Filing for bankruptcy can be an incredibly overwhelming and confusing matter, leaving many filers with a considerable number of questions. One of the most common questions that those considering bankruptcy have is whether or not they truly need to list all the debts in their name. The following blog explores what you should know about these matters, including the importance of working with a Memphis, TN consumer bankruptcy attorney to help you through this process so you can receive the debt relief you need.
Why Must I List All Debts During Chapter 7?
When you file for bankruptcy, it’s imperative to understand that you must list all debts and liabilities in your name, including any loans from family members. Unfortunately, many people assume they can pick and choose which debts to file, with the intention of continuing to repay the debts not included. For example, if you want to keep your car during Chapter 7 bankruptcy to ensure you can retain the property or leave off a debt that was co-signed by a family member to prevent them from being liable for the funds. However, failure to list all debts can result in serious issues for your case.
During bankruptcy, regardless of the Chapter you file, you must ensure you list all liabilities in your name. You cannot pick and choose which creditors to include in the filing, because this is unfair to the other creditors with whom you have loans. For example, you cannot include your credit card issuer in the filing while leaving off a family member who has loaned you money, because the creditor would be negatively impacted by bankruptcy, whereas the family member would not be.
What Happens if I Forget to Include a Debt?
It’s imperative to understand that omitting a debt, whether intentionally or not, can result in serious legal trouble. In many instances, you may be able to prove that you did not intentionally leave a certain creditor off of the filing by amending your petition to include a forgotten creditor.
However, you’ll find that the trustee assigned to your case or other creditors can claim this was a fraudulent act. If they can prove that this was intentional, you’ll find that your bankruptcy case can be dismissed with prejudice. This means your case will be stopped without receiving the debt relief you sought, and you will be barred from filing for a period of time.
If the creditor is negatively impacted by being left out of the bankruptcy filing, but it was unintentional, they will have the right to continue collection efforts against you, as this debt will not be eligible for discharge. In some instances, concealing a debt can be a federal crime, resulting in astronomical fines and up to five years in jail.
Bankruptcy can be tedious and complicated, which is why it’s critical to connect with an experienced attorney with the Arnold Law Firm to explore your legal options. Our team will walk you through this complicated matter to help you seek the best possible outcome for your unique circumstances. Contact us today to learn more.
