Special Warning to a Debtor Thinking of Filing a Bankruptcy Petition
Before you file a bankruptcy petition, you need to stop and make sure that you have met the statute’s credit counseling requirement and that filing a petition is the best thing for you to do:
- DO NOT file if you have not obtained credit counseling within 180 days before you file your bankruptcy case (unless you qualify for one of the rarely applicable exceptions to that requirement). You need to make sure that you receive credit counseling, as required by section 109(h) of the Bankruptcy Code (11 U.S.C. § 109(h)), before you file. (A copy of the Bankruptcy Code is available at the Clerk’s Office.) If you do not get the credit counseling before you file, your case may be dismissed. More information is available about this in the Notice to All Debtors.
- You need to determine whether, under the law of your state, your income is above or below the amount subject to garnishment or is immune from garnishment, and whether your other assets can or cannot be seized by creditors. For example, if your employer is located in Washington, D.C., the amount of wages that can be seized is governed by D.C. Code § 16-572. Other states’ statutes can be found on the Cornell University Law School website.
- If you are considering bankruptcy because you face a foreclosure on real property, there may be ways of avoiding foreclosure short of filing a bankruptcy case. See the discussion of foreclosure on the U.S. Courts website.
- If you filed a bankruptcy case before that was dismissed:
- Determine whether the order that dismissed your last case barred you from filing a new case for some period of time (for example, by dismissing the case “with prejudice for 180 days”). If so, you cannot file your new case until that time has passed (usually measured from the date the clerk entered the order of dismissal which may be later than the date the judge signed the order).
- Determine whether a motion for relief from the automatic stay was pending in your earlier case when you decided to dismiss your case voluntarily. If so, your new case may be dismissed if filed within 180 days after entry by the clerk on the docket of the order that dismissed the earlier case. See section 109(g)(2) of the Bankruptcy Code (11 U.S.C. § 109(g)(2)).
- Your right to have the automatic stay in place throughout your case will be affected if a prior case or cases were pending during the year before you file your new case. You are urged to seek the advice of an attorney about this. See sections 362(c)(1) and 362(c)(2) of the Bankruptcy Code (11 U.S.C. §§ 362(c)(1) and 362(c)(2)).
- If you filed a bankruptcy case before and received a discharge in that case (or an earlier case), determine if that discharge makes you ineligible to receive a discharge in the new case. See the Table Regarding Availability of Discharge if Debtor Got a Discharge in an Earlier Case.
- You may even be denied a discharge in a chapter 7 case if you engaged in certain conduct preceding the bankruptcy case such as:
- in some instances, having made a transfer of property in order to hinder, delay, or defraud a creditor (see 11 U.S.C. § 727(a)(2)), or
- in some instances, having failed to keep adequate records (see 11 U.S.C. § 727(a)(3)),
- You should be aware that sometimes not all of a debtor’s liabilities are discharged in a bankruptcy case even if the debtor receives a discharge. See 11 U.S.C. §§ 523(a), 523(c), and 1328(a).
- Those provisions regarding what debts are dischargeable are complicated, and the advice of counsel is strongly recommended in your evaluating them.
- For example, the date on which you file your petition could affect whether certain tax liabilities will be discharged by the discharge you receive in the case. See 11 U.S.C. § 523(a)(1), referring to taxes of the kind and for the periods specified in 11 U.S.C. § 507(a)(8). Illustratively, a discharge in a chapter 7 case does not apply to an income tax liability for which a return was last due, including extensions, after three years before the date of the filing of the petition.
- Before you file a bankruptcy petition, you ought to determine whether you are eligible to file a bankruptcy case:
- If you wish to file a case under chapter 13 of the Bankruptcy Code, make sure you meet the debt eligibility requirements for such a case. See 11 U.S.C. § 109(e).
- If you wish to file a case under chapter 7 of the Bankruptcy Code, be aware of the means test under 11 U.S.C. § 707(b)(2). See also Official Form B22A (information you must file addressing the means test). (A copy of the Official Forms is available at the Clerk’s Office.) If a presumption of abuse arises under the means test, then under 11 U.S.C. § 707(b)(1) your case might be dismissed as an abuse of the provisions of chapter 7 (unless you were to convert the case to another chapter).
- Be aware of the consequences, discussed above, of your having filed a bankruptcy case before.
- Make sure that your case will not be dismissed based on the statutory requirement regarding prepetition credit counseling discussed under Notice to All Debtors.
- You will also need to be aware of all of the requirements that will be imposed upon you, once the case is filed, in order for you to prevent dismissal of the case and to prevent denial of a discharge. See Warning to Debtors Who Are Pro Se (Without an Attorney) Regarding the Difficulties They May Encounter Once They File a Bankruptcy Case.
- Beyond that, you need to also read the General Warning to Parties Proceeding Without an Attorney (Proceeding Pro Se).
or if you will not be able in the case to explain satisfactorily any loss of assets or deficiency of assets to meet your liabilities (see 11 U.S.C. § 727(a)(5)).