Voluntary Bankruptcy Petition
The voluntary bankruptcy petition (Official Form B1) is a 3 page document that initiates the bankruptcy process. The filing of a voluntary bankruptcy petition with the court commences the voluntary bankruptcy case and constitutes an order for relief, thereby invoking the protections of the automatic stay which stops the collection of claims, repossessions, and foreclosures. The information contained in the bankruptcy petition is limited and largely consists of basic identifying information and certifications. However, the bankruptcy petition itself is just one document among the many necessary to complete chapter 7 or 13 bankruptcy. In addition to the voluntary bankruptcy petition, the debtor must submit a series of schedules and statements.
The Voluntary Bankruptcy Petition in Depth
The top portion of the first page of the voluntary bankruptcy petition requires the disclosure of basic identifying information: names, social security number (last 4 digits) or taxpayer identification number, address, county or residence, and mailing address. If a husband and wife are filing a joint bankruptcy petition the same information for the joint-debtor spouse is entered under the joint-debtor fields on the right side of the petition. Other information called for on the first page of the form is fairly basic. The debtor must specify which chapter they are filing under; whether they are an individual or an entity; and whether the filing fee is being paid in full or in installments, or whether a filing fee waiver is being requested. One area where many people may be misled by the bankruptcy petition itself is the “nature of debts” section. The bankruptcy petition requires the debtor to specify where their debts are primarily consumer debts or “business debts.” This area of the form is misleading and likely causes the over-identification of consumer debts and unnecessary application of the means test. To explain, if debts in a chapter 7 bankruptcy are primarily consumer debts (debts incurred by an individual primarily for personal, family, or household purposes) the debtor must subject themselves to the means test and pass the test to qualify for chapter 7 bankruptcy. However, the term “business debt” is not defined in the bankruptcy code. Consequently, if a debt is not incurred by an individual primarily for personal, family, or household purposes it is a non-consumer debt resigned to the “business debt” check-box on the voluntary petition. In practice, if the majority of an individual chapter 7 petitioner’s debts are non-consumer debts, but not necessarily debts incurred for a business purpose, the “business debts” checkbox should be marked and the individual should not be subject to the means test.
The second page of the bankruptcy petition requires disclosure of all bankruptcy cases filed within the previous 8 years. Furthermore, a series of exhibits must be completed. Exhibit A only applies to publicly traded companies. Exhibit B is a declaration by the attorney in individual cases with primarily consumer debts that certifies that the attorney has provided the section 342(b) notice. Exhibit C concerns the ownership or possession of property that may pose a threat of imminent harm to public health or safety. Exhibit D is a statement regarding consumer credit counseling. The section marked “information regarding the debtor” requires checking the appropriate box to establish correct venue. The following section marked “certification by a debtor who resides as a tenant of residential property” applies to tenants in default.
The last page of the voluntary bankruptcy petition requires the debtor’s signature certifying that the information contained in the petition is true; if the debtor is filing under chapter 7 they are aware they may proceed under chapter 7, 11, 12, or 13 of the bankruptcy code and understand the relief available under each chapter; and if no attorney is representing them, that they have obtained and read the section 342(b) notice. The last page also requires the signature of the debtor’s attorney, if applicable. The attorney’s signature will serve as a certification under Federal Rule of Bankruptcy Procedure Rule 9011(b).