It’s no secret that bankruptcy can be an incredibly tedious process with a considerable amount of paperwork involved. Unfortunately, this means that the likelihood of an error when completing this process on your own increases. As such, if you make an error when filing, such as forgetting to list a debt, you may assume that this simple error will be forgiven. However, this is far from the truth. In reality, failure to include a debt as part of your bankruptcy case can have serious consequences. As such, it’s in your best interest to connect with an experienced Shelby County, TN bankruptcy lawyer to explore your legal options during these difficult times.
Do All Debts Need to Be Listed During Bankruptcy in Memphis?
When filing for bankruptcy, regardless of which chapter you choose to file, you must list all debts during this process as per the United States Bankruptcy Code. This includes family and friends whom you have borrowed money from, as well as all formal loans and debts in your name. The primary purpose of this is not only to ensure the courts have a clear picture of your financial circumstances, but also to help ensure that all creditors are included so they may receive a portion of the funds.
Failure to list all debts can carry severe consequences. Generally, depending on the type of bankruptcy you file, you can still be held liable for debts that are not included in your filing. During Chapter 13 and Chapter 7 asset cases, any debt not listed in the filing will not be discharged. This is because the creditor was not given the option to obtain their portion of the payments or liquidated assets. If your Chapter 7 case is considered no-asset, meaning none of your creditors will receive payments, the court could choose to discharge the non-included debt, as they believe the creditor would not have received any repayment anyway. However, they could also deny the discharge, and you would remain liable for the debt.
You should also note that you may be accused of intentionally trying to defraud the court by omitting an asset. As such, you’ll find that you could potentially have your case dismissed and face criminal charges.
What Should I Do if I Forget to List a Debt?
In the event you forget to list a debt during your bankruptcy case, it’s in your best interest to connect with an experienced attorney as soon as possible. They can assist you in amending your filing to include the debt to ensure that all creditors are accounted for.
The best way to ensure you can prevent errors when filing for bankruptcy is to connect with an experienced attorney to help guide you through this process. At the Arnold Law Firm, our dedicated team understands how complicated bankruptcy can be, which is why we are ready to assist you. When you need help, do not hesitate to contact our team today to learn more.
