The Bankruptcy Code for a Chapter 7
Found under the Bankruptcy Code 521 (a)(2) is the Debtors Statement of Intention on what he will do concerning his secured property. The debtor is required to file the statement in a Chapter 7 within the first 30 days of the Creditors 341 Meeting if he has any secured debt. Secured debt is a debt with a secured lien held against the property.
What Does the Debtor Do if He Does Not Have Any Secured Property?
This illustrated question came from a bankruptcy forum website that a debtor, while waiting for a Chapter 7 discharge, learned on Pacer that he was missing the Debtor’s Statement of Intention, even though he had reported on the Schedules D, E, and G that he had no secured assets: “I only have credit card debt; no car or home,” he said. “Will this be a problem?”
Exception to the Rule
Although the code states that a Chapter 7 type of bankruptcy requires a Debtors Statement of Intention, there are exceptions to this particular rule. A Debtors Statement of Intention is a statement made by the filing debtor on what his or her intention is regarding secured debt. Under code 521(a) section 2(A), the filing debtor has the choice to “retain or surrender such property and, if applicable, specify that such property is claimed as exempt, that the debtor intends to redeem such property, or that the debtor intends to reaffirm debts secured by such property.”
In the case of the illustration above, the filing debtor received a 11 USC 521 Notice of Noncompliance. This statement given by the bankruptcy court would have the effect of acknowledging the filing debtor has no secured assets to consider in a Chapter 7 case.
Even though the bankruptcy court has placed in the records the filing debtor has not complied with the code by providing a Debtors Statement of Intention, the Notice of Noncompliance proves the debtor has no secured assets in which to have any intentions. Therefore, the exception to the rule, logically, is that a Debtors Statement of Intention is really not needed because there is nothing to declare.
What Happens if the Trustee Files for Dismissal for Noncompliance?
Should a bankruptcy court panel trustee make an issue of not filing the Debtor’s Statement of Intention in a timely manner and then ask for a dismissal for noncompliance, which is not likely, the filing debtor need only take his Schedules and Notice of Noncompliance statement before the bankruptcy Judge who would recognize the significance of the statement under question. It is extremely unlikely a bankruptcy Judge would dismiss a case under those circumstances.
The Need for Bankruptcy Advice
Bankruptcy laws are sometimes complicated. How you fill out an application in a Chapter 7 bankruptcy is very important. Improperly filling out your paperwork can cause your case to be dismissed under certain circumstances. These are all good reasons why there is a need for experienced bankruptcy advice, and there is no one better to give you this legal advice than an experienced bankruptcy attorney.
- Are There Good Reasons Not to File a Chapter 7? (betterbankruptcy.com)
- Report of No Assets in a Chapter 7 (betterbankruptcy.com)
- Chapter 7 Bankruptcy for a Family of Four (betterbankruptcy.com)
- Chapter 7 Questions and Potential Answers (betterbankruptcy.com)
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