If you're deep in debt enough to consider bankruptcy as an option, you likely owe money to a whole roster of creditors. What we see in our offices is that when our clients come in to discuss filing bankruptcy, they have a list of pressing debts that they are concerned about – credit cards, car loan, mortgage – but they really don't know exactly who all they owe money to. For some, they may not want to think about how extensive the list is of those they owe and for others, they simply don't remember who all they owe.
Why you want to ensure your creditor list is complete
It's important that the list of creditors is accurate and complete for a number of reasons:
- First, you'll get the most complete relief by including all your creditors. If a creditor is not included in your petition, there's a chance that they can seek recourse later.
- Second, you're not allowed to leave creditors off. If you have a credit card that's not maxed out and is current, you may want to hold it back, but that's not allowed. You don't want to be accused of inaccuracy on your bankruptcy petition that could cause your payment plan to be turned down (in a Chapter 13 bankruptcy) or your discharge to be disallowed (in a Chapter 7 bankruptcy).
- Third, having the most complete picture of your debt circumstances allows your bankruptcy attorney to get you the best results. By knowing exactly what your income versus debts are allows our attorneys to advise you whether you're best served by a Chapter 7 or Chapter 13 and to ensure that the means test (the standard you must pass to secure a Chapter 7) is accurate and complete.
How you can make sure your creditor list is complete
Prior to coming in for your bankruptcy consultation, pull a free credit report to bring in with you. Also, collect up your last month of mail and sort through it for bills in case some of your past due debt isn't on your credit report. Finally, sit down and think about your bills and see if there are any debts you can think of that aren't on your credit report or in the stack of mail. This can include personal loans, furniture rentals (or rent to own arrangements), title pawns, payday loans and other “off the books” financial arrangements.
Bring all this information along when you come in for your free consultation, along with your most recent tax returns and pay stubs. This will allow us to give you the best advice and tell you which options you're eligible for and which will give you the most complete debt relief. Don't be worried about being embarrassed by what you owe, whom you owe or what the debt was for – we've seen it all and can serve you best with accurate information. There's no judgments in this process – we're here to help you.
Remember, any creditor you fail to list in your bankruptcy petition won't be discharged and can come after you at any point. If you leave off a major debt, this can ruin your financial fresh start and you don't want that. And, worse than your repayment plan not being approved or your petition being dismissed, you can be accused of bankruptcy fraud for leaving off debts and creditors. In short, your bankruptcy petition needs to be both accurate and complete.