Legal Definitions - statement of intention

A statement of intention is a formal document that an individual filing for Chapter 7 bankruptcy must submit to the court. Its purpose is to clearly outline the debtor's (the person filing for bankruptcy) plans for certain personal property that is secured by a consumer debt.

In this statement, the debtor must declare one of the following for each piece of secured consumer property:

• Whether they intend to retain the property (keep it), which might involve reaffirming the debt (agreeing to continue making payments) or redeeming the property (paying its current market value in a lump sum).
• Whether they intend to surrender the property to the creditor (give it back).
• Whether they claim the property as exempt from the bankruptcy process under applicable laws.

This statement helps the court and creditors understand the debtor's proposed actions regarding these specific assets early in the bankruptcy proceedings. It typically must be filed either before the first meeting with creditors or within 30 days of filing the bankruptcy petition, whichever occurs first.

Examples of a Statement of Intention:

• Example 1: Automobile Loan

  Maria files for Chapter 7 bankruptcy. She has a car that is financed through a bank loan, meaning the car itself serves as collateral for the debt. In her statement of intention, Maria must declare whether she plans to keep the car by continuing to make payments (reaffirming the debt), pay the bank the car's current value to own it outright (redeeming the car), or surrender the car to the bank. She might also state if she claims the car as exempt under bankruptcy laws if applicable.

  Explanation: This illustrates the statement of intention because Maria is formally notifying the court and the bank of her specific plan for the secured vehicle, which is a key piece of consumer debt property.

• Example 2: Financed Household Appliances

  David is filing for Chapter 7 bankruptcy and has a refrigerator and washing machine that he purchased using a store credit card, where the appliances themselves are collateral for the loan. David's statement of intention would specify if he intends to surrender these appliances back to the store, or if he plans to keep them by either reaffirming the debt or redeeming them by paying their current value.

  Explanation: This example shows how the statement applies to household goods secured by consumer debt, requiring David to declare his intentions for these specific assets to the court and the creditor.

• Example 3: Secured Personal Loan for Electronics

  Sarah is going through Chapter 7 bankruptcy. She has a high-end laptop that she purchased with a personal loan from a finance company, and the laptop itself is collateral for that loan. Sarah's statement of intention would indicate whether she plans to surrender the laptop to the finance company, or if she intends to keep it, perhaps by reaffirming the loan or redeeming the laptop for its current market value. She might also claim it as exempt if allowed by her state's bankruptcy laws.

  Explanation: This demonstrates the statement of intention's role in addressing personal items of value that are secured by consumer debt, requiring the debtor to formally declare their plan for the asset.