Filing bankruptcy can make you feel like you are drowning in paper.
There’s your paper; there’s the paper your lawyer needs. And there’s the paper the court insists on.
It’s easy to try to skate. To cut corners. To shut down.
But that paper is critical.
Nearly every question, benefit, or dispute in an individual’s bankruptcy case starts with the bankruptcy papers.
Those papers are called the schedules. The schedules form the heart of a bankruptcy case. They lay out what the person filing the case owns, owes, and spends.
And most debtors (those who file bankruptcy) have little idea how much paper is involved til they see the schedules and sign them in their lawyer’s office.
Before they get to the signing, debtors chafe at the endless questions from their attorney about the nature of the debt, who is liable, and whether the debt is disputed.
Is all this effort really needed?
Bankruptcy schedules matter
Your schedules constitute the trustee’s first look at you. Well-done schedules project engagement with the process and they tend to limit digging by the trustee.
The creditor schedules control who gets notice of your case and notice of the automatic stay.
Notice to all affected assures that anyone with a right to challenge the discharge of your debt to them is bound by the timelines of the Bankruptcy Code.
Creditors who don’t get notice may reopen the bankruptcy case later to assert that their debt isn’t dischargeable.
Omit assets and you may lose them, as case law limits your right to claim an exemption in an asset you didn’t disclose in the first place.
Leave out a legal right or pending lawsuit and the defendant in that suit can have your lawsuit dismissed.
Then, there’s the matter of perjury: the law provides for fines and imprisonment for deliberate untruths on the bankruptcy schedules. Not something you want to expose yourself to.
What the schedules contain
Seen broadly, bankruptcy schedules list the debtor’s assets; debts; projected budget; and recent financial history.
Since 2005, there’s a schedule for the means test.
You file proof of having taken prebankruptcy credit counseling and statement of your intentions with respect to debts secured by personal property, like your car.
Helping you get them right is part of the job of a bankruptcy attorney.
New bankruptcy forms
The courts are rolling out new versions of the bankruptcy forms which claim to be more “modern” and user friendly.
I find them verbose and impossible to scan easily to get the big picture in a bankruptcy filing.
The new forms read like tax forms and they suggest that you could competently file bankruptcy without a lawyer. My experience is that, since 2005, it is the rare individual who can correctly file out the forms, much less understand the implications of those forms.
Enlist a professional to assess whether bankruptcy is right for you and whether now is the right time, before you file. Afterward, it may be too late.