Should I file for bankruptcy? Evaluating your Situation.

by the Arizona Bankruptcy Attorneys of Ariano & Reppucci, PLLC 

While you may contemplate filing bankruptcy because of unmanageable debt in your individual or business situation, it is important to do a cost-benefit analysis to determine whether it is the best route for you. An analysis of your personal situation can be complicated because there are many facts you need to take into account to determine which chapter of the Bankruptcy Code you need to file under and what formalities follow.

Forms and Formalities

There are many forms involved with filing under any Chapter of the Bankruptcy Code depending on what you want to do. Moreover, it is important to know which forms need to be filed when. For example, in a Chapter 13 bankruptcy case you need to file several documents within seven days from the date you filed your bankruptcy petition.1 These documents include a mailing list of creditors, a statement of social security number, and a credit counseling certificate to show you completed the credit counseling requirements.2

You do have the option to file forms electronically as long as you fill out the Declaration of Electronic Filing with the U.S. Bankruptcy Court District of Arizona.3

Chapter 7

In a Chapter 7 bankruptcy you liquidate your non-exempt assets so the bankruptcy trustee can figure out which assets to use to pay back certain debt to creditors. You will need to file a bankruptcy petition that asks for various information, such as your street address, social security number, whether or not you filed a bankruptcy case within the last eight years, and information about your creditors.4

In addition to the bankruptcy petition, you will need to file three documents within seven days of when you filed the petition; the Mailing List of Creditors, a Statement of Social Security Number, and a Credit Counseling Certificate from an approved credit counseling agency.5

Moreover, if you did not file the following documents with your petition you will need to file then within fourteen days of filing your petition:

  1. Schedule A through J and summary
  2. Statement of Financial Affairs
  3. Statement of Intention (if you have debts secured by property)
  4. Individual Debtor Statement of Current Monthly Income and Means Test Calculation
  5. Declaration of Evidence of Employers’ Payments Within 60 days6

As a Chapter 7 debtor you will also have to file a form no later than 60 days after the first meeting of the creditors that proves your completion of the personal financial management course.7

Chapter 13

In  a Chapter 13 bankruptcy you will come up with a repayment plan over three to five years to pay back creditors over time with your income. Depending on the size of your debt, you may be able to keep your property.8 Thus, you will need to file a bankruptcy petition and several forms that correspond to your Chapter 13 plan either with your petition or no later than fourteen days after you file.9

In addition to your bankruptcy petition, you will need to file several documents including a credit counseling certificate no later than seven days from the date your petition was filed.10

You will also need to file documents that were not filed with your bankruptcy petition within fourteen days from the day your petition was filed to avoid dismissal.11 These documents can be the Chapter 13 Plan itself, the Statement of Financial Affairs, an Individual Debtor Statement of Current Monthly Income, or more.12

Similar to Chapter 7 formalities, as a Chapter 13 debtor you will also have to complete a personal financial management course in order to receive a discharge.13 This means you will need to file a form no later than your last payment under the Chapter 13 repayment plan you come up with.14

Other Forms

There are many other forms available to you that you may need to file in a bankruptcy. For example, a Schedule J allows you to provide estimates of your monthly expenses as required by some chapters in the Bankruptcy Code, or it can be used to supplement information you have already provided.15 Further, a Schedule I provides details about your monthly income and employment for similar purposes.16

There are also forms that you may or may not need in your particular situation, such as the change of address form for debtors or archive request form to obtain direct copies from the Federal Records Center for any reason.17

Fees

There are multiple fees involved in bankruptcy. In certain situations, you can apply to waive some fees such as the filing fee. You may also qualify to pay the fee in installments as long as you fill out the appropriate form and file it with the bankruptcy clerk’s office.18 Of course, this will require filing more paperwork.

Here is a sampling of fees in Arizona due at the time of filing:19

Bankruptcy Chapter Filing Fee Conversion Fee Cost of Filing Complaint for Adversary Proceeding Amendment fee
Chapter 7 $306 To Chapter 11: $922To Chapter 13: None $293By debtor: None $30
Chapter 13 $281 To Chapter 11: $932To Chapter 7: $25 $293By debtor: None $30

 

Other fees apply for deconsolidating or splitting a case that you may have filed jointly, copying documents, or any motion to withdraw a reference, lift a modified stay, or reopen a case.20 The costs can add up, so it is important to follow formalities. For example, it costs $235.00 to reopen a Chapter 13 bankruptcy case and $260.00 to reopen a Chapter 7 case.21

You should do your own cost-benefit analysis to determine whether or not bankruptcy is for you. If you do decide to go forward, you should contact a experienced Phoenix bankruptcy lawyer who can evaluate your situation with you and tell you how to proceed.

[1] Chapter 13, azb.uscourts.gov, http://www.azb.uscourts.gov/Documents/Chapter_13_Pro_Se_Handout.pdf (last visited Mar. 17, 2014).

2 Id.

3 United States Bankruptcy Court, azb.uscourts.gov, http://www.azb.uscourts.gov/Documents/Ecfdeclaration.pdf (last visited Mar. 17, 2014).

4 B1 Official Form, azb.uscourts.gov, http://www.azb.uscourts.gov/Documents/BAPCPA_Petition.pdf (last visited Mar. 17, 2014).

5 Chapter 7, azb.uscourts.gov, http://www.azb.uscourts.gov/Documents/Chapter_7_Pro_Se_Handout.pdf (last visited Mar. 17, 2014).

6 Id.

7 Id.

8 Chapter 13 Bankruptcy FAQ, nolo.com, http://www.nolo.com/legal-encyclopedia/chapter-13-bankruptcy-faq-32408.html (last visited Mar. 17, 2014).

9 Chapter 13, supra note 1.

10 Id.

11 Id.

12 Id.

13 Id.

14 Id.

15 Forms and Publications, azb.uscourts.gov, http://www.azb.uscourts.gov/default.aspx?PID=73 (last visited Mar. 17, 2014).

16 Id.

17 Id.

18 Application for Waiver of the Chapter 7 Filing Fee For Individuals Who Cannot Pay the Filing Fee In Full Or In Installments, uscourts.gov (last visited Mar. 17, 2014).

19 The chart was put together from information available at Filing Fees, azb.uscourt.gov (Dec. 1, 2013), http://www.azb.uscourts.gov/default.aspx?PID=97.

20 Id.

21 Chapter 13, supra note 1; Chapter 7, supra note 5.