Bankruptcy Statement of Intention

What Is a Bankruptcy Statement of Intention?

The Statement of Intention is a document filed by an individual debtor in a Chapter 7 bankruptcy case. Its purpose is to tell the bankruptcy court, Chapter 7 trustee, secured creditors, and personal-property lessors what the debtor plans to do with certain property.

Official Form 108 is generally required when either of the following applies:

• A creditor has a claim secured by the debtor’s property.
• The debtor has an unexpired lease of personal property.

Examples include a financed vehicle, a home mortgage, furniture purchased through secured financing, a leased automobile, or leased business equipment used personally. The form is completed by individual Chapter 7 debtors, including married couples filing a joint case. In a joint filing, both spouses are responsible for the accuracy of the information and must sign the form.

The Statement of Intention is not a magical permission slip. Filing it does not automatically transfer property, cancel a lease, complete a redemption, or create a reaffirmation agreement. It is a formal declaration of what you plan to do, followed by a legal obligation to take the appropriate action within the applicable deadlines.

When Must Form 108 Be Filed?

A debtor normally must file the Bankruptcy Statement of Intention within:

• 30 days after filing the Chapter 7 petition; or
• The date scheduled for the meeting of creditors under Section 341,

whichever occurs first. A court may extend the deadline for cause, but the request ordinarily must be made before the original period expires. The debtor must also serve a copy on the trustee and on every creditor or lessor identified in the statement. Filing something with the court and forgetting to send it to the interested parties is the legal equivalent of mailing yourself a wedding invitation.

Federal law also generally requires the debtor to perform the stated intention within 30 days after the first date set for the meeting of creditors. Additional rules may impose a 45-day deadline for certain personal property securing a purchase-money claim.

What If a Case Is Converted to Chapter 7?

When a Chapter 11, Chapter 12, or Chapter 13 case is converted to Chapter 7, a Statement of Intention may become necessary even though one was not required when the original case began. Under the federal rules, the statement is generally due within 30 days after entry of the conversion order or before the first date set for the new meeting of creditors, whichever occurs first.

How to Complete Official Form 108

The form contains three main sections. The information should match the debtor’s bankruptcy schedules, especially Schedule D, Schedule G, and Schedule C. Inconsistencies do not automatically create disaster, but they may cause questions from the trustee, creditor, or court.

Part 1: Creditors With Secured Claims

Part 1 asks for each creditor listed on Schedule D, which identifies claims secured by property. For every secured creditor, the debtor provides:

• The creditor’s name.
• A description of the collateral.
• The debtor’s intended treatment of the property.
• Whether the property was claimed as exempt on Schedule C.

Common collateral includes cars, trucks, motorcycles, homes, appliances, jewelry, electronics, and household furniture. Describe the property clearly enough to identify it. “Car” is less helpful than “2021 Honda Accord.” The court does not need the vehicle’s entire autobiography, but it does need to know which car you mean.

Part 2: Unexpired Personal-Property Leases

Part 2 covers unexpired leases of personal property, such as a leased car or leased equipment. It asks for the lessor’s name, a description of the property, and whether the debtor intends to assume the lease.

Do not list residential apartment leases or other real-estate leases in this section. Those may appear elsewhere in the bankruptcy schedules, but Part 2 of Form 108 is specifically designed for personal-property leases. The official form also explains that an individual may assume a personal-property lease when the trustee does not assume it, subject to the applicable legal process.

Part 3: Signatures

The debtor signs the form under penalty of perjury. In a joint bankruptcy case, both debtors must sign and date it. A signature is more than decorative courthouse calligraphy: it confirms that the information is complete and accurate to the best of the debtor’s knowledge.

Your Main Options for Secured Property

For secured property, Form 108 presents several possible intentions. The appropriate choice depends on the property’s value, the loan balance, payment status, contract terms, exemptions, available cash, and the debtor’s long-term budget.

1. Surrender the Property

Surrender means making the collateral available to the secured creditor rather than keeping it. A debtor might surrender a vehicle when the loan balance greatly exceeds the car’s value, the payment is unaffordable, or the vehicle is no longer reliable.

Surrender does not mean abandoning a car in a supermarket parking lot with the keys balanced artistically on the hood. The debtor should communicate with the creditor or attorney and arrange a lawful return or pickup. Until possession and ownership issues are resolved, insurance and other responsibilities may continue.

Chapter 7 may discharge the debtor’s personal liability for a qualifying deficiency balance, but valid liens generally remain attached to collateral. Surrender also does not automatically eliminate the liability of a co-borrower who did not file bankruptcy.

2. Retain and Redeem the Property

Redemption allows an individual debtor to keep certain tangible personal property by paying the secured creditor the amount of its allowed secured claim in one payment. The property must generally be intended for personal, family, or household use and must be exempt or abandoned by the trustee.

Suppose a debtor owes $18,000 on a car worth $11,000. If the vehicle qualifies for redemption, the debtor may be able to pay approximately $11,000 in a lump sum rather than continuing to owe the full contract balance. The exact amount may be negotiated or determined by the bankruptcy court if the parties disagree about value.

Redemption can reduce an underwater secured debt, but producing a lump-sum payment is the obvious challenge. Redemption financing exists, although its interest rate and total cost should be reviewed carefully. Replacing one troublesome loan with another expensive loan is not always the financial fresh start the brochure promised.

3. Retain the Property and Reaffirm the Debt

A reaffirmation agreement is a new agreement under which the debtor remains personally liable for a debt that could otherwise be discharged. It is commonly considered when a debtor wants to keep a financed vehicle.

Reaffirmation is voluntary, and the creditor must also agree. The document is separate from Form 108 and includes detailed disclosures concerning the balance, interest rate, payment amount, collateral, and the debtor’s ability to afford the obligation.

A reaffirmed debt survives the bankruptcy discharge. If the debtor later defaults, the creditor may repossess the collateral and may pursue the debtor for a remaining balance when permitted by the contract and state law. That is why reaffirming an unreliable car with a high payment can be risky: the debt receives a fresh set of legal teeth, but the transmission does not receive a fresh warranty.

Under Federal Rule of Bankruptcy Procedure 4008, a reaffirmation agreement generally must be filed within 60 days after the first date scheduled for the meeting of creditors, although the court may extend the filing time. Depending on the circumstances, attorney certification or court approval may be required. An unrepresented debtor will commonly have a hearing at which the judge considers whether the agreement is affordable and in the debtor’s best interest.

Can a Reaffirmation Agreement Be Canceled?

Federal law generally permits a debtor to rescind a reaffirmation agreement before discharge or within 60 days after the agreement is filed with the court, whichever deadline occurs later. The debtor must notify the creditor of the rescission. Because the method of notice and proof of delivery may matter, written notice with a reliable record is usually safer than a cheerful but undocumented telephone call.

4. Retain the Property and Explain Another Treatment

Form 108 also contains a box allowing the debtor to retain the property and explain another intended treatment. This option may be relevant to real estate, lien avoidance, negotiations with a creditor, or other circumstances.

Some debtors hope to keep collateral by remaining current without reaffirming the debt, sometimes called “retain and pay” or “ride-through.” Whether that approach is available can depend on the kind of property, the loan contract, creditor policy, state law, and controlling decisions in the applicable federal circuit. It should not be treated as an automatic nationwide right, particularly for personal property.

What Happens If You Miss the Deadline?

Failing to file or perform the Statement of Intention on time can have serious consequences for personal property. Under Section 362(h), the automatic stay may terminate as to personal property securing a claim or subject to an unexpired lease. The property may also cease to be property of the bankruptcy estate, allowing the creditor to exercise available nonbankruptcy remedies.

An exception may apply when the debtor states an intention to reaffirm on the original contract terms but the creditor refuses. A trustee may also seek court protection when the property has meaningful value for the bankruptcy estate. These exceptions are technical, time-sensitive, and not ideal territory for improvisation.

Missing the deadline does not always mean that a tow truck will appear before breakfast. It does mean that legal protections may change, and the creditor may gain options it did not previously have.

Common Statement of Intention Mistakes

Confusing an Exemption With Lien Removal

Claiming property as exempt may protect equity from the Chapter 7 trustee, but it does not automatically erase a valid mortgage or vehicle lien. A debtor may exempt a car and still need to address the lender’s secured claim.

Assuming That Checking “Reaffirm” Creates an Agreement

The checkbox merely states an intention. A separate reaffirmation agreement must be negotiated, signed, completed with required disclosures, and filed when appropriate.

Listing a Residential Lease in Part 2

Part 2 concerns personal-property leases. A lease for an apartment, house, or commercial space is a real-estate lease and is handled elsewhere in the bankruptcy documents.

Forgetting to Serve Creditors and the Trustee

The form must not simply sit in the court docket admiring itself. Copies must be provided to the trustee and the creditors or lessors listed on it.

Choosing an Option Without Reviewing the Budget

A car may feel essential, but reaffirming a $720 monthly payment on a budget with only $90 of monthly breathing room is not optimism. It is arithmetic wearing a fake mustache.

Failing to Amend the Form

If the debtor’s intention changes, an amended Form 108 may be necessary. The official form includes a checkbox identifying an amended filing. Changes should be addressed promptly and before the applicable performance deadline whenever possible.

A Specific Example

Imagine that Jordan files Chapter 7 and owns a vehicle worth approximately $15,000. The vehicle loan balance is $21,000, and the monthly payment is $610.

Jordan might consider three primary choices:

• Surrender: Return the vehicle and seek a discharge of qualifying personal liability for any deficiency.
• Redeem: Pay the vehicle’s allowed secured value in one payment, potentially with redemption financing.
• Reaffirm: Sign an agreement preserving personal liability, possibly under the original or renegotiated terms.

The right decision cannot be made from the vehicle’s value alone. Jordan should also consider reliability, insurance, replacement transportation, interest rate, remaining loan term, income stability, and the risk of owing a deficiency after a future repossession. A cheap-looking monthly payment can become expensive when stretched across six years and accompanied by a vehicle that has started communicating through mysterious dashboard lights.

Practical Experiences and Lessons From the Statement of Intention Process

The most common real-world experience is that debtors initially treat Form 108 as routine paperwork and only later realize that it forces an important financial decision. A debtor may enter Chapter 7 focused on credit cards and medical bills, then discover that the car loan deserves equal attention. The bankruptcy discharge may remove unsecured debt, but it does not transform an unaffordable secured loan into an affordable one.

One recurring lesson is that emotional attachment can interfere with the numbers. A debtor may want to keep a vehicle because it represents stability, independence, or years of payments already made. Those feelings are understandable, but past payments are gone regardless of the decision. The useful questions are forward-looking: What is the property worth today? What will it cost to keep? Is it dependable? Can the payment be sustained after bankruptcy?

Consider a hypothetical debtor named Maria. Her SUV is worth $17,000, but she owes $25,000 and has four years remaining on the loan. At first, reaffirmation feels like the easiest option because it avoids shopping for another vehicle during bankruptcy. After reviewing her budget, however, Maria sees that the payment consumes nearly one-quarter of her take-home income. Surrender becomes less frightening when she compares the cost of replacement transportation with the long-term cost and risk of reaffirming the existing debt.

Another common experience involves delayed creditor communication. A debtor checks the reaffirmation box and expects the lender to send documents immediately. Instead, weeks pass. Because Form 108 is not the reaffirmation agreement, the debtor or attorney may need to follow up. Waiting until the discharge is about to be entered can create deadline problems and unnecessary motions. Successful cases tend to involve early communication, written records, and a calendar that treats bankruptcy deadlines as immovable appointments rather than gentle suggestions.

Debtors with leased vehicles often face a different surprise. Checking that a lease will be assumed does not force the lessor to continue the arrangement on whatever terms the debtor prefers. The lessor may require missed payments to be cured, proof of insurance to be maintained, and assumption documents to be signed. The debtor should compare the remaining lease obligations, mileage limits, end-of-lease charges, and the cost of alternative transportation.

Homeowners may also misunderstand the form. They sometimes believe that listing an intention to retain a home guarantees continued ownership. It does not. The mortgage lien ordinarily survives bankruptcy, and the homeowner must continue dealing with the lender, maintaining insurance, paying taxes when required, and complying with applicable loan obligations. Form 108 reports an intention; it does not modify a mortgage or resolve a foreclosure by itself.

A final practical lesson is that consistency matters. Trustees and creditors compare Form 108 with Schedules A/B, C, D, G, I, and J. A debtor who says a car will be reaffirmed but shows no budget capacity to make the payment may face questions about hardship. A debtor who lists a lease on Schedule G but omits it from Form 108 may need to correct the filing. Reviewing the documents as one connected financial story is far safer than completing each form in isolation.

The best experience usually comes from making the property decision before the petition is filed. Obtain current loan balances, realistic property values, payment histories, lease documents, insurance costs, and replacement estimates. Then compare surrender, redemption, reaffirmation, and other lawful options using actual numbers. Bankruptcy is designed to provide a fresh start, and a fresh start works better when it is not towing an unaffordable car payment behind it.

Conclusion

The Bankruptcy Statement of Intention is short, but it addresses some of the most consequential choices in a Chapter 7 case. It tells the court and interested parties whether secured property will be surrendered, redeemed, reaffirmed, or handled another way, and whether personal-property leases will be assumed.

Complete Form 108 accurately, file and serve it before the deadline, and follow through on the stated intention. Most importantly, choose an option based on long-term affordability rather than habit, fear, or the understandable desire to finish the paperwork before dinner.

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