What is a Bankruptcy Petition?

N. Madison
N. Madison

A bankruptcy petition is an official document a person files in order to begin a bankruptcy case. This document is typically filed with the person’s local bankruptcy court, though it may be filed with a general court in places that do not have specific courts for bankruptcies. It is used to give the court information about the filer, including contact information, financial details and information about the filer's creditors. When completed and filed properly, it gives the court enough information to begin assessing the bankruptcy case.

Filing a petition officially begins a bankruptcy case in federal court.
Filing a petition officially begins a bankruptcy case in federal court.

The bankruptcy petition a person files with the court usually provides detailed information about the petitioner, who may be referred to as the debtor or petitioner. For example, the petitioner may have to provide his name, contact information and tax identification number. The petitioner also has to identify whether he is petitioning as an individual or some type of business. A bankruptcy petition will typically list the estimated number of creditors the petitioner has as well. In addition to the petition, a debtor must also provide the names and addresses of his creditors and detailed information about his financial situation, often in separate schedules or exhibits that are filed with the petition.

Individuals who have a serious problem with debt may file for bankruptcy.
Individuals who have a serious problem with debt may file for bankruptcy.

When filing a bankruptcy petition, it is critical for the petitioner to ensure that every statement included in the document is true, at least to the best of his knowledge. The petitioner has to sign the document, swearing to its accuracy. If he adds deliberate falsehoods and they are discovered, the court could dismiss his case. If a person provides fraudulent information, he could even face criminal charges. Filing incomplete information, such as omitting resources or creditors, may lead to case dismissal as well.

Once someone has filed a bankruptcy petition and notified those involved according to the laws of his country, collection calls and processes typically grind to a halt. The filing of the petition often starts something called an automatic stay. While the court is considering the bankruptcy case, the automatic stay generally prevents collections and other debt actions from proceeding. If the court grants the bankruptcy, the debts are dismissed permanently. This means the creditors cannot attempt to collect on them again.

Many people pay lawyers to handle their bankruptcy cases, including the completion and filing of the bankruptcy petition. This is because the bankruptcy process can be complex, particularly for those who have numerous debts or many different types of creditors. It's possible to file without a lawyer, however. There are many books and tutorials designed to teach consumers how to prepare documents, file and complete their cases without lawyers. Consumers may also use document preparers to complete their bankruptcy petitions for them, allowing them to file without struggling to create the petition themselves.

N. Madison
N. Madison

Nicole’s thirst for knowledge inspired her to become a wiseGEEK writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

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