Can You Leave out Certain Debts when you File Personal Bankruptcy?
So, you have decided to file personal bankruptcy, but aren’t sure what debts to include in the bankruptcy case and which ones to leave out. You aren’t even sure if you can leave any of them out of the bankruptcy. What do you do?
Know and Follow the Laws When You File Personal Bankruptcy
Before you file personal bankruptcy, you need to understand a few things. First, you are no longer playing by your rules. The federal and state government determines what goes into your bankruptcy case and what does not. Second, the law states that all of your debts must be presented to the court when you file personal bankruptcy.
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This means you don’t have the option of leaving out your mortgage, car payment, or any other debt. Your bankruptcy petition must include all creditors and any interested parties. Even the money you owe your brother must be included.
In some states, child support and alimony must be presented as a priority debt during Chapter 13 bankruptcy cases. This means, if you owe child support or alimony every month to your child or spouse, you must include their name on the bankruptcy petition. Those individuals must also be contacted when you include their name, so they will be aware you of when you file personal bankruptcy. This is required even if you are not behind on your child support or alimony payments.
If the debt is important and you wish to keep paying on it, like with a home or car, there is nothing in the bankruptcy law that keeps you from doing so after bankruptcy. Reaffirmations can be used to keep your property and continue paying for it. However, even if repayment is intended, you still must inform the court of the debt when you file personal bankruptcy.
What Happens if You Leave a Debt out when you File Personal Bankruptcy?
When you file personal bankruptcy, it is against the law to leave out any debts you owe. During the course of your bankruptcy, you will be asked to certify that all the debts you owe are present on your bankruptcy petition. The first time will be when you sign the petition, and the second will be under oath during the meeting of the creditors.
If you leave a debt out when you file personal bankruptcy, here is what might happen:
- If the debt was left off intentionally, you may find your bankruptcy case dismissed early. You may also be brought up on criminal fraud charges as a result of the missing debt.
- If you accidentally left the debt off the bankruptcy petition and realize it before the court does, you can pay a small fee and have your bankruptcy petition amended. If your bankruptcy is discharged under chapter 7 and no assets were granted to any creditors, then it will not matter if the debt was listed or not. It will still be discharged, along with the rest of your debt.
Before you file personal bankruptcy, make sure you understand the bankruptcy law and know all of your creditors. This will help you avoid delays and dismissals due to leaving debt off your petition. Bottom line? Be sure you are knowledgeable before you begin. Don’t make costly (or illegal) mistakes when you file personal bankruptcy.
