The short answer is yes — debtors must list all debts in their bankruptcy petition.
This includes loans from friends or family members, all credit cards, including store credit cards and charge accounts, medical bills, car loans and mortgages.
Even debts for which you may not eligible for discharge have to be listed, such as student loans and certain tax debts.
It is a common misconception that you can pick and choose which debts to include in a bankruptcy. It’s perfectly understandable why you may think so- maybe you have a credit card with good rewards or an excellent payment history, and you are willing to pay that debt in order to keep the card open.
Maybe you don’t want to list a particular card because you have a co-signer who is a family member, and you don’t want to put them in a bad position or be embarrassed because they will find out you filed bankruptcy. Maybe you owe a friend or family member money and you don’t want to ruin your relationship by reneging on the debt.
While all of these are valid concerns, you shouldn’t forget the reasons that support filing bankruptcy in the first place.
If you’re drowning in debt and behind on payments, it is better to file bankruptcy rather than to risk losing your car or your home. Your friends and family members may find out you have filed bankruptcy depending on the circumstances, but they should support your decision because you are the one who has to live with your financial circumstances- not them.
Even though you must list all debts in your bankruptcy, you may choose to pay a debt after your bankruptcy case is closed. So if you owe money to a friend or family member, you can always pay them back after your bankruptcy is over because what you do with your money after a bankruptcy is your decision.
In fact, it will be easier to pay them back and a lot faster when your money isn’t spread so thin paying several other debts. In the case of a car loan or a mortgage, you can choose to reaffirm the debt, which renews your obligation to pay the debt as though you never filed bankruptcy in the first place.
Reaffirmation may or may not be in your best interests and it may not be necessary to avoid repossession, which is why you should consult with an experienced bankruptcy attorney to determine the best course of action for your case.
Even the simplest bankruptcy can be complicated without any help. So even if you intend to file your bankruptcy without an attorney, it is beneficial to take advantage of a free consultation with a bankruptcy attorney to help you fully understand the process and avoid some common mistakes that prevent discharge.