June 30, 2015

Chapter 7 – “Liquidation”


Chapter 7 is the chapter of the Bankruptcy Code which provides for liquidation of the debtor’s assets, which is the sale of the debtor’s non-exempt property and the distribution of the proceeds to creditors.

Chapter 7 Filing Fee
Credit Counseling & Debtor Education
Chapter 7 Filing Requirements
Notice of Possible Dismissal
Meeting of Creditors
General Information


Chapter 7 Filing Fee

The filing fee for a Chapter 7 case is $335.00.  This amount includes a $245.00 filing fee + $75.00 administrative fee + $15.00 trustee surcharge.

If an individual debtor is unable to submit the full filing fee at the time of filing, the debtor may request to pay the fee in installments.  A completed Application to Pay Filing Fee in Installments – EDVA must be filed with the petition and approved by the court.  The form is available from the Clerk’s Office or on the Court’s web site, at http://www.vaeb.uscourts.gov, under Forms – Bankruptcy Forms.  The initial installment payment of $100.00 is required at the time of filing.

If an individual debtor is unable to pay the filing fee either in full or in installments, the Court may “waive” the filing fee, as provided in 28 U.S.C. Section 1930(f), and as further provided that the debtor meets certain requirements.  An Application for Waiver of the Chapter 7 Filing Fee for Individuals Who Cannot Pay The Filing Fee in Full or In Installments (Official Form B 3B), must be filed with the petition.  The form is available from the Clerk’s Office, or may be accessed through the Court’s web site, at http://www.vaeb.uscourts.gov,  under Forms – Bankruptcy Forms.  By statute, the Court must first make a determination that the individual debtor “has income less than one hundred fifty percent (150%) of the office poverty line applicable to a family of the size involved, and is unable  to pay the fee in installments.”  If the case is a joint case, both debtors must provide the requested information, sign and date the application.

Acceptable forms of payment of the filing fee are cash, money order, cashier’s check, signed check, credit card and Internet credit card (where the debtor is represented by an attorney).  Personal checks and credit cards from the debtor, two-party checks and post-dated checks are not accepted.  Payment made by cashier’s check or money order must be made payable to:  Clerk, U. S. Bankruptcy Court.  Note:  The Newport News Divisional Office does not accept cash.  In addition, effective February 4, 2008, exact change only is accepted for cash payment of fees and services in the Richmond Divisional Office.


Credit Counseling & Debtor Education

All individual debtors who file a Chapter 7 bankruptcy are required to obtain credit counseling from an approved provider within 180 days before filing for bankruptcy relief, pursuant to U.S.C. Section 109(h).  Pursuant to Fed. R. Bankr. P. 1007(b)(3)((A), a statement of compliance, together with a certificate and debt repayment plan, if any (as required by 11 U.S.C. Section 521(b)) from the approved provider must be filed with the petition.  Pursuant to Local Bankruptcy Rule 1007-1(I)(2), if these documents are not filed with the petition, the Clerk shall enter an order of dismissal of the case, unless the same are filed not later than three (3) days after the filing of the petition.  If the debtor has received the credit counseling, but does not have the required certificate, he/she may file a statement pursuant to Fed. R. Bankr. P. 1007(b)(3)B).  The required documents must then be filed within fourteen (14) days of the order for relief, or the Clerk shall enter an order of dismissal, pursuant to Local Bankruptcy Rule 1007-1(I)(2).  The debtor may file a certification, pursuant to 11 U.S.C. Section 109(h(3)(A) describing exigent circumstances that merit a waiver of the requirement, stating that the debtor requested the credit counseling, but was unable to obtain the services during the seven-day  (7-day) period, beginning on the date on which the debtor made that request; and the certification must be satisfactory to the Court.  Pursuant to 11 U.S.C. Section 109(h)(4), the requirement to obtain credit counseling shall not apply, if after notice and hearing, the court determines that the debtor is unable to complete the requirements due to incapacity, disability or active military duty in a military combat zone.  A list of approved providers is available from the Court’s web site, at http://www.vaeb.uscourts.gov,  under General Information,  US Trustee Program, Approved List of Credit Counseling Agencies.

Debtors are also required to complete an instructional course in personal financial management from an approved provider after filing bankruptcy, pursuant to Fed. R. Bankr. P. 1007(b)(7).  The debtor must file with the court a statement of completion of the course, either as provided by the provider or prepared as prescribed by Official Form 23, which may be accessed through the Court’s web site, at http://www.vaeb.uscourts.gov, under Forms – Bankruptcy Forms.  The certificate must be filed within sixty (60) days of the date first set for the 341 Meeting of Creditors.  Failure to file the certificate will result in the closing of the case without entry of a discharge.  A list of approved providers is available from the Court’s web site, at http://www.vaeb.uscourts.gov,  under General Information,  US Trustee Program, Approved List of Personal Financial Management Providers.


Chapter 7  Filing Requirements

The original of the following documents is required for filing a Chapter 7.  Documents preceded by an asterisk (*) are required to initiate a bankruptcy case.  All remaining documents must be filed within the specified time period:

  • *Notice to Consumer Debtor(s) and Certification Under Section 342(b) of the Bankruptcy Code – Must be filed with the petition or within fourteen (14) days.  When the debtor is represented by legal counsel, the attorney’s signature on Exhibit B (page 2) of the Voluntary Petition certifies compliance with this provision.
  • *Voluntary Petition
  • *Statement of Social Security Number(s)Individual only – this form is retained by the attorney for the debtor(s),  is not filed unless the debtor is filing pro se, and is not available for public viewing.
  • *Exhibit D – Individual Debtor’s Statement of Compliance with Credit Counseling – EDVA; and Certificate of Credit Counseling (or Certificate of Exigent Circumstance or Motion for Exemption).  If not filed with the petition, the Clerk will enter an order of dismissal unless filed within 3 days after the filing of the petition.  Local Bankruptcy Rule 1007(I)(1),(2)Individual(s) only – see also, Credit Counseling and Debtor Education, above.
  • *Corporate ResolutionCorporation only - Local Bankruptcy Rule 5005-1(D)(1)(c)
  • *Corporate Ownership StatementCorporation only – Fed. R. Bankr. P. 1007(a)(1)
  • *Filing Fee - The filing fee is to be paid in full at the time of the filing the petition unless the debtor files, and the court approves, an Application to Pay Filing Fee in Installments or an Application for Waiver of Chapter 7 Filing Fee (Official Form B 3B).   An application to pay in installments or for waiver of the filing fee can be filed by individual debtors only (including married couples) and shall be filed at the time of the filing of the petition.  Fed. R. Bankr. P. 1006(b).  If the debtor is filing pro se, the fee must be paid in cash or money order.
  • *List of CreditorsMailing Matrix (in .txt format), together with Coversheet – if not filed electronically, via CM/ECF, must be submitted on computer diskette.  if not filed with the petition, the Clerk will enter an order of dismissal unless filed within 3 days after the filing of the petition.Local Bankruptcy Rule 1007-1(H)(1).
  • Statement of Financial Affairs – Must be filed with the petition or within fourteen (14) days.  11 U.S.C. § 521(1)(B)(iii) and Fed. R. Bankr. P. 1007(b),(c).
  • Summary of Schedules and Statistical Summary of Certain Liabilities and Related Data – Must be filed with the petition or within fourteen (14) days.  Fed. R. Bankr. P. 1007(b), (c).
  • Schedules A through J – Must be filed with the petition or within fourteen (14) days.  11 U.S.C. § 521(1) and Fed. R. Bankr. P. 1007(b),(c).
  • Statement of IntentionIndividual(s) only - Must be filed with the petition or within thirty (30) days or by the date set for the § 341 Meeting of Creditors, whichever is earlier.  11 U.S.C. §§ 362(h) and 521(a)(2).
  • Chapter 7 Statement of Your Current Monthly Income (Form B22A1)Individual(s) only – Must be filed with the petition or within fourteen (14) days.  Fed. R. Bankr. P. 1007(b), (c).
  • Disclosure of Compensation of Bankruptcy Preparer (Form B280), if applicable – Must be filed with the petition if the bankruptcy petition is prepared by someone other than the debtor(s).  11 U.S.C. § 110(h)(2).
  • Declaration and Signature of Non-Attorney Bankruptcy Petition Preparer (Official Form 19 – which includes Notice to Debtor for Non-Attorney Bankruptcy Petition Preparer), if applicable- Must be filed with the petition if the bankruptcy petition is prepared by someone other than the debtor(s).  11 U.S.C. § 110(b)(2).
  • Disclosure of Compensation of Attorney for Debtor, if applicable - Must be filed within fourteen (14) days or other date set by the court.  11 U.S.C. § 329 and Fed. R. Bankr. P. 2016(b).
  • Copies of Payment Advices (ex.:  earnings statements, pay stubs, etc.) or other evidence of payment received by the debtor within 60 days before the filing of the petition. – Individual only – Must be submitted to the trustee, and any creditor who requests copies, at least seven (7) days before the meeting of creditors conducted pursuant to 11 U.S.C. Section 341. Local Bankruptcy Rule 1007-1(H)(4).
  • Copy of the Federal Income Tax Return for the most recent tax year ending immediately before the commencement of the case – Must be submitted to the trustee, and any creditor who timely requests a copy, at least seven (7) days before the date first set for the meeting of creditors.  11 U.S.C. Section 521(e)(2)(A).

NOTE:

  • Corporations and Partnerships must be represented by an attorney in filing bankruptcy
  • A daytime telephone number for the debtor(s) must be provided to the Clerk’s Office, at the time of filing
  • Failure to comply with the filing requirements, or missing deadlines, may result in the dismissal of the case, and the loss of bankruptcy protection

Notice of Possible Dismissal

If a debtor fails to file the required documents at the time of the filing of the petition, as set out in the section Chapter 7 Filing Requirements, the appropriate notice of deficiency is completed and forwarded to the pro se debtor or, where the debtor is represented by an attorney, to counsel for the debtor.  The notice of deficiency provides a notice that the case will be dismissed if the required document(s) is/are not filed within the required time period, as set out in the notice.


Meeting of Creditors

After the filing of the petition, a Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines is mailed to the debtor(s) and the creditors of the debtor(s).  The notice advises the debtor(s) and creditors of the date, time and location of the 341 Meeting of Creditors (the 341 Meeting of Creditors is held at the Office of the U.S. Trustee), the name, address and telephone number of the trustee assigned to the case, and certain deadlines set in the case.  The notice provides a warning to the debtor(s) that the case may be dismissed for failure to appear at the 341 Meeting of Creditors.  Please read the notice carefully.

Debtor(s) must present a photo identification at the 341 Meeting, as well as verification of his/her Social Security Number, pursuant to 11 U.S.C. Section 521(h).  Pursuant to 11 U.S.C. Section 343, the debtor shall appear and submit to examination, under oath at the meeting.


General Information

  • Official Forms & Petition Preparation – The Clerk’s Office of the U. S. Bankruptcy Court does not supply the official forms required for filing bankruptcy.  They may be purchased at an office supply store, or may be downloaded from the courts web site, at http://www.vaeb.uscourts.gov, under Forms, Bankruptcy Forms.  If someone other than an attorney assists you in the preparation of the bankruptcy forms, the petition preparer must sign the petition and provide you with the notice contained in Official Form B 19, Declaration and Signature of Non-Attorney Bankruptcy Petition Preparer.  11 U.S.C. Section 110.
  • Social Security Number  – Effective December 1, 2007, individuals filing bankruptcy place only the last four digits of their Social Security Number or Taxpayer-Indentification Number on the bankruptcy petition.  Individuals are required to submit, with the bankruptcy petition, a separate Statement of Social Security Number(s), Official Form B 21, in which the full Social Security Number or Taxpayer-Indentification Number is given.    If the debtor is pro se, the original of the statement must be provided to the Court; if the debtor is represented by an attorney, the attorney retains the original of the statement.  In both instances, the statement is not a part of the public record, and is not viewable by the public.  Official Form B 21 may be accessed through the Court’s web site, at http://www.vaeb.uscourts.gov, under Forms, Bankruptcy Forms.
  • Protection of Personal Information - Any schedule or supporting document filed with he court should not include:  1) the names of minor children – use only initials; 2) birthdates – use only the year of birth; and 3) financial account numbers – use only the last four (4) digits.
  • Legal Advice & Resources – The Clerk’s Office of the U. S. Bankruptcy Court is neither permitted to provide legal advice nor to assist in the preparation of the petition, schedules or other documents.  The local library contains law books that may be of assistance.  The Local Bankruptcy Rules for the Eastern District of Virginia, and information on the various chapters in bankruptcy are available in the Clerk’s Office.  The local bankruptcy rules, forms and instructions are also available on the Court’s web site, at http://www.vaeb.uscourts.gov, under Court Resources, Local Rules; and http://www.vaeb.uscourts.gov, under Forms, Bankruptcy Forms, respectively.
  • Appropriate Courtroom Attire & Conduct – All persons present in a courtroom where a trial, hearing, or other proceeding is in progress must dress and conduct themselves in a manner demonstrating respect for the court.  Traditional business attire is considered appropriate.  Jeans, shorts, and t-shirts are not appropriate.
  • Retaining Your Records – It is advisable to keep copies of your petition, schedules, Discharge of Debtor, and if applicable, your Order of Dismissal.  You may wish to obtain copies of other pertinent documents.
  • Credit Rating & Reports – The Clerk’s Office of the U. S. Bankruptcy Court is not responsible for credit reports or the information reported by credit bureaus.  Bankruptcy records are public records and the information contained in them can be retrieved by anyone.  Additionally, the Fair Credit Reporting Act allows credit bureaus to keep a bankruptcy on your credit record for up to ten (10) years from the date of discharge (not the date of filing of the case).  Any disputes that you may have with a credit agency must be solved by you and that agency.
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