Once the debtor has completed Schedules A, B, C, D, E/F, G, H, I and J, she might think she’s finished. Not by a long shot. There are still several more documents to come, though almost all are shorter and less involved than the Schedules.
One document that is lengthy, however, is the Statement of Financial Affairs, or SOFA as it’s often called. Officially Form B107, the SOFA is a series of questions regarding the debtor’s financial dealings. Today we’ll talk about how to complete the SOFA. Most of the questions are self-explanatory. We’ll only discuss a few in any depth.
Part 1. The first Part is information about the debtor’s marital status and where she lived.
Part 2 is information about the debtor’s income. It asks for gross income for the current year to date (from January 1 of the current year through the month prior to the month in which the debtor files) and the two previous years. In the first section the debtor shows income from employment or operation of a business. In the second section the debtor shows income from all other sources, such as unemployment assistance, Social Security, retirement, or any other income not related to employment or operation of a business.
Part 3 asks for information about debt payments prior to filing bankruptcy. The trustee can recover certain payments on debts made before the debtor filed. In most cases, the trustee can recover payments made within 90 days of filing. However, in other cases, where the debtor paid an insider or made payments on behalf of an insider, the trustee can recover payments made up to a year prior to filing. “Insiders” are close associates of the debtor, such as relatives or business partners.
With respect to payments on consumer debts, the trustee only cares about payments that total $600 or more to any one creditor. For example, if the debtor made three payments of $100 each on a credit card in the 90 days prior to filing, she would not have to disclose those payments. But if she made three payments of $250 each on a car loan in the same period, she would disclose those payments.
Part 4 is for information about lawsuits that the debtor was a party to within the one year prior to filing bankruptcy. This includes divorce and criminal cases. It also asks for information about property that has been repossessed, foreclosed on, garnished, or attached. We discussed those matters here.
Questions 11 and 12 are somewhat tricky. A set off or offset, occurs where a creditor matches a debt that it owes the debtor against a debt that the debtor owes the creditor. An assignment for the benefit of creditors is a state court proceeding that allows the debtor to turn over all her property to a person appointed by a state court to have that person deal with the debts of the debtor. They are very rare; in fact, in over 35 years of practicing bankruptcy, I’ve never seen one.
Part 5 asks for information about gifts and contributions. The trustee is entitled to recover the value of any gifts or contributions but almost never does unless the amount is significant. Gifts under $600 to any one person do not need to be disclosed.
Part 6 is information about losses such as by fire, theft, other damage, or gambling. These might be covered by insurance that the trustee could use.
Part 7 discloses payments or transfers that the debtor made for help dealing with her debts. If the debtor paid anyone to help or try to help her work out her debt situation, those payments are listed under Part 7.
Part 8 is information about financial accounts that were closed or transferred within the year prior to filing. Do not list any open accounts here; they would be listed on Schedule B. This part also requires disclosing any safe deposit boxes that the debtor has or that she closed within a year prior to filing. Question 22 asks about any storage units that the debtor might have.
Part 9 is sort of the reverse of Question 22. In Question 23 the debtor must say whether there is anything at her residence that does not belong to her. This would be things like a piano that belongs to the debtor’s grandmother that the debtor is storing; a friend’s car that she is borrowing; or the like.
Part 10 only applies if the debtor has any property that poses an environmental hazard, such as a gas station or dry-cleaning business where there could be leaks of dangerous substances.
Part 11 is for information regarding any businesses that the debtor either operates or has operated in the four years prior to filing bankruptcy.
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