Do I Have to Include All of My Debts in My Bankruptcy?

We often have clients come into our office and ask, "Why do I need to include all of my debts in my bankruptcy?" Some people want to pay back some of their creditors while others want to avoid certain creditors from knowing about the bankruptcy. For example, a client comes into the office for a bankruptcy consultation. When we discuss the types of debts she owns, she tells us that she does not want to include all of her debts in the bankruptcy case because she owes her parents money and she must pay that money back.  She also does not want her parents to know that she is filing bankruptcy. 

Paying Back Relatives and Friends - Do I Need to Include Those Debts in My Bankruptcy?

We understand that owing your family or friends money is difficult.  They were there for you when you needed their help and you promised to pay them back as soon as you could.  If it was not for your family and friends helping you, you may have lost everything.  Bankruptcy law does not let you pick and choose the debts you want to include in your bankruptcy case. You must include all of your debts in your bankruptcy. 

However, there are two things to remember when you owe your family and friends. Is this a true debt? Do you have to pay this money back or did your parents intend for it to be a gift?  If your parents are not "requiring" you to repay them back, this may not be a true "debt."  On the other hand, if your parents or your friend does expect you to repay the money, this is a debt and it must be listed in your bankruptcy. If you are worried that your family or friends will be mad at you for not paying them back, you can choose to repay discharged debts once your bankruptcy case is complete; therefore, you can repay your parents and your friends after your bankruptcy case is closed.

Paying Back My Employer - Do I Need to Include This Debt in My Bankruptcy?

Another example of a debt that many people do not want to include in their bankruptcy is a debt owed to an employer. If your employer loaned you money or you work for a bank and have a loan account with that bank, you may be worried about listing this debt in your bankruptcy case.  Again, bankruptcy law requires you to include all debts in your bankruptcy case and all creditors must receive notice of the bankruptcy filing. It is natural to be worried that you could lose your job if you include your employer in your bankruptcy filing or that your employer and co-workers will think poorly of you because you had to file bankruptcy.

Bankruptcy law prevents employers from discriminating against employees, including firing an employee, simply because the employee has filed a bankruptcy case.  If you work for a financial institution, it may help to remember that your supervisor or manager is not the person who loaned you the money. Including this debt in your bankruptcy is not going to affect your manager or supervisor financially. Your co-workers and supervisor may never need to know about the bankruptcy filing because the bankruptcy notice is mailed to the address you provide to the court, which is usually the payment address or the corporate address. In a case where you borrowed money directly from a manager, supervisor, or employer, the same applies as borrowing money from a family or friend — you include the debt in your bankruptcy but can choose to repay the debt once your bankruptcy case is closed.

Each Case is Different

Your financial situation is unique; therefore, you cannot base what happens in your case on another person's bankruptcy experience. We understand that you may be nervous about filing bankruptcy for a variety of reasons.  During your free bankruptcy consultation, we will answer all of your questions about bankruptcy and address each of your concerns about filing bankruptcy. In many cases, once you get the facts about filing bankruptcy, your fears and reservations are alleviated.

Our attorneys want to help you find an affordable solution to your debt problems so that you do not have to worry about creditors trying to repossess your property or garnish your wages. We want to help you find a real solution to your financial problem so that you can get back to your life without the stress and anxiety caused by debt problems.