Cite as: Keith M. Lundin, Lundin On Chapter 13, § 36.22, at ¶ ____, LundinOnChapter13.com (last visited __________).
Bankruptcy Rule 1007(b)(1) requires every Chapter 13 debtor to file a Statement of Financial Affairs, Official Bankruptcy Form 7. The Statement of Financial Affairs requires detailed financial information in a question-and-answer format. A married debtor must answer all questions for both spouses even if only one spouse is a debtor, unless the spouses are separated and not filing a joint petition. Questions 1 through 18 of Official Bankruptcy Form 7 are completed by all debtors; a Chapter 13 debtor engaged in business must also complete questions 19 through 25.
There is no quick way to answer some of the questions in the Statement of Financial Affairs. Among other things, the first 18 questions in Official Bankruptcy Form 7 require the debtor to provide detailed information about prior bankruptcies, foreclosures, garnishments, repossessions, bank accounts, gifts, income during the previous two years, thefts, fires or other casualty losses, payments to lawyers or others for bankruptcy assistance, transfers of property, safe deposit boxes, setoffs that may be held by any creditor, property that the debtor holds for someone else and all prior addresses of the debtor within the two years immediately preceding commencement of the case. The questions in Official Bankruptcy Form 7 must be read and explained in tedious detail. The answers may determine the outcome of the debtor’s eligibility for Chapter 13 relief, will bear on the liquidation value of the estate for purposes of confirmation, and will reveal to counsel the major sources of financial pressure on the debtor and the likely challenges to confirmation of a plan. If the Chapter 13 debtor is engaged in business, the debtor must provide special information about the debtor’s business in questions 19 through 25 of Official Bankruptcy Form 7.1
Answering questions in the Statement mechanically and without careful attention is guaranteed to produce trouble. For example, if the debtor lists a creditor as unsecured in Schedule F,2 because the TV that once secured the claim was stolen, there had better be an appropriate explanation of the loss in question 8 of the Statement of Financial Affairs. If the debtor is driving a Porsche borrowed from a wealthy uncle, tell everyone in the answer to question 14, before a creditor reports a sighting from the bankruptcy court parking lot and the trustee goes ballistic. The Statement of Financial Affairs is a pain to fill out well; it is also an opportunity to deal with small problems before they inflate.
1 See § 36.8 [ Statement of Financial Affairs for Debtor Engaged in Business ] § 36.31 Statement of Financial Affairs for Debtor Engaged in Business.
2 See § 35.7 [ Schedule F—Unsecured Claims ] § 36.13 Schedule F—Unsecured Claims.