Posted on April 17, 2010
Does a bankruptcy petition really expire? Yes…sort of.
What this is referring to, is the fact that a bankruptcy petition is a snapshot in time, of the debtor’s financial situation.
Schedule I reflects the current or most recent income (or lack thereof), and the Means Test (Form 22a in a Chapter 7 or Form 22c in a Chapter 13), reflects the debtors income for the last six FULL months.
Once a bankruptcy petition is prepared to show this financial picture, it must be filed with the court before the end of the month it is prepared in. Why? Because if it isn’t filed by the end of the month and the calendar flips over to a new month, the debtor’s financial picture may have changed, and the petition must be updated accordingly so that the Means Test still shows the last six full months of income.
This rolling over to a new month will have caused the sixth month to have rolled off of the six month snapshot, as it becomes the seventh month, and the month that just passed now becomes the most recent month that needs to be reported in the petition.
Furthermore, the income on Schedule I needs to reflect the most recent income, and should be updated with any changes shown on the debtor’s most recent pay stub or business profit and loss statement (P&L).
Once the data in the petition is updated, it is then again ready to file, and you have until the end of the new month to get it filed, before it expires again. I refer to this process of updating the information listed in the petition in order to be current as “Refreshing” the petition. I have also heard this referred to as “bringing the petition current”, or the “Means Test expiring”.
The need to refresh petitions is something that would be nice to avoid, but there are a number of situations and unforeseen circumstances that can lead to this, such as the debtor not providing needed information in a timely fashion (this is the most common), the debtor getting cold feet, the attorney having the client wait to file for some reason, or a myriad of other things.
Simply updating Schedule I and the Means test may not be enough though. There are other things within the petition that could “expire”, or that may need to be updated as a result of rolling over into a new month, including arrearages on liens, and payments to creditors.
Keep in mind too, that with updated information, there may be changes, which could change other things in a petition, such as the amount of disposable monthly income for a Chapter 13 Plan payment.
The list below can serve as a checklist of things you will want to verify, and update if necessary, when refreshing an expired bankruptcy petition:
Below are some TIPS on avoiding and handling expired bankruptcy petitions:
713 Training Team
DISCLAIMER: We at 713 Training are not attorneys; any information provided by 713 Training should not be considered legal advice. The information in this article, and any other materials provided by 713 Training, whether delivered verbally, written or via any other means, including electronic/digital delivery and storage, is for training purposes only, and is intended for individuals who work under the direction of a licensed attorney.