Consumer Bankruptcy Law and Practice: 11.6.1.2.1 Introduction
The debtor’s rights to modify are subject to several major limitations.
The debtor’s rights to modify are subject to several major limitations.
Schedule G, the schedule of unexpired leases and executory contracts, is required in all cases. It is designed primarily to put the trustee on notice of leases or other executory contracts that might be assumed or rejected because of their potential benefit or cost to the estate.159 Although the issues that might be raised by the schedule are rarely of great importance in consumer cases, the schedule is not difficult to complete.
The debtor’s codebtors, other than a spouse in a joint case, should be listed in Schedule H. The instructions for the Official Form provide that, in community property states, a married debtor not filing a joint case should always report the name and address of the non-debtor spouse, together with any other names used by the non-debtor spouse within the previous eight years. As discussed above, codebtors may also be listed as creditors in Schedule F due to any potential subrogation claims that could arise if the codebtors later pay off the obligation.
The automatic stay also prohibits, subject to the exceptions found in section 362(b):
On the motion of a party in interest, after notice and a hearing held before the thirty-day period expires, the court may extend the stay as to all or some creditors upon a showing that the case was filed in good faith.25 If the court extends the stay, it may impose conditions or limitations upon it.26 The provision does not define good faith for purposes of this stay limitation, but good faith with respect to the filing of a case has been given a recognized meaning by existing case law.
If an individual debtor has had two or more cases dismissed within the year before the petition is filed, section 362(c)(4) of the Code provides that the automatic stay under section 362(a) does not go into effect upon the filing of any case, other than a case refiled under section 707(b).50 Because the provision applies to each debtor individually, the expiration or inapplicability of the stay as to one debtor does not apply to a joint debtor who has not filed a prior case.51 On a motion filed by a
The breadth of the automatic stay is narrowed by twenty-eight exceptions listed in section 362(b). Many of these exceptions have little bearing in consumer cases (such as those concerning commodity futures or Department of Housing and Urban Development foreclosures on multi-family dwellings). Some, though, are significant in particular cases.
The commencement of the case also activates two other automatic provisions relating to the debtor’s property—sections 542 and 543. These sections require turnover to the trustee of property in which the debtor has an interest.
Simply by filing a bankruptcy petition, a debtor brings to his or her aid an instrument of awesome breadth and power—the Bankruptcy Code’s automatic stay. Few other legal steps that may be taken on behalf of a consumer can bring about relief so simply, so effectively, and so dramatically. The stay provisions of the Code,1 along with the other related provisions that are discussed in this Chapter, take effect the instant a case is filed, from that moment placing the debtor and the debtor’s property under the protection of the bankruptcy court.
Closely akin to the automatic stay provisions of Code section 362 are the provisions regarding refusal to provide utility service in section 366. While the general purpose of this section closely parallels that of the automatic stay, its operation and effect are somewhat different.
The Bankruptcy Rules and the Official Forms require that certain information be redacted in the forms that are filed with the court. Bankruptcy Rule 9037(a) requires that, unless the court orders otherwise, only the last four digits of a Social Security number or taxpayer identification number can be included in a filed paper.15 Similarly, only the last four digits of a financial account number may be listed. Only the year of an individual’s birth may be included.
The 2005 Act added new subsections 727(a)(12), 1141(d)(5)(C), 1228(f), and 1328(h), which provide that the entry of the debtor’s discharge in a chapter 7, 11, 12, or 13 case may be delayed pending the outcome of any criminal and civil proceedings against the debtor referred to in section 522(q)(1).
Section 362(c)(3) of the Bankruptcy Code, added by the 2005 amendments, limits the stay under section 362(a) of the Code in an individual chapter 7, 11, or 13 case if the individual was a debtor in a case dismissed within the year before the filing of the petition.20 Because the provision applies to each debtor individually, the expiration or inapplicability of the stay as to one debtor does not apply to a joint debtor who has not filed a prior case.21 For debtors covered by this new restriction, th
Section 603(a) of the 2005 bankruptcy amendments, Pub. L. No. 109-8, 119 Stat. 118 (2005), required the United States Department of Justice to establish procedures to audit petitions, schedules, and other information in consumer bankruptcy cases filed on or after October 20, 2006. Pursuant to 28 U.S.C. § 586(f), the Executive Office of the United States Trustees (EOUST) contracted with private accounting firms to audit cases selected by the EOUST.
DEPARTMENT OF JUSTICE
Debtor Audit Standards
AGENCY: Executive Office for United States Trustees, Justice.
ACTION: Notice.
Pursuant to section 603 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, individuals who file for relief under chapter 7 or chapter 13 of the Bankruptcy Code are subject to audit. At least one out of every 1,000 individual chapter 7 and chapter 13 cases will be randomly selected for audit. In addition, a case may be selected for an exception audit (audit of a case with income or expenditures above a statistical norm).
This subsection contains the forms required to institute a typical chapter 7 case, while Appendix D.3, infra, contains the forms required to institute a typical chapter 13 case.
Section 342(b) requires the clerk of the bankruptcy court to give each consumer debtor a notice prior to the filing of the petition describing the chapters of the Bankruptcy Code under which the debtor may proceed, the services of credit counseling agencies, and the possible consequences of bankruptcy fraud. However, because section 521(a)(1)(B)(iii) requires the debtor’s attorney to file a certification that the attorney delivered the notice to the debtor, a represented debtor will receive the notice from their attorney rather than from the court.
An individual may file a bankruptcy case alone, even if the individual is married. Only an individual and their spouse may file a joint bankruptcy case. 11 U.S.C. § 302; § 3.2.2, supra. A legally married same-sex couple may file a joint bankruptcy petition.
Despite using best efforts to obtain complete and accurate information in preparing the forms, it is not uncommon for errors or omissions to be discovered after the documents are filed. If an amendment is needed, Bankruptcy Rule 1009 provides that the debtor may amend the filed documents as a matter of course at any time before the case is closed.
The sample case below is provided to help illustrate how the basic forms are prepared. The debtor has decided to file for chapter 7 bankruptcy primarily to stop a wage garnishment. Her attorney has learned the following information from the initial client interview.
Official Form 101 (formerly Form 1) is the petition used by an individual (or two married individuals filing jointly) to commence a voluntary case under chapter 7, 11, 12, or 13 of the Bankruptcy Code. The filing of the petition constitutes an “order for relief.” 11 U.S.C. §§ 301, 302. It also invokes the automatic stay, which takes effect immediately upon the filing of the petition, subject to certain exceptions. 11 U.S.C. § 362.
1. In every case a disclosure of fees paid to the debtor’s attorney must be filed. 11 U.S.C. § 329; Fed. R. Bankr. P. 2016(b). Director’s Form B2030, though not an Official Form, has been promulgated by the Administrative Office of the United States Courts to fulfill this requirement. The purpose of this form is to allow the court and the United States trustee, who also must receive a copy, to monitor fees and to make sure they are reasonable.
This subsection contains the forms required to institute a typical chapter 13 case, while Appendix D.4, infra, contains other Official Bankruptcy Forms, including many that may be required later in the case. The initial forms and other documents reprinted below in this section are: