Preface and Notice To Consumer Debtor

The laws, codes and rules governing bankruptcy procedures are complicated and intricate in detail. This guide is not intended to serve as a “how to” manual, nor is it intended to advise debtors of their legal rights or responsibilities under bankruptcy. The purpose of this guide is simply to shed light on some common misconceptions and answer frequently asked questions posed to the Clerk by debtors filing bankruptcy without the assistance of legal counsel (Pro Se). A Pro Se Debtor is responsible for all proceedings of their case.





In accordance with § 342(b) of the Bankruptcy Code, this notice: (1) Describes briefly the services available from credit counseling services; (2) Describes briefly the purposes, benefits and costs of the four types of bankruptcy proceedings that may be commenced; and (3) Informs the debtor about bankruptcy crimes and notifies that the Attorney General may examine all information supplied in connection with a bankruptcy case. Debtor(s) are cautioned that bankruptcy law is complicated and not easily described. Thus, debtor(s) may wish to seek the advice of an attorney to learn of rights and responsibilities should they decide to file a petition. Court employees cannot give legal advice.



1.    Services Available from Credit Counseling Agencies


With limited exceptions, § 109(h) of the Bankruptcy Code requires that all individual debtors who file for bankruptcy relief on or after October 17, 2005, receive a briefing that outlines the available opportunities for credit counseling and provides assistance in performing a budget analysis. The briefing must be given within 180 days before the bankruptcy filing. The briefing may be provided individually or in a group (including briefings conducted by telephone or on the Internet) and must be provided by a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator. The Clerk of the bankruptcy court has a list that may be consulted of the approved budget and credit counseling agencies.


In addition, after filing a bankruptcy case, an individual debtor generally must complete a financial management instructional course before they can receive a discharge. The Clerk also has a list of approved financial management instructional courses.


2.   The Four Chapters of the Bankruptcy Code Available to Individual Consumer Debtors


Chapter 7: Liquidation


  1. Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a “means test” designed to determine whether the case should be permitted to proceed under chapter 7. If income is greater than the median income for the state of residence and family size, in some cases, creditors have the right to file a motion requesting that the court dismiss the case under § 707(b) of the Code. It is up to the court to decide whether the case should be dismissed.


  1. Under chapter 7, debtors may claim certain property as exempt under governing law. A trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay creditors.


  1. The purpose of filing a chapter 7 case is to obtain a discharge of existing debts. If, however, debtors are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny discharge and, if it does, the purpose for which the bankruptcy petition was filed will be defeated.


  1. Even if the debtor receives a general discharge, some particular debts are not discharged under the law. Therefore, they may still be responsible for most taxes and student loans; debts incurred to pay non-dischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; certain debts which are not properly listed in the bankruptcy papers; and debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.


Chapter 13: Repayment of All or Part of the Debts of an Individual with Regular Income


  1. Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. Debtors are only eligible for chapter 13 if their debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.


  1. Under chapter 13, debtors must file with the court a plan to repay creditors all or part of the money that is owed them, using future earnings. The period allowed by the court to repay debts may be three years or five years, depending upon income and other factors. The court must approve the plan before it can take effect.


  1. After completing the payments under the plan, debts are generally discharged except for domestic support obligations; most student loans; certain taxes; most criminal fines and restitution obligations; certain debts which are not properly listed in bankruptcy papers; certain debts for acts that caused death or personal injury; and certain long term secured obligations.


Chapter 11: Reorganization


Chapter 11 is designed for the reorganization of a business but is also available to consumer debtors. Its provisions are quite complicated, and any decision by an individual to file a chapter 11 petition should be reviewed with an attorney.


Chapter 12: Family Farmer or Fisherman


Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm or commercial fishing operation.


3.   Bankruptcy Crimes and Availability of Bankruptcy Papers to Law Enforcement Officials


A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury, either orally or in writing, in connection with a bankruptcy case is subject to a fine, imprisonment, or both. All information supplied by a debtor in connection with a bankruptcy case is subject to examination by the Attorney General acting through the Office of the United States Trustee, the Office of the United States Attorney, and other components and employees of the Department of Justice.


WARNING: § 521(a)(1) of the Bankruptcy Code requires that debtors promptly file detailed information regarding creditors, assets, liabilities, income, expenses and general financial condition. Bankruptcy case may be dismissed if this information is not filed with the court within the time deadlines set by the Bankruptcy Code, the Bankruptcy Rules, and the local rules of the court.