Definition of "Petition for Chapter 7 Bankruptcy"

Over-extended individuals may declare Chapter 7 bankruptcy.

Chapter 7 bankruptcy is a legal proceeding in which a person is relieved of his debts when the court liquidates his assets and pays off creditors according to the rules of the Bankruptcy Code. Federal bankruptcy laws apply to all Chapter 7 bankruptcies; states also have their own bankruptcy laws. Filing a Chapter 7 bankruptcy petition is the first step in beginning the bankruptcy proceeding. Filing the petition is the process by which a person or business "declares bankruptcy."

Official Petition Form

The individual or owner of a business who wants to declare Chapter 7 bankruptcy files a bankruptcy petition with the court that serves the area where the person or business is located. The Chapter 7 bankruptcy petition form must be used and is available at the United States Courts website. You must print out the form and fill it out manually. You cannot fill out the form on your computer and save it. On the form, the debtor is asked to provide several pieces of information, such as his name and a summary of his assets and liabilities.

Filing the Petition

In addition to filing the Chapter 7 Bankruptcy petition, the debtor must file several schedules and documents pertaining to his finances. Usually these documents must be filed at the same time as the petition; but if they are not ready for filing at that time, the debtor has 14 days to get them to the court. Some, however, must be filed with the petition itself.

Forms Filed with the Petition

The forms that must be filed with the petition include the mailing list of the debtor's creditors, the Statement of Social Security Number and the debtor's Statement of Compliance with Credit Counseling Requirement. All creditors on the debtor's mailing list should receive notices of the proceeding from the court.

Additional Documents

Additional documents that must be filed with the court with the petition, or within 14 days of filing the petition, include schedules of assets and liabilities, a statement of current income and expenses, a statement of financial affairs, and a list of contracts and leases to which the debtor is a party. There should also be a copy of the debtor's federal tax returns, as well as a schedule of monies the debtor has in qualified education or tuition accounts. Again, the petitioner must use the official government forms which are available on the United States Courts website.

Petition Filing Fees

When the petition is filed, the debtor must pay certain fees, including a $245 case filing fee, a $39 fee for administration and a $15 trustee fee.

References

• United States Courts: Chapter 7 Liquidation Under the Bankruptcy Code