When you file for Chapter 7 or Chapter 13 bankruptcy, you must complete and file a number of forms, called the official bankruptcy forms. On one of those forms, the Individual Debtor’s Statement of Intention (Form 8), you tell the bankruptcy trustee and secured creditors what you want to do with secured property (property that serves as collateral for a debt) and unexpired leases.
(To learn about the other forms you must file, see Completing the Bankruptcy Forms.)
How to Get the Statement of Intention?
You can find the most recent version of the Individual Debtor’s Statement of Intention on the U.S. Court’s website at www.uscourts.gov. To learn more about getting the official and other forms, see The Bankruptcy Forms: Getting Started.
When You Must File the Statement of Intention
You don’t have to file this form with the rest of your bankruptcy papers, although you may. The deadline for filing the Statement of Intention is within 30 days of filing your bankruptcy petition or by the date set for the meeting of creditors, whichever is first.
If you don’t file the Statement on time, the automatic stay may terminate as to personal property and leases of personal property.
Completing the Statement of Intention
On Part A of the Statement, you must describe each item of secured property, list the creditor holding the debt secured by the property, indicate what you intend to do with the property (see below), and then indicate whether the property is exempt or not. (To learn more about secured debt, see What is a Secured Debt?)
On Part B of the Statement, you describe the leased property, provide the lessor’s name, and indicate whether you want to assume the lease or not.
Part A: Your Options for Secured Debt in Chapter 7 Bankruptcy
In Chapter 7 bankruptcy you can either give up the property (surrender it) or keep the property (retain it).
Surrender the property. If you don’t want the property, you can give it back to the creditor.
Redeem the property. You can redeem property only if it secures a consumer debt (not a business debt), is tangible, and is exempt or the trustee has abandoned it. To redeem the property, you pay a lump-sum to the creditor in an amount equal to the value of the property or the amount of the debt, whichever is less.
Reaffirm the debt. You can also keep the property by reaffirming the debt. If you do this, you will remain legally obligated to pay the debt even after you receive the bankruptcy discharge.
Take some other action. If you intend to avoid the lien on the property, or take some other action regarding the property, you can check the “Other” box and then explain your intentions.
Consider each of these options carefully before you decide what to do. To learn more about your options, including the pros and cons of each, see the articles in our Secured Debt & Property in Chapter 7 Bankruptcy area.
Part B: Your Options for Leases in Chapter 7 Bankruptcy
If you lease personal property (like a car) and the lease has not yet expired, the bankruptcy trustee may assume the lease as property of the estate (take it over) or terminate the lease (reject it). In most Chapter 7 cases, leases of personal property have little value to the bankruptcy estate so the bankruptcy trustee does not assume them.
If the trustee rejects the lease, you have two options: assume the lease or terminate it. You indicate your preference on the Statement of Intention even before the trustee makes her decision. To learn more about those options, see What Happens to Leases and Contracts in Chapter 7 Bankruptcy?
This article provides general information only. There are many legal issues involved and important decisions to be made when filing for bankruptcy. You must understand the entire bankruptcy process, learn about the applicable federal and state laws, and determine how those laws will affect your particular situation before you complete the bankruptcy forms. If you want to file bankruptcy without a lawyer, use a good do-it-yourself book like Nolo's How to File for Chapter 7 Bankruptcy to ensure you make well informed decisions about your bankruptcy case.