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

Many people assume that they can decide which debts they can “include” in their bankruptcy case.  In reality, all debts must be listed in the bankruptcy schedules – even debts that you want to keep. 

Here are just some of the important reasons why you should list all of your debts during bankruptcy:

  • The bankruptcy code has a process to allow you to keep debts:

The bankruptcy code has a process where you can “reaffirm” a debt which lets you keep the debt through the bankruptcy.  This allows most people to keep their house and vehicles through their bankruptcy.   The process also gives you options if they have a high interest loan or a vehicle that is falling apart.

  • It is required by the bankruptcy code:

The code doesn’t allow you to pick and choose which creditors will be notified. The logic behind the law makes sense. Giving a creditor notice allows it to participate in the bankruptcy process.  This means that if you owe money to anyone, they must be included in your creditor’s list, which allows each creditor to submit a proof of claim and also stops its collection actions against you (known as the “automatic stay”).

  • An undisclosed debt might not be discharged:

Case law around the country varies – however, some courts have ruled that an undisclosed debt isn’t discharged.  Since a fresh start is likely the reason that you want to file – it is not wise to jeopardize your fresh start by leaving a creditor out of your schedules.

  • Avoiding being charged with fraud or perjury:

All bankruptcy schedules are signed under penalty of perjury.  Trustees always ask if you listed all of your assets and all of your debts in your schedules.  Additionally, bankruptcy trustees have a duty to report fraudulent schedules or perjured testimony to appropriate authorities.  In fact, some meeting rooms in the bankruptcy courthouse have signs saying that the FBI prosecutes bankruptcy fraud.

You should include all of your creditors when you fill out your bankruptcy schedules. Omitting some of your creditors, regardless of the reason, can cause numerous challenges in your bankruptcy. By adhering to the enclosed advice when filing your bankruptcy, you will finally have a chance to live a debt-free life.

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