Introduction
Bankruptcy is a legal process designed to help individuals and businesses eliminate or repay their debts under the protection of the bankruptcy court. This guide provides a comprehensive overview of the documentation and eligibility criteria required for filing bankruptcy in the United States. We will cover various types of bankruptcy, the necessary documentation, eligibility requirements, and provide official resources for further information.
Types of Bankruptcy
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of a debtor's non-exempt assets by a trustee. The proceeds are then used to pay off creditors. This type of bankruptcy is typically suitable for individuals with limited income and significant unsecured debts.
- Eligibility Criteria: To qualify for Chapter 7 bankruptcy, individuals must pass the means test, which compares their income to the median income for their state. If their income is below the median, they are eligible to file for Chapter 7. If their income is above the median, they must complete additional calculations to determine eligibility.
- Documentation Required:
- Petition for Bankruptcy (Form B101)
- Schedules of Assets and Liabilities (Form B106)
- Statement of Financial Affairs (Form B107)
- Means Test Calculation (Form B122A-2)
For more information, visit the United States Courts Chapter 7 Bankruptcy Basics.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy, also known as reorganization bankruptcy, is primarily used by businesses but can also be filed by individuals with substantial debts and assets. This type of bankruptcy allows the debtor to propose a plan to reorganize and repay creditors over time while continuing to operate their business.
- Eligibility Criteria: There are no specific income requirements for Chapter 11 bankruptcy. However, the debtor must demonstrate the ability to propose a feasible reorganization plan.
- Documentation Required:
- Petition for Bankruptcy (Form B101)
- Schedules of Assets and Liabilities (Form B206)
- Statement of Financial Affairs (Form B207)
- Disclosure Statement (detailing the reorganization plan)
For more information, visit the United States Courts Chapter 11 Bankruptcy Basics.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also known as wage earner's bankruptcy, allows individuals with regular income to create a repayment plan to pay off all or part of their debts over three to five years. This type of bankruptcy is suitable for individuals who have a steady income and want to keep their assets.
- Eligibility Criteria: To qualify for Chapter 13 bankruptcy, individuals must have a regular income and their unsecured debts must be less than $419,275, and secured debts must be less than $1,257,850 (as of 2021).
- Documentation Required:
- Petition for Bankruptcy (Form B101)
- Schedules of Assets and Liabilities (Form B106)
- Statement of Financial Affairs (Form B107)
- Chapter 13 Plan (Form B113)
For more information, visit the United States Courts Chapter 13 Bankruptcy Basics.
Documentation Requirements
General Documentation
Regardless of the type of bankruptcy being filed, there are several common documents that must be submitted:
- Bankruptcy Petition: The initial document filed with the bankruptcy court to start the bankruptcy process.
- Schedules of Assets and Liabilities: Detailed lists of the debtor's assets, liabilities, income, and expenses.
- Statement of Financial Affairs: A comprehensive statement detailing the debtor's financial history and current financial situation.
- Credit Counseling Certificate: Proof that the debtor has completed a credit counseling course from an approved agency within 180 days before filing for bankruptcy.
Specific Documentation for Different Chapters
Chapter 7 Documentation
- Means Test Calculation: A form used to determine eligibility for Chapter 7 bankruptcy based on the debtor's income and expenses.
- Statement of Intention: A document indicating the debtor's intentions regarding secured debts, such as mortgages or car loans.
Chapter 11 Documentation
- Disclosure Statement: A detailed document outlining the debtor's reorganization plan and how it will be implemented.
- Monthly Operating Reports: Regular reports detailing the debtor's financial performance during the reorganization process.
Chapter 13 Documentation
- Chapter 13 Plan: A proposed repayment plan outlining how the debtor will repay their debts over three to five years.
- Proof of Income: Documentation of the debtor's income, such as pay stubs or tax returns, to demonstrate their ability to make plan payments.
Eligibility Criteria
General Eligibility
To file for bankruptcy, individuals and businesses must meet certain eligibility criteria. These criteria vary depending on the type of bankruptcy being filed.
Chapter 7 Eligibility
- Means Test: The means test compares the debtor's income to the median income for their state. If the debtor's income is below the median, they are eligible to file for Chapter 7. If their income is above the median, they must complete additional calculations to determine eligibility.
- Previous Bankruptcy Filings: Debtors cannot file for Chapter 7 bankruptcy if they have received a discharge in a Chapter 7 case within the past eight years or a Chapter 13 case within the past six years.
Chapter 11 Eligibility
- No Specific Income Requirements: There are no specific income requirements for Chapter 11 bankruptcy. However, the debtor must demonstrate the ability to propose a feasible reorganization plan.
- Previous Bankruptcy Filings: There are no specific restrictions on previous bankruptcy filings for Chapter 11 bankruptcy.
Chapter 13 Eligibility
- Regular Income: Debtors must have a regular income to qualify for Chapter 13 bankruptcy.
- Debt Limits: As of 2021, unsecured debts must be less than $419,275, and secured debts must be less than $1,257,850.
- Previous Bankruptcy Filings: Debtors cannot file for Chapter 13 bankruptcy if they have received a discharge in a Chapter 7 case within the past four years or a Chapter 13 case within the past two years.
Official Resources
For more detailed information on bankruptcy filing requirements, documentation, and eligibility criteria, refer to the following official resources:
- United States Courts Bankruptcy Basics
- Internal Revenue Service Declaring Bankruptcy
- United States Department of Justice Bankruptcy Information Sheet
Conclusion
Filing for bankruptcy is a complex process that requires careful consideration of various factors, including the type of bankruptcy, documentation requirements, and eligibility criteria. By understanding these requirements and utilizing official resources, individuals and businesses can navigate the bankruptcy process more effectively and achieve a fresh financial start.
