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Bankruptcy Statements

December 2, 2013

As a part of your bankruptcy petition you will also attach certain statements. This article will describe the various statements that are common in a consumer bankruptcy case.

The Statement of Financial Affairs
This statement is the big picture the debtor’s finances over the last couple years leading up to the bankruptcy. This document will list your previous year’s income—payments to creditors and family members—and will list information about other transfers or business transactions. This document is extremely detailed and an experienced attorney should help you fill it out. The Trustee in your bankruptcy case will want to make sure that the information is correct and will look for certain transfers that may be an issue in your case.

The Chapter 7 Statement of Intention
The statement of intention, like the name suggests, provides the Debtor’s intentions towards certain debts and contracts in the case. Typically, in a consumer case, only the Debtor’s secured debt and leases are listed. This statement is where the Debtor will inform the court and creditors if they intend to keep and reaffirm a debt or if they intend to surrender the debt.

The Chapter 7 Statement of Current Monthly Income and Means-Test Calculation
Usually, this statement is called the means test; this statement is used to determine if you qualify for a chapter 7 case. The first part of the test averages your previous six months income and compares it to the median income for your household size. If you are below the median the test stops there; being below median means that the bankruptcy code has determined that you have no disposable or extra income that should pay your unsecured creditors. If you are above median you move on to the second part of the text that deducts your expenses from your average income to see how much, if any, disposable income you have remaining. The expenses are tied to the IRS standard expenses but in some areas the bankruptcy code allows you to depart from the standard expenses. If after all the deductions are removed and you have no additional disposable income, you will qualify for a chapter 7 case.

The Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income
This statement looks nearly identical to the chapter 7 means test but has a few differences. The chapter 13 statement calculates if you qualify for a 3 year plan or a 5 year plan, by comparing your average income to the median income as in chapter 7. If you are below the median income you qualify for a 3 year plan, and if you are above it you qualify for a 5 year plan. The second part of the test as in chapter 7 deducts your expenses from your average income to see how much, if any, disposable income you have remaining. After the test is complete if there is disposable income remaining this amount would be multiplied by 60 (60 Months in a 5 year plan) and is used to determine how much should be paid to your unsecured creditors. The chapter 13 statement is a very complicated statement and is usually reviewed with a great deal of scrutiny. Your attorney will need to go over all of your income and expenses with you to ensure that it is filed correctly.

As with all bankruptcy paperwork, the statements you make are crucial to the success of your case. They are signed under penalty of perjury and must be filled out accurately. For more information and a free consultation, contact the experienced attorneys at Fears | Nachawati by calling 1.866.705.7584 or sending an email to .


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