A petition is a formal application made to a court in writing that requests action on a certain matter. For bankruptcy purposes, a petition is the document that is filed with the Clerk of the Bankruptcy Court, seeking relief from your debts. The petition is the document that “gets it all started”. When your lawyer files your petition, the bankruptcy is now in effect, and you are now protected against harassment and collection activity from creditors by the “automatic stay”.
Petitions run at least 30 pages, sometimes they can be 50 pages long. There are many parts to the petition. The most important are: Voluntary Petition, Schedules, Statement of Financial Affairs, Median Income/Means Test, and if a Chapter 13, Chapter 13 plan.
Voluntary Petition It contains basic information: Name, address including county, social security number, individual or joint case, type of bankruptcy, and whether you have filed any previous cases in the last eight years.
Schedules The Schedules are labeled from A to J. A – Real estate owned. B – Personal possessions: cash, bank accounts, furniture, vehicles, life insurance, etc., etc. C – Exemptions. D – Secured Creditors E- Priority Creditors F- Unsecured Creditors G – Leases H – Co-Debtors I – Income J- Expenses
Statement of Financial Affairs This is a series of questions that must be answered. There are 18 questions, 25 if a business is owned by the Debtor. Some of the questions: Income from all sources for the last two years plus the current year to date income; pending lawsuits; garnishments and repossession; fees paid to your attorney; transfers of any property.
Median Income/Means Test This is a very, very complicated form that many attorneys have trouble understanding. Essentially, it sets forth the income to the Debtor’s household for the six months before the month in which the bankruptcy was filed. If over the median, there is a second part of the form known as the Means Test. The Median Income/Means Test is a major factor to determine if a Debtor qualifies for a Chapter 7 or is a factor in determining the amount of a payment plan in a Chapter 13.
Chapter 13 Plan This sets forth the amount of the monthly payment that the Debtor will pay to the Trustee each month, the length of the plan, and the percentage paid to unsecured creditors.