|
Every bankruptcy case begins with a Voluntary Petition. A Chapter 7 petition contains three major parts: the petition or cover page, schedules, and a statement of financial affairs. Although these three parts are commonly referred to as a "petition," the petition is really only one part of the documents required in a bankruptcy filing. For the sake of clarity, "petition" here will be used to refer to the entire body of documents initially required for a bankruptcy filing. Also, throughout the petition, the individual who is filing for bankruptcy is referred to as the "debtor." The first part of a petition serves as a cover and signature page and is made up of two pages that list basic information about the debtor: name, address, social security number, etc. The cover page is also where the debtor indicates under which chapter he or she is filing for bankruptcy. The second part of a petition is the debtor's Schedules. The schedules, labeled from A to J, each list a particular type of information relating to the debtor's assets and liabilities. On schedule A, the debtor lists any real property, such as a house or condominium, in which the debtor has an ownership interest along with the fair market value of the property listed and any loan against such property. On schedule B, the debtor lists all personal property he or she owns as well as the value of that property. Personal property includes such items as cash, bank accounts, furniture and clothing but also includes intangible property and property in which the debtor holds only a contingent interest. For example, a debtor who has or may commence a lawsuit must list the lawsuit on schedule B as personal property. Taken together, schedules A and B list the debtor's assets. Schedule C lists the debtor's exemptions. Put simply, exemptions limit the extent to which the debtor's assets may be used to pay off his or her debts. In New York, a debtor's allowable exemptions are determined either under New York State law or under the Federal Property Exemptions. For example, an individual debtor living in NYC is entitled to claim a "Homestead Exemption of $204,825 of equity in their primary residence (up to $300,000 for a married couple filing jointly). Examples of other "exempt" property are set forth below. On schedules D through F, the debtor lists any debts he or she owes. Debts owed to creditors are referred to on the petition as "claims." Schedule D is reserved for secured claims. Secured claims are those debts where the creditor holds an interest in one of the debtor's assets and allows the creditor to use that asset to satisfy the debt. The most common example is a lender holding a lien in a debtor's house under a mortgage. Thus, if the house is sold, the creditor may use the proceeds of that sale to satisfy the lien. Schedules E and F list unsecured claims. Unsecured claims are debts owed by the debtor that are not secured by assets of the debtor. Unsecured claims are further divided between priority claims and general unsecured claims. A common example of a priority claim is tax debt while by far the most common example of a general unsecured claim is credit card debt. The practical consequences of classifying claims as priority or general unsecured debt will be more fully explained below. |
Sources
This information is general and is not legal advice. Amounts are adjusted periodically; consult an attorney about your case.
|
Voluntary Petition and Schedules
Part 1 of 2