You Must List All Debts And Property In Any Bankruptcy Case
One of the most common misconceptions people have about bankruptcy is that you can pick and choose which debts to “file bankruptcy on” or which assets can be included.
Not a week goes by that I don’t get at least 2 or 3 people start out their consultation with me by saying “I only want to include these debts” or, “I have property in another state (or country) that I don’t want to include”.
You Cannot Pick and Choose Which Assets and Debts to List In Bankruptcy
When you file a bankruptcy case, you must list (include) all assets wherever on the planet earth or the universe they may be located, and all debts no matter who they are owed to (yes, this includes your mother, your best friend, and any other person or entity to whom you owe a debt).
There are very few questions in the law that have simple answers but, happily for this article, this one is easy.
What About My Spouse?
If you live in a Community Property state, such as California, you must list all debts and assets of your spouse, even if they are not joining in the bankruptcy filing, if they were incurred or obtained during the marriage and are not separate property. If you’re unsure about this, talk to a bankruptcy and/or family law attorney.
Will Including My Spouse’s Debts Affect Them If They Are Not Joining In The Bankruptcy Filing?
The bankruptcy is not going to affect them directly. But if they are liable on the debts and the debts are not paid, then obviously it is going to affect their credit.
Does That Mean I Cannot Repay Family or Friends?
No. You can repay anyone you want after the bankruptcy case is completed. To my knowledge, there has never been a law passed in the history of mankind that prevented someone from repaying a debt to another. The bankruptcy discharge simply removes the legal obligation to pay. If you want to file bankruptcy, discharge your debts, and then pay them all back anyway, you may do so.
Does That Mean I Will Lose My Property?
No. Whether you will lose any property depends on the value of the property, what exemptions (protections) are available to you under applicable law in your case, and which bankruptcy chapter is filed. In a Chapter 13 or 11 case, you get to keep all your assets regardless of their values or exemptions. But you have to pay out to your creditors at least as much as they would get if you filed a Chapter 7 case.
Consult With A Bankruptcy Specialist To Determine Your Risks And Benefits.
A consultation with an experienced bankruptcy attorney in your area will provide you your options and eligibility and determine what consequences you might face (if any).