The Statement of Financial Affairs is one of the many documents that you must complete prior to filing a bankruptcy case. Although the form looks deceptively simple with its "check the box" format, and seemingly straightforward questions, the Statement of Financial Affairs is, in reality, complicated and full of traps and pitfalls. Prior to answering any question on the Statement of Financial Affairs, you must think carefully about what exactly is requested.
Questions 1-2
Question 1 of the Statement of Financial Affairs requires that the debtor disclose income received from the operation of a business or from employment within the two years prior to the filing of the bankruptcy case. You must include the income received year to date, as of the filing of the bankruptcy. This is a fairly straightforward question. Question 2 requires a similar disclosure, but refers to income not from the operation of a business or from employment. This may include, for example, the sale of stock or interest on a savings account.
Question 3
For this question, you must list all transfers of property or money made to creditors within the 90 days immediately prior to your bankruptcy filing. If you having mostly business debts, the total value of the transfers must equal or exceed $5,000 to require disclosure, whereas mostly consumer debts has a lower limit of $600. If the debtor is a corporation, it must also disclose any transfers to insiders of the corporation within one year of the bankruptcy filing. An insider has private knowledge of the corporation, such as an officer or employee.
Question 4
You must disclose any lawsuits, garnishments, attachments, or other attempts to satisfy judgments. The time period of disclosure goes back one year from the filing of your bankruptcy case.
Question 5
Question 5 concerns any property that was foreclosed on or returned to the seller within one year prior to the bankruptcy filing.
Question 6
This unusual question requires the listing of any assignments, within 120 days prior to the bankruptcy, or receiverships, within one year prior to the bankruptcy, over your property. This question is unlikely to apply to individual consumer debtors.
Questions 7-8
These questions relate to gifts and losses received within one year prior to the filing of your bankruptcy case, respectively. Losses include a stock portfolio decline or gambling losses.
Questions 9-10
Questions 9 and 10 require you to disclose even more transfers. Question 9 asks you to list any payments made to attorneys or other individuals for services related to debt counseling or bankruptcy. Question 10 is a catch-all question which asks for any transfers made by you to anyone within the last two years. Note that part (b) of question 10 requires disclosure of transfers made to a self-settled trust within the last ten years.
Questions 11-13
These questions concern accounts at financial institutions. Question 11 asks you to list any financial accounts, such as a bank account, closed within one year prior to the bankruptcy case. Question 12 necessitates disclosure of any safety deposit boxes owned within the immediately preceding year. Finally, question 13 asks you to list any setoffs taken by a financial institution within 90 days prior to the commencement of your bankruptcy case. A setoff is when a bank or financial institution takes money from your checking or savings account to pay off your debt.
Question 14
This question asks you to list any property that you hold for another person. For example, you may allow your daughter to keep her car at your house. In that case, you would like the car under this question.Questions 15-16
Question 15 asks for any prior addresses within the last three years. Question 16 requires disclosure of your spouse or any former spouses within the last eight years.
Question 17
This question concerns environmental violations by the debtor. This question is very unlikely to apply to most individuals.
Questions 18-25
Questions 18 to 25 delve deeply into the business of the debtor. These questions require the debtor to disclose any businesses owned or operated within six years prior to the filing of the bankruptcy case. The questions also request information regarding the keeper of the business's books and records, a listing of inventory, a listing of current and former partners, directors, and shareholders, and the identification number of any pension fund.