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Notice to Consumer Debtor(s) of the Bankruptcy Code
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In accordance with § 342(b) of the Bankruptcy Code, this notice to individuals with
primarily consumer debts: (1) Describes briefly the services available from credit
counseling services; (2) Describes briefly the purposes, benefits and costs of the
four types of bankruptcy proceedings you may commence; and (3) Informs you about
bankruptcy crimes and notifies you that the Attorney General may examine all information
you supply in connection with a bankruptcy case.
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You are cautioned that bankruptcy law is complicated and not easily described. Thus,
you may wish to seek the advice of an attorney to learn of your rights and responsibilities
should you decide to file a petition. Court employees cannot give you legal advice.
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Notices from the bankruptcy court are sent to the mailing address you list on your
bankruptcy petition. In order to ensure that you receive information about events
concerning your case, Bankruptcy Rule 4002 requires that you notify the court of
any changes in your address. If you are filing a joint case (a single bankruptcy
case for two individuals married to each other), and each spouse lists the same
mailing address on the bankruptcy petition, you and your spouse will generally receive
a single copy of each notice mailed from the bankruptcy court in a jointly-addressed
envelope, unless you file a statement with the court requesting that each spouse
receive a separate copy of all notices.
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1. Services Available from Credit Counseling Agencies
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With limited exceptions, § 109(h) of the Bankruptcy Code requires that all individual
debtors who file for bankruptcy relief on or after October 17, 2005, receive a briefing
that outlines the available opportunities for credit counseling and provides assistance
in performing a budget analysis. The briefing must be given within 180 days
before the bankruptcy filing. The briefing may be provided individually or in a
group (including briefings conducted by telephone or on the Internet) and must be
provided by a nonprofit budget and credit counseling agency approved by the United
States trustee or bankruptcy administrator. The clerk of the bankruptcy court has
a list that you may consult of the approved budget and credit counseling agencies.
Each debtor in a joint case must complete the briefing.
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In addition, after filing a bankruptcy case, an individual debtor generally must
complete a financial management instructional course before he or she can receive
a discharge. The clerk also has a list of approved financial management
instructional courses. Each debtor in a joint case must complete the course.
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2. The Four Chapters of the Bankruptcy Code Available to Individual Consumer Debtors
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Chapter 7: Liquidation ($245 filing fee, $39 administrative fee, $15 trustee
surcharge: Total fee $299)
1. Chapter 7 is designed for debtors in financial difficulty who do not have the
ability to pay their existing debts. Debtors whose debts are primarily consumer
debts are subject to a “means test” designed to determine whether the case should
be permitted to proceed under chapter 7. If your income is greater than the median
income for your state of residence and family size, in some cases, creditors have
the right to file a motion requesting that the court dismiss your case under § 707(b)
of the Code. It is up to the court to decide whether the case should be dismissed.
2. Under chapter 7, you may claim certain of your property as exempt under governing
law. A trustee may have the right to take possession of and sell the remaining property
that is not exempt and use the sale proceeds to pay your creditors.
3. The purpose of filing a chapter 7 case is to obtain a discharge of your existing
debts. If, however, you are found to have committed certain kinds of improper conduct
described in the Bankruptcy Code, the court may deny your discharge and, if it does,
the purpose for which you filed the bankruptcy petition will be defeated.
4. Even if you receive a general discharge, some particular debts are not discharged
under the law. Therefore, you may still be responsible for most taxes and student
loans; debts incurred to pay nondischargeable taxes; domestic support and property
settlement obligations; most fines, penalties, forfeitures, and criminal restitution
obligations; certain debts which are not properly listed in your bankruptcy papers;
and debts for death or personal injury caused by operating a motor vehicle, vessel,
or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove
that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful
and malicious injury, the bankruptcy court may determine that the debt is not discharged.
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Chapter 13: Repayment of All or Part of the Debts of an Individual with Regular
Income ($235 filing fee, $39 administrative fee: Total fee $274)
1. Chapter 13 is designed for individuals with regular income who would like
to pay all or part of their debts in installments over a period of time. You are
only eligible for chapter 13 if your debts do not exceed certain dollar amounts
set forth in the Bankruptcy Code.
2. Under chapter 13, you must file with the court a plan to repay your creditors
all or part of the money that you owe them, using your future earnings. The period
allowed by the court to repay your debts may be three years or five years, depending
upon your income and other factors. The court must approve your plan before it can
take effect.
3. After completing the payments under your plan, your debts are generally discharged
except for domestic support obligations; most student loans; certain taxes; most
criminal fines and restitution obligations; certain debts which are not properly
listed in your bankruptcy papers; certain debts for acts that caused death or personal
injury; and certain long term secured obligations.
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Chapter 11: Reorganization ($1000 filing fee, $39 administrative fee: Total
fee $1039) Chapter 11 is designed for the reorganization of a business but
is also available to consumer debtors. Its provisions are quite complicated, and
any decision by an individual to file a chapter 11 petition should be reviewed with
an attorney.
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Chapter 12: Family Farmer or Fisherman ($200 filing fee, $39 administrative
fee: Total fee $239) Chapter 12 is designed to permit family farmers and
fishermen to repay their debts over a period of time from future earnings and is
similar to chapter 13. The eligibility requirements are restrictive, limiting its
use to those whose income arises primarily from a family-owned farm or commercial
fishing operation.
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3. Bankruptcy Crimes and Availability of Bankruptcy Papers to Law Enforcement Officials
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A person who knowingly and fraudulently conceals assets or makes a false oath
or statement under penalty of perjury, either orally or in writing, in connection
with a bankruptcy case is subject to a fine, imprisonment, or both. All information
supplied by a debtor in connection with a bankruptcy case is subject to examination
by the Attorney General acting through the Office of the United States Trustee,
the Office of the United States Attorney, and other components and employees of
the Department of Justice.
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WARNING: Section 521(a)(1) of the Bankruptcy Code requires that you promptly
file detailed information regarding your creditors, assets, liabilities, income,
expenses and general financial condition. Your bankruptcy case may be dismissed
if this information is not filed with the court within the time deadlines set by
the Bankruptcy Code, the Bankruptcy Rules, and the local rules of the court.
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If you decide to file bankruptcy, it is important that you understand the following:
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1. Some or all of the information you provide in connection with your bankruptcy
will be filed with the bankruptcy court on forms or documents that you will be required
to sign and declare as true under penalty of perjury.
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2. A person who knowingly and fraudulently conceals assets or makes a false oath
or statement under penalty of perjury in connection with a bankruptcy case shall
be subject to fine, imprisonment, or both.
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3. All information you provide in connection with your bankruptcy case is subject
to examination by the Attorney General. Notice mandated by 527(a)(2)
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4. All information that you are required to provide with the filing of your case
and thereafter, while your case is pending, must be complete, accurate and truthful.
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5. All your assets and all your liabilities must be completely and accurately disclosed
in the documents filed to commence your case.
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6. Some sections of the Bankruptcy Code require you to determine and list the replacement
value of an asset such as a car or furniture. When replacement value is required,
it means the replacement value, established after reasonable inquiry, as of the
date of the filing of your bankruptcy case, without deduction for costs of sales
or marketing. With respect to property acquired for personal, family or household
purposes. Replacement value means the price a retail merchant would charge for "used"
property of that kind considering the age and condition of the property.
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7. Before your case can be filed, it is subject to what is called "Means Testing".
The Means Test was designed to determine whether or not you qualify to file a case
under chapter 7 of the Bankruptcy Code, and if not, how much you need to pay your
unsecured creditors in a chapter 13 case.
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For purposes of means test, you must state, after reasonable inquiry, your total
current monthly income, the amount of all expenses as specified and allowed pursuant
to section 707(b)(2) of the bankruptcy code, and if the plan is to file in a Chapter
13 case, you must state, again after reasonable inquiry, your disposable income,
as that term is defined.
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8. Information that you provide during your case may be audited pursuant to the
provisions of the Bankruptcy Code. Your failure to provide complete, accurate and
truthful information may result in the dismissal of your case or other sanctions,
including criminal sanctions.
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IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY
PETITION PREPARER
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If you decide to seek bankruptcy relief, you can represent yourself, you can
hire an attorney to represent you, or you can get help in some localities from a
bankruptcy petition preparer who is not an attorney. THE LAW REQUIRES AN ATTORNEY
OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE
ATTORNEY OR BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST.
Ask to see the contract before you hire anyone.
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The following information helps you understand what must be done in a routine
bankruptcy case to help you evaluate how much service you need. Although bankruptcy
can be complex, many cases are routine.
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Before filing a bankruptcy case, either you or your attorney should analyze
your eligibility for different forms of debt relief available under the Bankruptcy
Code and which form of relief is most likely to be beneficial for you. Be sure you
understand the relief you can obtain and its limitations. To file a bankruptcy case,
documents called a Petition, Schedules and Statement of Financial Affairs, as well
as in some cases a Statement of Intention need to be prepared correctly and filed
with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court.
Once your case starts, you will have to attend the required first meeting of creditors
where you may be questioned by a court official called a “trustee” and by creditors.
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If you choose to file a chapter 7 case, you may be asked by a creditor to
reaffirm a debt. You may want help deciding whether to do so. A creditor is not
permitted to coerce you into reaffirming your debts.
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If you choose to file a chapter 13 case in which you repay your creditors
what you can afford over 3 to 5 years, you may also want help with preparing your
chapter 13 plan and with the confirmation hearing on your plan which, if held, will
be before a bankruptcy judge.
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If you select another type of relief under the Bankruptcy Code other than chapter
7 or chapter 13, you will want to find out what should be done from someone familiar
with that type of relief.
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Your bankruptcy case may also involve litigation. You are generally permitted to
represent yourself in litigation in bankruptcy court, but only attorneys, not bankruptcy
petition preparers, can give you legal advice.
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