionordamagesawardedinacivilcaseforwillfulormaliciousactionsbythedebtorthatcausepersonalinjuryordeathtoapersonwillbedischargedunlessacreditortimelyfilesandprevailsinanactiontohavesuchdebtsdeclarednondischargeable.11U.S.C.§§1328,523(c);Fed.R.Bankr.P.4007(c).
Thedischargeinachapter13caseissomewhatbroaderthaninachapter7case.Debtsdischargeableinachapter13,butnotinchapter7,includedebtsforwillfulandmaliciousinjurytoproperty(asopposedtoaperson),debtsincurredtopaynondischargeabletaxobligations,anddebtsarisingfrompropertysettlementsindivorceorseparationproceedings.11U.S.C.§1328(a).
TheChapter13HardshipDischarge
Afterconfirmationofaplan,circumstancesmayarisethatpreventthedebtorfromcompletingtheplan.Insuchsituations,thedebtormayaskthecourttogranta"hardshipdischarge."11U.S.C.§ 1328(b).Generally,suchadischargeisavailableonlyif:(1)thedebtor'sfailuretocompleteplanpaymentsisduetocircumstancesbeyondthedebtor'scontrolandthroughnofaultofthedebtor;(2)creditorshavereceivedatleastasmuchastheywouldhave
receivedinachapter7liquidationcase;and(3)modificationoftheplanisnotpossible.Injuryorillnessthatprecludesemploymentsufficienttofundevenamodifiedplanmayserveasthebasisforahardshipdischarge.Thehardshipdischargeismorelimitedthanthedischargedescribedaboveanddoesnotapplytoanydebtsthatarenondischargeableinachapter7case.11U.S.C.§523.
ProSeDebtors
Chapter13isacomplexmechanismavailabletopeoplewhohavethemeanstopaysomeoralloftheirdebts,butrequiretheprotectionsaffordedundertheU.S.BankruptcyCode.However,thevastmajorityofthosewhofileunderthischapterdonotsucceed.Individualsconsideringchapter13arestronglyurgedtoretainacompetentandexperiencedbankruptcyattorney.Thejoboftheattorneyistoknowthelawandtocounselthedebtor.Thejobofthedebtoristomaketheplanwork.Thischaptermakesitdifficultforonepersontoperformthesetwojobs.
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DischargeinBankruptcy
Whatisadischargeinbankruptcy?
Abankruptcydischargereleasesthedebtorfrompersonalliabilityforcertainspecifiedtypesofdebts.Inotherwords,thedebtorisnolongerlegallyrequiredtopayanydebtsthataredischarged.
Thedischargeisapermanentorderprohibitingthecreditorsofthedebtorfromtakinganyformofcollectionactionondischargeddebts,includinglegalactionandcommunicationswiththedebtor,suchastelephonecalls,letters,andpersonalcontacts.
Althoughadebtorisnotpersonallyliablefordischargeddebts,avalidlien(i.e.,achargeuponspecificpropertytosecurepaymentofadebt)thathasnotbeenavoided(i.e.,madeunenforceable)inthebankruptcycasewillremainafterthebankruptcycase.Therefore,asecuredcreditormayenforcethelientorecoverthepropertysecuredbythelien.
Whendoesthedischargeoccur?
Thetimingofthedischargevaries,dependingonthechapterunderwhichthecaseisfiled.Inachapter7(liquidation)case,forexample,thecourtusuallygrantsthedischargepromptlyonexpirationofthetimefixedforfilingacomplaintobjectingtodischargeandthetimefixedforfilingamotiontodismissthecaseforsubstantialabuse(60daysfollowingthefirstdatesetforthe341meeting).Typically,thisoccursaboutfourmonthsafterthedatethedebtorfilesthepetitionwiththeclerkofthebankruptcycourt.Inindividualchapter11cases,and
incasesunderchapter12(adjustmentofdebtsofafamilyfarmerorfisherman)and13(adjustmentofdebtsofanindividualwithregularincome),thecourtgenerallygrantsthedischargeassoonaspracticableafterthedebtorcompletesallpaymentsundertheplan.Sinceachapter12orchapter13planmayprovideforpaymentstobemadeoverthreetofiveyears,thedischargetypicallyoccursaboutfouryearsafterthedateoffiling.Thecourtmaydenyanindividualdebtor'sdischargeinachapter7or13caseifthedebtorfailstocomplete"aninstructionalcourseconcerningfinancialmanagement."
TheBankruptcyCodeprovideslimitedexceptionstothe"financialmanagement"requirement:iftheU.S.trusteedeterminesthereareinadequateeducationalprogramsavailable,orifthedebtorisdisabledorincapacitatedoronactivemilitarydutyinacombatzone.
Howdoesthedebtorobtainadischarge?
Unlessthereislitigationinvolvingobjectionstothedischarge,thedebtorwillusuallyautomaticallyreceiveadischarge.TheFederalRulesofBankruptcyProcedureprovidefortheclerkofthebankruptcycourttomailacopyoftheorderofdischargetoallcreditors,theU.S.trustee,thetrusteeinthecase,andthetrustee'sattorney,ifany.Thedebtorandthedebtor'sattorneyalsoreceivecopiesofthedischargeorder.Thenotice,whichissimplyacopyofthefinalorderofdischarge,doesnotspecificallyidentifythosedebtsdeterminedtobedischargeable,i.e.,coveredbythedischarge.Thenoticeinformscreditorsgenerallythatthedebtsowedtothem
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havebeendischargedandthattheyshouldnotattemptanyfurthercollection.Theyarecautionedinthenoticethatcontinuingcollectioneffortscouldsubjectthemtopunishmentforcontempt.Anyinadvertentfailureonthepartoftheclerktosendthedebtororanycreditoracopyofthedischargeorderpromptlywithinthetimerequiredbytherulesdoesnotaffectthevalidityoftheordergrantingthedischarge.
Areallofthedebtor’sdebtsdischargedoronlysome?
Notalldebtsaredischarged.ThedebtsdischargedvaryundereachchapteroftheBankruptcyCode.Section523(a)oftheCodespecificallyexceptsvariouscategoriesofdebtsfromthedischargegrantedtoindividualdebtors.Congresshasdeterminedthatthesetypesofdebtsarenotdischargeableforpublicpolicyreasons(basedeitheronthenatureofthedebtorthefactthatthedebtswereincurredduetoimproperbehaviorofthedebtor,suchasthedebtordrivingundertheinfluenceofdrugsoralcohol).
Thereare19categoriesofdebtexceptedfromdischargeunderchapters7,11,and12. Amorelimitedlistofexceptionsappliestocasesunderchapter13.
Generallyspeaking,theexceptionstodischargeapplyautomaticallyifthelanguageprescribedbysection523(a)applies.Themostcommontypesofnondischargeabledebtsarecertaintypesoftaxclaims;debtsnotsetforthbythedebtoronthelistsandschedulesthedebtormustfilewiththecourt;debtsforspousalorchildsupportoralimony;debtsforwillfulandmaliciousinjuriestopersonorproperty;debtstogovernmentalunitsforfinesand
penalties;debtsformostgovernmentfundedorguaranteededucationalloansorbenefitoverpayments;debtsforpersonalinjurycausedbythedebtor'soperationofamotorvehiclewhileintoxicated;debtsowedtocertaintax‐advantagedretirementplans,anddebtsforcertaincondominiumorcooperativehousingfees.
Thetypesofdebtsdescribedinsections523(a)(2),(4),and(6)(obligationsaffectedbyfraudormaliciousness)arenotautomaticallyexceptedfromdischarge.Creditorsmustaskthecourttodeterminethatthesedebtsareexceptedfromdischarge.Intheabsenceofanaffirmativerequestbythecreditorandthegrantingoftherequestbythecourt,thetypesofdebtssetoutinsections523(a)(2),(4),and(6)willbedischarged.
Aslightlybroaderdischargeofdebtsisavailabletoadebtorinachapter13casethaninachapter7case.Debtsdischargeableinachapter13,butnotinchapter7,includedebtsforwillfulandmaliciousinjurytoproperty,debtsincurredtopaynon‐dischargeabletaxobligations,anddebtsarisingfrompropertysettlementsindivorceorseparationproceedings.
Althoughachapter13debtorgenerallyreceivesadischargeonlyaftercompletingallpaymentsrequiredbythecourt‐approved(i.e.,"confirmed")repaymentplan,therearesomelimitedcircumstancesunderwhichthechapter13debtormayrequestthecourttogranta"hardshipdischarge"eventhoughthedebtorhasfailedtocompleteplanpayments.Suchadischargeisavailableonlytoadebtorwhosefailuretocompleteplanpaymentsisduetocircumstancesbeyondthedebtor'scontrolandcreditorshavereceivedat
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leastwhattheywouldhaveinachapter7(liquidation).Thescopeofachapter13"hardshipdischarge"issimilartothatinachapter7casewithregardtothetypesofdebtsthatareexceptedfromthedischarge.
Ahardshipdischargealsoisavailableinchapter12ifthefailuretocompleteplanpaymentsisdueto"circumstancesforwhichthedebtorshouldnotjustlybeheldaccountable."
Doesthedebtorhavetherighttoadischargeorcancreditorsobjecttothedischarge?
Inchapter7cases,thedebtordoesnothaveanabsoluterighttoadischarge.Anobjectiontothedebtor'sdischargemaybefiledbyacreditor,bythetrusteeinthecase,orbytheU.S.trustee.Creditorsreceiveanoticeshortlyafterthecaseisfiledthatsetsforthmuchimportantinformation,includingthedeadlineforobjectingtothedischarge.Toobjecttothedebtor'sdischarge,acreditormustfileacomplaintinthebankruptcycourtbeforethedeadlinesetoutinthenotice.Filingacomplaintstartsalawsuitreferredtoinbankruptcyasan"adversaryproceeding."
Thecourtmaydenyachapter7dischargeforanyofthereasonsdescribedinsection727(a)oftheBankruptcyCode,includingfailuretoproviderequestedtaxdocuments;failuretocompleteacourseonpersonalfinancialmanagement;transferorconcealmentofpropertywithintenttohinder,delay,ordefraudcreditors;destructionorconcealmentofbooksorrecords;perjuryandotherfraudulentacts;failuretoaccountforthelossofassets;violationofacourtorderorreceivingadischargeinanearliercase
commencedwithincertaintimeframes(discussedbelow)beforethedatethepetitionwasfiled.Iftheissueofthedebtor'srighttoadischargegoestotrial,theobjectingpartyhastheburdenofprovingallthefactsessentialtotheobjection.
Inchapter12andchapter13cases,thedebtorisusuallyentitledtoadischargeuponcompletionofallpaymentsundertheplan.Asinchapter7,however,dischargemaynotoccurinchapter13ifthedebtorfailstocompletearequiredcourseonpersonalfinancialmanagement.Adebtorisalsoineligibleforadischargeinchapter13ifheorshereceivedapriordischargeinanothercasecommencedwithintimeframesdiscussedinthenextparagraph.Unlikechapter7,creditorsdonothavestandingtoobjecttothedischargeofachapter12orchapter13debtor.Creditorscanobjecttoconfirmationoftherepaymentplan,butcannotobjecttothedischargeifthedebtorhascompletedmakingplanpayments.
Canadebtorreceiveaseconddischargeinalaterchapter7case?
Thecourtwilldenyadischargeinalaterchapter7caseifthedebtorreceivedadischargeunderchapter7orchapter11inacasefiledwithineightyearsbeforethesecondpetitionisfiled.Thecourtwillalsodenyachapter7dischargeifthedebtorpreviouslyreceivedadischargeinachapter12orchapter13casefiledwithinsixyearsbeforethedateofthefilingofthesecondcaseunless(1)thedebtorpaidall"allowedunsecured"claimsintheearliercaseinfull,or(2)thedebtormadepaymentsundertheplanintheearliercasetotalingatleast70
71
percentoftheallowedunsecuredclaimsandthedebtor'splanwasproposedingoodfaithandthepaymentsrepresentedthedebtor'sbesteffort.
Adebtorisineligiblefordischargeunderchapter13ifheorshereceivedapriordischargeinachapter7,11,or12casefiledfouryearsbeforethecurrentcaseorinachapter13casefiledtwoyearsbeforethecurrentcase.
Canthedischargeberevoked?
Thecourtmayrevokeadischargeundercertaincircumstances.Forexample,atrustee,creditor,ortheU.S.trusteemayrequestthatthecourtrevokethedebtor'sdischargeinachapter7casebasedonallegationsthatthedebtor:obtainedthedischargefraudulently;failedtodisclosethefactthatheorsheacquiredorbecameentitledtoacquirepropertythatwouldconstitutepropertyofthebankruptcyestate;committedoneofseveralactsofimproprietydescribedinsection727(a)(6)oftheBankruptcyCode;orfailedtoexplainanymisstatementsdiscoveredinanauditofthecaseorfailstoprovidedocumentsorinformationrequestedinanauditofthecase.Typically,arequesttorevokethedebtor'sdischargemustbefiledwithinoneyearofthedischargeor,insomecases,beforethedatethatthecaseisclosed.Thecourtwilldecidewhethersuchallegationsaretrueand,ifso,whethertorevokethedischarge.
Inchapter11,12,and13cases,ifconfirmationofaplanorthedischargeisobtainedthroughfraud,thecourtcanrevoketheorderofconfirmationordischarge.
Maythedebtorpayadischargeddebtafterthebankruptcycasehasbeenconcluded?
Adebtorwhohasreceivedadischargemayvoluntarilyrepayanydischargeddebt.Adebtormayrepayadischargeddebteventhoughitcannolongerbelegallyenforced.
Whatcanthedebtordoifacreditorattemptstocollectadischargeddebtafterthecaseisconcluded?
Ifacreditorattemptscollectioneffortsonadischargeddebt,thedebtorcanfileamotionwiththecourt,reportingtheactionandaskingthatthecasebereopenedtoaddressthematter.Acreditorcanbesanctionedbythecourtforviolatingthedischargeinjunction.Thenormalsanctionforviolatingthedischargeinjunctioniscivilcontempt,whichisoftenpunishablebyafine.
Mayanemployerterminateadebtor'semploymentsolelybecausethepersonwasadebtororfailedtopayadischargeddebt?
Thelawprohibitsdiscriminatorytreatmentofdebtorsbybothgovernmentalunitsandprivateemployers.Agovernmentalunitorprivateemployermaynotdiscriminateagainstapersonsolelybecausethepersonwasadebtor,wasinsolventbeforeorduringthecase,orhasnotpaidadebtthatwasdischargedinthecase.Thelawprohibitsthefollowingformsofgovernmentaldiscrimination:terminatinganemployee;discriminatingwithrespecttohiring;ordenying,revoking,suspending,ordecliningtorenewalicense,franchise,orsimilarprivilege.Aprivateemployermaynotdiscriminate
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withrespecttoemploymentifthediscriminationisbasedsolelyuponthebankruptcyfiling.
Howcanthedebtorobtainanothercopyofthedischargeorder?
Ifthedebtorlosesormisplacesthedischargeorder,anothercopycanbeobtainedbycontactingtheclerkofthebankruptcycourtthatenteredtheorder.Theclerkwillchargeafeeforsearchingthecourtrecordsandtherewillbeadditionalfeesformakingandcertifyingcopies,ifacertifiedorderisrequired.If
thecasehasbeenclosedandarchivedtherewillalsobearetrievalfee,andobtainingthecopywilltakelonger.
Thedischargeordermaybeavailableelectronically.ThePACERsystemprovidesthepublicwithelectronicaccesstoselectedcaseinformationthroughapersonalcomputerlocatedinmanyclerk'soffices.UsersmustsetupanaccounttoacquireaccesstoPACER,andmustpayaper‐pagefeetodownloadandcopydocumentsfiledelectronically.
AdditionalinformationaboutPACERisfoundatwww.pacer.gov.
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These Required Lists, Schedules, Statements and Fees are current as of April 2016.
To be sure you have the most up‐to‐date information,
Visit www.mab.uscourts.gov
Go to Forms
Go to Official Forms (this will bring you to the United States Courts website)
Download Form Number B 2000
74
B2000 (Form 2000) (04/16)
UNITED STATES BANKRUPTCY COURT
REQUIRED LISTS, SCHEDULES, STATEMENTS, AND FEES
Voluntary Chapter 7 Case
☐ Filing Fee of $245. If the fee is to be paid in installments or the debtor requests a waiver of the fee, the debtor must be an individual and must
file a signed application for court approval. Official Form 103A or 103B and Fed.R.Bankr.P. 1006(b), (c).
☐ Administrative fee of $75 and trustee surcharge of $15. If the debtor is an individual and the court grants the debtor’s request, these fees are
payable in installments or may be waived.
☐ Voluntary Petition for Individuals Filing for Bankruptcy (Official Form 101) or Voluntary Petition for Non-Individuals Filing for
Bankruptcy (Official Form 201); Names and addresses of all creditors of the debtor. Must be filed WITH the petition. Fed.R.Bankr.P. 1007(a)(1).
☐ Notice to Individual Debtor with Primarily Consumer Debts under 11 U.S.C. § 342(b) (Director’s Form 2010), if applicable. Required if
the debtor is an individual with primarily consumer debts. The notice must be GIVEN to the debtor before the petition is filed. Certification that the
notice has been given must be FILED with the petition or within 15 days. 11 U.S.C. §§ 342(b), 521(a)(1)(B)(iii), 707(a)(3). Official Form 101 contains spaces for the certification.
☐ Bankruptcy Petition Preparer’s Notice, Declaration, and Signature (Official Form 119). Required if a “bankruptcy petition preparer”
prepares the petition. Must be submitted WITH the petition. 11 U.S.C. § 110(b)(2).
☐ Statement About Your Social Security Numbers (Official Form 121). Required if the debtor is an individual. Must be submitted WITH the
petition. Fed.R.Bankr.P. 1007(f).
☐ Credit Counseling Requirement (Official Form 101); Certificate of Credit Counseling and Debt Repayment Plan, if applicable; Section
109(h)(3) certification or § 109(h)(4) request, if applicable. If applicable, the Certificate of Credit Counseling and Debt Repayment Plan must be filed with the petition or within 14 days. If applicable, the § 109(h)(3) certification or the § 109(h)(4) request must be filed WITH the petition. Fed.R.Bankr.P.
1007(b)(3), (c).
☐ Statement disclosing compensation paid or to be paid to a “bankruptcy petition preparer” (Director’s Form 2800). Required if a
“bankruptcy petition preparer” prepares the petition. Must be submitted WITH the petition. 11 U.S.C. §110(h)(2).
☐ Statement of Your Current Monthly Income (Official Form 122A). Required if the debtor is an individual. Must be filed with the petition
or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Schedules of assets and liabilities (Official Forms 106 or 206). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b),(c).
☐ Schedule of Executory Contracts and Unexpired Leases (Schedule G of Official Form 106 or 206). Must be filed with the petition or within
14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Schedules of Your Income and Your Expenses (Schedules I and J of Official Form 106). If the debtor is an individual, Schedules I and J of
Official Form 106 must be filed with the petition or within 14 days. 11 U.S.C. § 521(1) and Fed.R.Bankr.P. 1007(b), (c).
☐ Statement of financial affairs (Official Form 107 or 207). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Copies of all payment advices or other evidence of payment received by the debtor from any employer within 60 days before the filing of
the petition. Required if the debtor is an individual. Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Statement of Intention for Individuals Filing Under Chapter 7 (Official Form 108). Required ONLY if the debtor is an individual and the
schedules of assets and liabilities contain debts secured by property of the estate or personal property subject to an unexpired lease. Must be filed within
30 days or by the date set for the Section 341 meeting of creditors, whichever is earlier. 11 U.S.C. §§ 362(h) and 521(a)(2).
☐ Statement disclosing compensation paid or to be paid to the attorney for the debtor (Director's Form 2030). Required if the debtor is
represented by an attorney. Must be filed within 14 days or any other date set by the court. 11 U.S.C. § 329 and Fed.R.Bankr.P. 2016(b).
☐ Certification About a Financial Management Course (Official Form 423), if applicable. Required if the debtor is an individual, unless the
course provider has notified the court that the debtor has completed the course. Must be filed within 60 days of the first date set for the meeting of
creditors. 11 U.S.C. § 727(a)(11) and Fed.R.Bankr.P. 1007(b)(7), (c).
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B2000 (Form 2000) (04/16)
* Amount subject to adjustment on 4/01/19, and every three years thereafter with respect to cases commenced on or after the date of adjustment.
REQUIRED LISTS, SCHEDULES, STATEMENTS, AND FEES
Voluntary Chapter 11 Case ☐ Filing fee of $1,167. If the fee is to be paid in installments, the debtor must be an individual and must file a signed application for court
approval. Official Form 103A and Fed.R.Bankr.P. 1006(b).
☐ Administrative fee of $550. If the debtor is an individual and the court grants the debtor’s request, this fee is payable in installments.
☐ United States Trustee quarterly fee. The debtor, or trustee if one is appointed, is required also to pay a fee to the United States trustee at the
conclusion of each calendar quarter until the case is dismissed or converted to another chapter. The calculation of the amount to be paid is set out in 28
U.S.C. § 1930(a)(6). As authorized by 28 U.S.C. § 1930(a)(7), the quarterly fee is paid to the clerk of court in chapter 11 cases in Alabama and North
Carolina.
☐ Voluntary Petition for Individuals Filing for Bankruptcy (Official Form 101) or Voluntary Petition for Non-Individuals Filing for
Bankruptcy (Official Form 201); Names and addresses of all creditors of the debtor. Must be filed WITH the petition. Fed.R.Bankr.P. 1007(a)(1).
☐ Notice to Individual Debtor with Primarily Consumer Debts under 11 U.S.C. § 342(b) (Director's Form 2010), if applicable. Required if
the debtor is an individual with primarily consumer debts. The notice must be GIVEN to the debtor before the petition is filed. Certification that the
notice has been given must be FILED with the petition or within 15 days. 11 U.S.C. §§ 342(b), 521(a)(1)(B)(iii), 1112(e). Official Form 101 contains
spaces for the certification.
☐ Bankruptcy Petition Preparer’s Notice, Declaration, and Signature (Official Form 119). Required if a “bankruptcy petition preparer”
prepares the petition. Must be submitted WITH the petition. 11 U.S.C. § 110(b)(2).
☐ Statement About Your Social Security Numbers (Official Form 121). Required if the debtor is an individual. Must be submitted WITH the
petition. Fed.R.Bankr.P. 1007(f).
☐ Credit Counseling Requirement (Official Form 101); Certificate of Credit Counseling and Debt Repayment Plan, if applicable; Section
109(h)(3) certification or § 109(h)(4) request, if applicable. If applicable, the Certificate of Credit Counseling and Debt Repayment Plan must be filed
with the petition or within 14 days. If applicable, the § 109(h)(3) certification or the § 109(h)(4) request must be filed WITH the petition. Fed.R.Bankr.P. 1007(b)(3), (c).
☐ Statement disclosing compensation paid or to be paid to a “bankruptcy petition preparer” (Director’s Form 2800). Required if a
“bankruptcy petition preparer” prepares the petition. Must be submitted WITH the petition. 11 U.S.C. §110(h)(2).
☐ Statement of Your Current Monthly Income (Official Form 122B). Required if the debtor is an individual. Must be filed with the petition
or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ For Individual Chapter 11 Cases: List of Creditors Who Have the 20 Largest Unsecured Claims Against You and Are Not Insiders
(Official Form 104) or Chapter 11 or Chapter 9 Cases: List of Creditors Who Have the 20 Largest Unsecured Claims and Are Not Insiders (Official Form 204). Must be filed WITH the petition. Fed.R.Bankr.P. 1007(d).
☐ Names and addresses of equity security holders of the debtor. Must be filed with the petition or within 14 days, unless the court orders
otherwise. Fed.R.Bankr.P. 1007(a)(3).
☐ Schedules of Assets and Liabilities (Official Form 106 or 206). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b),
(c).
☐ Schedule of Executory Contracts and Unexpired Leases (Schedule G of Official Form 106 or 206). Must be filed with the petition or within
14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Schedules of Current Income and Expenditures. If the debtor is an individual, Schedules I and J of Official Form 106 must be used for this
purpose. Must be filed with the petition or within 14 days. 11 U.S.C. § 521(1) and Fed.R.Bankr.P. 1007(b), (c).
☐ Statement of Financial Affairs (Official Form 107 or 207). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Copies of all payment advices or other evidence of payment received by debtor from any employer within 60 days before the filing of the
petition. Required if the debtor is an individual. Must be filed WITH the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Statement disclosing compensation paid or to be paid to the attorney for the debtor (Director’s Form 2030), if applicable. Required if the
debtor is represented by an attorney. Must be filed within 14 days or any other date set by the court. 11 U.S.C. § 329 and Fed.R.Bankr.P. 2016(b).
☐ Certification About a Financial Management Course (Official Form 423), if applicable. Required if the debtor is an individual and §
1141(d)(3) applies, unless the course provider has notified the court that the debtor has completed the course. Must be filed no later than the date of the
last payment under the plan or the filing of a motion for a discharge under § 1141(d)(5)(B). 11 U.S.C. § 1141(d)(3) and Fed.R.Bankr.P. 1007(b)(7), (c).
☐ Statement concerning pending proceedings of the kind described in § 522(q)(1), if applicable. Required if the debtor is an individual and
has claimed exemptions under state or local law as described in § 522(b)(3) in excess of $160,375*. Must be filed no later than the date of the last payment made under the plan or the date of the filing of a motion for a discharge under § 1141(d)(5)(B). 11 U.S.C. § 1141(d)(5)(C) and Fed.R.Bankr.P.
1007(b)(8), (c).
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B2000 (Form 2000) (04/16)
* Amount subject to adjustment on 4/01/19, and every three years thereafter with respect to cases commenced on or after the date of adjustment.
REQUIRED LISTS, SCHEDULES, STATEMENTS, AND FEES
Chapter 12 Case
☐ Filing Fee of $200. If the fee is to be paid in installments, the debtor must be an individual and must file a signed application for court
approval. Official Form 103A and Fed.R.Bankr.P. 1006(b).
☐ Administrative fee of $75. If the debtor is an individual and the court grants the debtor's request, this fee is payable in installments.
☐ Voluntary Petition for Individuals Filing for Bankruptcy (Official Form 101) or Voluntary Petition for Non-Individuals Filing for
Bankruptcy (Official Form 201). Names and addresses of all creditors of the debtor. Must be filed WITH the petition. Fed.R.Bankr.P. 1007(a)(1).
☐ Notice to Individual Debtor with Primarily Consumer Debts under 11 U.S.C. § 342(b) (Director's Form 2010), if applicable. Required if
the debtor is an individual with primarily consumer debts. The notice must be GIVEN to the debtor before the petition is filed. Certification that the
notice has been given must be FILED with the court in a timely manner. 11 U.S.C. §§ 342(b), 521(a)(1)(B)(iii). Official Form 101 contains spaces for the certification.
☐ Bankruptcy Petition Preparer’s Notice, Declaration, and Signature (Official Form 119). Required if a “bankruptcy petition preparer”
prepares the petition. Must be submitted WITH the petition. 11 U.S.C. § 110(b)(2).
☐ Statement of Your Social Security Numbers (Official Form 121). Required if the debtor is an individual. Must be submitted WITH the
petition. Fed.R.Bankr.P. 1007(f).
☐ Credit Counseling Requirement (Official Form 101); Certificate of Credit Counseling and Debt Repayment Plan, if applicable; Section
109(h)(3) certification or § 109(h)(4) request, if applicable. If applicable, the Certificate of Credit Counseling and Debt Repayment Plan must be filed with the petition or within 14 days. If applicable, the § 109(h)(3) certification or the § 109(h)(4) request must be filed WITH the petition. Fed.R.Bankr.P.
1007(b)(3), (c).
☐ Statement disclosing compensation paid or to be paid to a “bankruptcy petition preparer” (Director’s Form 2800). Required if a
“bankruptcy petition preparer” prepares the petition. Must be submitted WITH the petition. 11 U.S.C. §110(h)(2).
☐ Schedules of Assets and Liabilities (Official Form 106 or 206). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b),
(c).
☐ Schedule of Executory Contracts and Unexpired Leases (Schedule G of Official Form 106 or 206). Must be filed with the petition or within
14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Schedules of Current Income and Expenditures. If the debtor is an individual, Schedule I and J of Official Form 106 must be used for this
purpose. Must be filed with the petition or within 14 days. 11 U.S.C. § 521(1) and Fed.R.Bankr.P. 1007(b), (c).
☐ Statement of Financial Affairs (Official Form 107 or 207). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Copies of all payment advices or other evidence of payment received by the debtor from any employer within 60 days before the filing of the
petition if the debtor is an individual. Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Statement disclosing compensation paid or to be paid to the attorney for the debtor (Director’s Form 2030), if applicable. Must be filed
within 14 days or any other date set by the court. 11 U.S.C. § 329 and Fed.R.Bankr.P. 2016(b).
☐ Chapter 12 Plan. Must be filed within 90 days. 11 U.S.C. § 1221.
☐ Statement concerning pending proceedings of the kind described in § 522(q)(1), if applicable. Required if the debtor is an individual and
has claimed exemptions under state or local law as described in §522(b)(3) in excess of $160,375*. Must be filed no later than the date of the last payment made under the plan or the date of the filing of a motion for a discharge under § 1228(b). 11 U.S.C. § 1228(f) and Fed.R.Bankr.P. 1007(b)(8), (c).
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B2000 (Form 2000) (04/16)
* Amount subject to adjustment on 4/01/19, and every three years thereafter with respect to cases commenced on or after the date of adjustment.
REQUIRED LISTS, SCHEDULES, STATEMENTS, AND FEES
Chapter 13 Case
☐ Filing fee of $235. If the fee is to be paid in installments, the debtor must file a signed application for court approval. Official Form 103A and
Fed.R.Bankr.P. 1006(b).
☐ Administrative fee of $75. If the court grants the debtor’s request, this fee is payable in installments.
☐ Voluntary Petition for Individuals Filing for Bankruptcy (Official Form 101). Names and addresses of all creditors of the debtor. Must
be filed WITH the petition. Fed.R.Bankr.P. 1007(a)(1).
☐ Notice to Individual Debtor with Primarily Consumer Debts under 11 U.S.C. § 342(b) (Director’s Form 2010), if applicable. Required if
the debtor is an individual with primarily consumer debts. The notice must be GIVEN to the debtor before the petition is filed. Certification that the
notice has been given must be FILED with the petition or within 15 days. 11 U.S.C. §§ 342(b), 521(a)(1)(B)(iii), 1307(c)(9). Official Form 101 contains spaces for the certification.
☐ Bankruptcy Petition Preparer’s Notice, Declaration, and Signature (Official Form 119). Required if a “bankruptcy petition preparer”
prepares the petition. Must be submitted WITH the petition. 11 U.S.C. § 110(b)(2).
☐ Statement of Social Security Number (Official Form 121). Must be submitted WITH the petition. Fed.R.Bankr.P. 1007(f).
☐ Credit Counseling Requirement (Official Form 101); Certificate of Credit Counseling and Debt Repayment Plan, if applicable; Section
109(h)(3) certification or § 109(h)(4) request, if applicable. If applicable, the Certificate of Credit Counseling and Debt Repayment Plan must be filed
with the petition or within 14 days. If applicable, the § 109(h)(3) certification or the § 109(h)(4) request must be filed WITH the petition. Fed.R.Bankr.P. 1007(b)(3), (c).
☐ Statement disclosing compensation paid or to be paid to a “bankruptcy petition preparer” (Director's Form 2800). Required if a
“bankruptcy petition preparer” prepares the petition. Must be submitted WITH the petition. 11 U.S.C. §110(h)(2).
☐ Statement of Your Current Monthly Income (Official Form 122C). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007.
☐ Schedules of Assets and Liabilities (Official Form 106). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Schedule of Executory Contracts and Unexpired Leases (Schedule G of Official Form 106). Must be filed with the petition or within 14
days. Fed.R.Bankr.P. 1007(b), (c).
☐ Schedules of Current Income and Expenditures (Schedules I and J of Official Form 106). Must be filed with the petition or within 14 days.
11 U.S.C. § 521(1) and Fed.R.Bankr.P. 1007(b), (c).
☐ Statement of Financial Affairs (Official Form 107). Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Copies of all payment advices or other evidence of payment received by the debtor from any employer within 60 days before the filing of
the petition. Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 1007(b), (c).
☐ Chapter 13 Plan. Must be filed with the petition or within 14 days. Fed.R.Bankr.P. 3015.
☐ Statement disclosing compensation paid or to be paid to the attorney for the debtor (Director’s Form 2030), if applicable. Must be filed
within 14 days or any other date set by the court. 11 U.S.C. § 329 and Fed.R.Bankr.P. 2016(b).
☐ Certification About a Financial Management Course (Official Form 423), if applicable. Must be filed no later than the date of the last
payment made under the plan or the date of the filing of a motion for a discharge under § 1328(b), unless the course provider has notified the court that the debtor has completed the course. 11 U.S.C. § 1328(g)(1) and Fed.R.Bankr.P. 1007(b)(7), (c).
☐ Statement concerning pending proceedings of the kind described in § 522(q)(1), if applicable. Required if the debtor has claimed
exemptions under state or local law as described in §522(b)(3) in excess of $160,375*. Must be filed no later than the date of the last payment made under
the plan or the date of the filing of a motion for a discharge under § 1328(b). 11 U.S.C. § 1328(h) and Fed.R.Bankr.P. 1007(b)(8), (c).
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GLOSSARY
Thesedefinitionsarefortermsusedfrequentlythroughoutthismanualandareincludedonlyforguidance.Itisnotasubstituteforlegaladvice.ForadditionaldefinitionsoftermsusedinbankruptcyandintheU.S.BankruptcyCode.,pleasereferto11U.S.C.§101.
ADVERSARYPROCEEDING
AlawsuitarisinginabankruptcycasethatiscommencedbythefilingofacomplaintintheBankruptcyCourt.SeeFed.R.Bankr.P.7001,etseq.
AFFIDAVIT
Awrittenstatementoffacts,confirmedbytheoathtakenbeforeanofficerhavingauthoritytoadministersuchoath(suchasanotarypublic)oraffirmationofthepartyingmakingit.SeealsoVERIFICATION.
ANNUITY
Acontractthatprovidesforperiodicpaymentsofmoney,eitherforlifeorforanumberofyears.
ANSWER
Adefendant’sresponsetoacomplaintfiledinanadversaryproceeding.Sincethedefendantmaybeaplaintiff,butalsoadefendantincounterclaim,theresponseisalsocalledanAnswer.
APPELLANT
Thepartywhofilesandseeksanappealofajudge’sdecision.
APPELLEE
Thepartyagainstwhomtheappealhasbeentaken.Theappelleeisthepartywhohasnointerestinobjectingtothecourt’sjudgment,decisionororder.
APPLICATION
Aformalrequest,usuallyinwriting,tothecourttograntcertainrelief.Seealso,MOTION.
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BANKRUPTCYPETITIONPREPARER
Apersonorbusiness,otherthanalawyeradmittedtopracticeintheUSBankruptcyCourtfortheDistrictofMassachusettsandotherthansomeonewhoworksforandissupervisedbythatlawyerthatchargesafeetopreparebankruptcydocuments.Underadebtor’sdirectionandcontrol,thebankruptcypetitionpreparertypesthebankruptcyformsforthedebtortofile.Becausetheyarenotattorneys,theycannotgivelegaladviceorrepresentthedebtorinbankruptcycourt.Alsocalledtypingservices.Seealso§110.
BARDATE
Traditionallythelastdatesettotakeaspecificaction.
BUSINESSDEBT
Adebtthatyouincurredtoobtainmoneyforabusinessorinvestmentorincurredthroughtheoperationofthebusinessorinvestment.
CERTIFICATEOFSERVICE
Astatementfiledwithapleading,motion,noticeorotherdocumentthatdescribesthedateandmannerinwhichacopyofthatdocumentwasservedonpartiesentitledtoreceiveit.Theinformationmustincludethemethodofservice,thedateandthenameandaddressoftheindividualorentityserved.SeeMLBR9013‐3.
CLAIM
Acreditor’srighttopayment,evenifcontingent,disputed,unliquidated,orunmatured.Seealso,§101(5)
CODEBTOR
Apersonorentitythatmayalsoberesponsibleforpayingaclaimagainstthedebtor.Thecodebtorisnotapartytothedebtor’scase.SeeJOINTDEBTOR.
COLLATERAL
Specificpropertysubjecttoalienfromwhichacreditormaybepaidaheadofothercreditorswithoutliensonthatproperty.Includesamortgage,securityinterest,judgmentlien,statutorylien,orotherlien.
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CONFIRMATION
Approvalofaplanforadebtortopaycreditorsprovidedthatthespecificcriteriaaremet.
CONSUMERDEBT
Adebtprimarilyforapersonal,family,orhouseholdpurpose.Seealso§101(8).
CONTINGENTCLAIM
Aclaimthatmaybeowedbythedebtorundercertaincircumstances,forexample,wherethedebtorisacosigneronanotherperson’sloanandthatpersonfailstopay.
CREDITOR
Apersonthathasaclaimagainstthedebtorand/ortheestate.Seealso§101(10).
CURRENTVALUE
Theamountpropertyisworth,whichmaybemoreorlessthanwhenthepropertywaspurchasedand/oracquired.Seetheinstructionsforspecificformsregardingwhetherthevaluerequestedisasofthedateofthefilingofthepetition,thedateyoucompletetheform,orsomeotherdate.AlsoreferredtoasValueorFairMarketValue.
DEBTOR1
Adebtorfilingaloneoronepersoninamarriedcouplewhoisfilingabankruptcycasewithaspouse.Thesamepersonretainsthisdesignationinalloftheforms.Seealso§101(13).
DEBTOR2
The second person in a married couple who is filing a bankruptcy case with a spouse. Seealso,§101(13).
DEPENDENT
Apersonwhoiseconomicallydependentonanother(suchasthedebtor)regardlessofwhetherthepersoncanbeclaimedasadependentonafederaltaxreturn.However,Chapter7MeansTestCalculation(OfficialForm122A‐2)andChapter13CalculationofYourDisposableIncome(OfficialForm122C‐2)usetheterminamorelimitedway.Seetheinstructionsonthoseforms.
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DISCOVERY
Theprocessbywhichpartiesexchangeandobtaininformationabouttheirrespectivepositions.SeeFed.R.Bankr.P.7026,etseq.
DISMISSAL
Anorderorjudgmentterminatingamotion,adversaryproceedingorbankruptcycase.
DISMISSALWITHPREJUDICE
Anorderorjudgmentterminatingamotion,adversaryproceedingorbankruptcycasethatprohibitsthepartyfrombringingthesamecase,claimorcauseofactionagainorforaspecificperiodoftime(seee.g.§109(g)).
DISPUTEDCLAIM
Adebtthatthedebtorcontestsorbelievesisnotowed,inwholeorinpart.
EVICTIONJUDGMENT
Ajudgmentforpossessionthatyourlandlordhasobtainedinaneviction,unlawfuldetaineraction,orsimilarproceeding.AlsoreferredtoasaJudgmentforPossession.
EXECUTORYCONTRACTORLEASE
Contractsorleasesunderwhichbothpartiestotheagreementhavedutiesremainingtobeperformedorhavenotbeenfullycompletedatthetimeofthebankruptcyfiling.Ifacontractorleaseisexecutory,adebtormaycontinuetofulfillthetermsofthecontractorlease(“assume”it)orchoosetocancelthecontractorlease(“reject”it).Examplesofanexecutorycontractare:aleaseforaresidence,carorequipment;anemploymentagreement;ahomeimprovementcontract;aservicecontract;oracontractfordeliveryofgoodsinthefuture.
EXEMPTPROPERTY
Property,orthevalueofaportionofit,thatthelawallowsadebtortoretainratherthansurrenderittoatrusteeforliquidationorprovideforvalueinaplan.
FRAUDULENTCONVEYANCE
Atransferofdebtor’spropertymadewithintenttodefraudorforwhichthedebtorreceiveslessthanthetransferredproperty’svalue.
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GARNISHMENT
Aprocedurebywhichacreditorcanreachadebtor’sfundsinthecustodyorcontrolofathirdpartytosatisfyadebt.Garnishmentsaresometimesusedbycreditorstoobtainmoneyfromadebtor’swagesorbankaccount.
INDIVIDUALDEBTOR
Apersonwhoisfilingforbankruptcyeitheraloneorwithaspouse,whetherornottheindividualownsabusiness.
INSIDER
Arelative,friend,co‐workerorotherpersonofcloserelationofanindividualdebtororapersonwithacloserelationshiptothedebtor.Seealso§101(31)
JOINTCASE
Asinglecasefiledbyamarriedcouple.
JOINTDEBTOR
OneofthetwodebtorsinaJOINTCASE.Seealso,DEBTOR1,DEBTOR2.
JUDGMENTLIEN
Alienonpropertythatarisesasaresultofajudgement,levyorotherlegalproceeding.Seealso§101(36)
JURISDICTION
ThelegalauthoritytheCourthastohearanddecideacase.
LEGALEQUIVALENTOFASPOUSE
Apersonrecognizedbyapplicablenonfederallawashavingarelationshipwiththedebtorthatgrantslegalrightsandresponsibilitiesequivalent,inwholeorinpart,tothosegrantedtoaspouse.
LEGALOREQUITABLEINTEREST
Abroadtermthatincludesallkindsofpropertyinterestsinbothtangibleandintangibleproperty,whetherornotanyoneelsehasaninterestinthatproperty.
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LIEN
Achargeuponspecificpropertydesignedtosecurepaymentfromadebtororperformanceofanobligation.Seealso§101(37).
LIQUIDATE
Toconvertassetsintocash.
LIQUIDATEDCLAIM
Acreditor’sclaimforafixedamountofmoney.
MATRIX
Alistofthenamesandaddressofallcreditorsandpartiesprovidedbythedebtor.Thematrixisthecourt’smailinglist,andthoseappearingonthecreditormatrixwillreceivenoticesfromthecourt.SeeOfficialLocalForm1;Fed.R.Bank.P.2002.AlsoreferredtoasCreditorMatrixorMailingMatrix.
MOTION
AnapplicationforrelieforrequestforanorderoftheCourtpresentedtotheCourt.Certainmotionshavearesponsedeadlinebywhichanotherpartyshallrespondorobjecttothereliefrequestedinthemotion.
MOTIONFORRELIEFFROMSTAY
Arequestbyacreditorforanorderterminatingand/orlimitingtheautomaticstaytoenablethecreditortotakeanactionthatwouldotherwisebeprohibitedbytheautomaticstay.
NEGOTIABLEINSTRUMENT
Afinancialinstrumentthatonecantransfertoanotherbysigningordeliveringit,includingbutnotlimitedtopersonalchecks,cashiers’checks,promissorynotes,andmoneyorders.
NONDISCHARGEABLEDEBT
Adebtthatwillnotbesubjecttothedischarge.See11U.S.C.§§523(a),1328(a).
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NON‐INDIVIDUALDEBTOR
Adebtorthatisnotahumanbeing–forexample,anylegalentitysuchasacorporation,partnership,orlimitedliabilitycompany(LLC).
NON‐NEGOTIABLEINSTRUMENT
Afinancialinstrumentthatcannotbetransferredtoanotherbysigningordeliveringit.
NONPRIORITYUNSECUREDCLAIM
Adebtthatgenerallywillbepaidafterpriorityunsecuredclaimsarepaid.Themostcommonexamplesarecreditcardbills,medicalbills,andeducationalorstudentloans.
OBJECTIONTODISCHARGE
Anobjection,filedbyapartyininterest,tothedebtorbeingreleasedfrompersonalliabilityforanyoralldebts.ThisiscommencedbyfilinganADVERSARYPROCEEDING.
OBJECTIONTOEXEMPTION
Atrustee’sorcreditor’sobjectiontoadebtor’sattempttoclaimcertainpropertyasexempt.SeeEXEMPTPROPERTY.
ORDER
AnorderisajudicialdecreeresolvinganissueorquestionraisedbeforetheCourtthatgrantsrelief,deniesrelief,ordirectsapartytoperformanactionortorefrainfromtakinganaction.
ORDERFORRELIEF
Aninjunctionthatstopsallproceedingsagainstthedebtorandthedebtor’sproperty.Theorderforrelief,orautomaticstay,iseffectiveimmediatelyuponthefilingofavoluntarypetition,subjecttothelimitationssetforthin§362.
PARTYININTEREST
Apartywhoisactuallyandsubstantiallyinterestedinthesubjectmatter,asdistinguishedfromonewhohasonlyanominalortechnicalinterestinit.
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PAYMENTADVICE
Adocumentsuchasapaystuborearningsstatementfromanemployerthatshowsallearningsanddeductionsfromadebtor’spay.
PLEADING
Awrittendocumentwhereapartyallegesand/orcounterallegesfactsgivingrisetoalegalactionorrequestforrelief.
PREFERENCE
Certainpaymentsortransfersofadebtor’spropertytoacreditorwithin90daysbeforethefilingofthebankruptcycasemaybeconsideredpreferential,andatrusteemayseektorecoverthosepaymentsonbehalfoftheestate.See§547.
PRESUMPTIONOFABUSE
Arebuttablelegalpresumptionthatyouhavetoomuchincomeafterallowedexpensestobegrantedreliefunderchapter7.
PRIORITYCLAIM
Aclaimthatisentitledtobepaidbeforegeneralunsecuredclaims.See§507. Themostcommonexamplesarecertainincometaxdebtsandpastduealimonyorchildsupport.
PROOFOFCLAIM
Awrittenstatementidentifyingtheamountandreasonadebtorowesacreditormoney.SeeOfficialForm410.Seealso,CLAIM.
REAFFIRMATIONAGREEMENT
Anagreementbetweenadebtorandacreditorinwhichthedebtoragreestopayalloraportionofadebtthatwouldbeotherwisedischargeable.
REDEMPTION
Wherethedebtorpaysthecreditorthefullcurrentor“marketvalue”ofpropertythatissecuredbyapurchasemoneysecurityagreement.Inexchange,thelienonthepropertyisextinguished.
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SECUREDCLAIM
Aclaimthatmaybesatisfiedinwholeorinparteitherbyachargeagainstoraninterestinspecificpropertyofthedebtor;or,byrightofasetoff.
SETOFF
Aclaimbyadebtorthatthecreditorowesthedebtormoneywhichshouldbesubtractedfromtheamountclaimedbycreditor.Byclaimingasetoffthedebtordoesnotnecessarilydisputethecreditor’sclaim,buthe/sheclaimstherighttoprovethatthecreditoroweshim/heranamountofmoneyfromsomeothertransactionandthattheamountshouldbedeductedfromthecreditor’sclaim.
SOLEPROPRIETORSHIP
Abusinessyouownedasanindividualthatisnotaseparatelegalentitysuchasacorporation,partnership,orLLC.
STATUTORYLIEN
Alienthatarisesasaresultofastatute.Seealso§101(53).
STIPULATION
Avoluntaryagreementbetweenopposingparties.
SUMMONS
Anofficialcourtdocumentinformingthepartyservedthatanactionhasbeenfiledagainstthem,thecourtwherethesummonsoriginatedandthatthepartyisrequiredtoappear,onthedateindicatedonthesummons,andanswerthecomplaintinsuchaction.
TRANSCRIPT
AwrittenrecordpreparedbythecourtreporteroftheproceedingsthatoccurredinCourt.
UNITEDSTATESTRUSTEE
AnofficeroftheDepartmentofJusticewhosupervisestrusteesandtheadministrationofbankruptcyestates.TheU.S.Trusteeappointstrustees,andmonitorsplans,disclosurestatements,creditors’committees,applicationsfor
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compensation,andtheprocessofbankruptcycases,inadditiontoperformingotherstatutoryduties(see28U.S.C.§586).
UNDERSECUREDCLAIM
Aclaimsecuredbypropertythathasavaluelessthantheamountowed.
UNEXPIREDLEASE
Aleasethatisineffectasofthepetitiondate.
UNLIQUIDATEDCLAIM
Adebtwithanamountthatcannotbereadilydetermined,suchasbyreferringtoanagreementorbyasimplecomputation.Anunliquidatedclaimisoneforwhichtheremaybeadefiniteliability,butwherethevaluehasnotbeenset.
UNSCHEDULEDDEBT
AdebtthatshouldhavebeenlistedintheschedulesfiledwiththeCourtbutwasnot.
UNSECUREDCLAIM
Aclaimwithrespecttoadebt,thepaymentofwhichisnotbackedupbycollateraloralienonpropertyofthedebtor.
UNSECUREDDEBT
Afinancialobligationthatisnotbackedbyasecurityagreementoralienonpropertyofthedebtor.
VACATE
Tocancel,annulorrenderofnoeffect.Ifajudgmentororderisvacated,itisasiftheorderorjudgmentwasneverentered.
VENUE
Theproperlocalityofalegalproceeding.
VERIFICATION
Confirmationofthecorrectness,truth,orauthenticityofacomplaint,statementordocument.FederalRulesofBankruptcyProcedure1008requiresthatbankruptcypetitions,lists,schedules,statements,andamendmentstobeverifiedasprovidedin28U.S.C.§1746.
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