If you are considering filing for bankruptcy, then you may have a few questions. One of the most common questions I am asked is “why do I have to include all of my credit cards when I file bankruptcy, I want to keep a few cards for emergency?” While the short answer is, “Because that’s just the way it is,” the full answer is more complicated.
Your bankruptcy attorney can advise you of all of your options and let you know if the time is right to file your bankruptcy case. The United States Bankruptcy Code requires that all creditors be listed in your bankruptcy filing. This is so that they will receive notice of the bankruptcy filing, and stop all collection activity pursuant to the bankruptcy automatic stay. The automatic stay kicks in once your bankruptcy case is filed and prevents creditors from calling you. If the creditors are not listed on your bankruptcy petition, the creditors do not get notice and do not know to stop trying to collect on the debt. The Bankruptcy Code defines “creditor” as “An entity that has a claim against the debtor that arose at the time of or before” the bankruptcy case is filed. Many people are worried that listing their mortgage or car loan means that they will lose their house and car, but this is not true. The overwhelming majority of people who file bankruptcy keep everything they have. Failing to list all of your debts can get you into trouble in your case, and you may risk not receiving a discharge of your debt in your case.
From a creditor’s perspective, bankruptcy is all about the same type of claims being treated in the same way. For example, all general unsecured debt–credit cards, medical bills and most personal loans–receive the same distribution in a bankruptcy case, regardless of who is owed the money. This means that whether it is a medical bill that was unpaid or your own mother, the debts will all be treated the same.
Failing to include all of the required information also is perjury. You sign the schedules under penalties of perjury, stating that you have listed “all entities holding claims”. At the meeting of creditors, you are typically asked, under oath, whether you listed all of your assets and all of your creditors by the bankruptcy trustee assigned to your case.
So when your bankruptcy lawyer asks you to list all of your creditors, please make sure that you list all of your creditors! If you fail to list all of your creditors you are only hurting your own case.
If you have additional questions regarding your credit card accounts after filing for bankruptcy contact Symmes Law Group at 206-682-7975