Clients and prospective clients aways ask whether they need to list all their debts in their bankruptcy. The simple answer is YES; you must list all your debts. You must list all debts whether they are secured or unsecured.
Just because you have listed all your debts does not mean that you cannot reaffirm them, or decide (outside of bankruptcy) to pay them in part or in full at any time, either before or after receiving your discharge. However, this gives you flexibility in determining which if any debt you are going to repay.
Often a client will ask whether they cannot list a credit card with the intent to keep it. Frankly, the issuer will close most credit cards within days of their becoming aware of your filing. Remember, the Credit Reporting Agencies (Experian, Equifax, and TransUnion) scan the bankruptcy filing system in live time and report the filings to their clients (most of your creditors). Most of the time, a credit issuer will cancel your account whether or not you owe them anything.
Since you cannot assure which creditors will find out about your filing, you should always include them in your list of creditors.
One caveat, failing to disclose a creditor can:
- Prevent your discharge to that creditor (in certain circumstances), or
- Prevent you receiving any discharge at all… Failing to list every creditor may constitute perjury or committing fraud on the Bankruptcy Court, which would deny you of any discharge.
- The best policy is to list every debt, including what you owe to your mother, your brother, Aunt Sally, or Uncle Sam. If the Court discharges a debt, you may still decide to pay that creditor later.Please note that deciding to pay a creditor, i.e., your Aunt Sally before you file is also a problem and may allow the bankruptcy court to order your Aunt Sally to pay the money back to the court. (There are different time limits for different creditors; this will be covered in a later post.)