Do I Have to Include All of My Debts in My Bankruptcy?

Clients often ask me if they have to list all of their debts when they file for bankruptcy. The short answer is: YES, you are required to include all of your debts in your bankruptcy. In fact, when you sign your bankruptcy petition, you are swearing under oath that have listed all of your debts. And you will probably be asked this same question at your bankruptcy hearing after being sworn in.

The proper question to ask your lawyer is not “do I have to list all of my debts” the proper question instead is “how can I treat (certain debts) that are important to me?” For instance, you may have a car and a corresponding car payment. Yes you have to list your car as well as the loan on it in the bankruptcy. You may, however, choose to keep the car by continuing to repay the loan according to it’s terms (some lenders in Chapter 7 will require you to sign a reaffirmation agreement which is not discussed here). Or you could choose not to repay the loan but then you would have to surrender the car back to the lender. Or, in a Chapter 13 only, you may be able to modify the loan, depending on your circumstances. Home mortgages work in similar way but are much more complicated. But these are all secured debts. What about unsecured debt, like a credit card, a store card or an over-draft line attached to your bank account? These too are required to be listed if there is a balance owed. If there is not a balance owed, they are simply revolving lines of credit and are not debts therefore they do not have to be listed. In this case you could get lucky and have the line of credit survive the bankruptcy although very often the lenders eventually find out about the bankruptcy and close the line of credit anyway. At our law firm, we recommend that you over-include creditors (listing even those creditors that have been paid off). This way, if there is ever an issue about whether you owe them money, you can use the bankruptcy as a defense to payment. A common reason people want to omit an unsecured debt from their bankruptcy is that they feel a moral obligation to repay certain people like their doctors, accountants or friends and family. Listen – the bankruptcy code says that you must list ALL debts, and that your creditors cannot try to collect on debt that is includeable in your bankruptcy.However, there is no rule against voluntarily repaying a debt once your bankruptcy has been discharged!