Bankruptcy:
One of the most common questions during a consultation is whether or not they have to include all of their debt in their bankruptcy. Many times potential bankruptcy clients don’t want to include all of their debt because they want to keep certain credit cards. However, there are many reasons clients should list all their debts on their bankruptcy petition.
First, it is important to understand that by law, debtors are obligated to list all of their debts and assets on their bankruptcy petition. This means that debtors are not allowed to choose which debts they want to keep and which debts they want discharged.
Many times debtors in both New York and New Jersey feel that if they list their houses, cars, jewelry or bank accounts are listed on a petition, this means that they automatically have to give up their property. Many are under a misguided impression that if they don’t list certain things on their bankruptcy petition, then creditors won’t find out and they will still be able to continue using these things.
What debtors in both New York and New Jersey need to understand is that omitting certain creditors won’t matter. The creditors usually do some routine bankruptcy checks and will close the accounts either way. On the other hand when it comes to property, in a Chapter 7 Bankruptcy, as long as it is exempt the trustee will not take the property from them. It is also important to understand that if you are not behind on your mortgage payment or car payment and the equity is exempt the creditor will likely not begin any foreclosure or repossession proceedings against you. Further, Bankruptcy debtors cars can keep their cars in a Chapter 7 Bankruptcy by sign a reaffirmation agreement. A reaffirmation agreement is an agreement in the Bankruptcy court where the Bankruptcy debtor promises to repay the loan.
Many times Bankruptcy debtors believe that if they don’t list a person on their Bankruptcy petition and continue to pay back the creditor on the side that it should be okay. Unfortunately this is called preferential treatment which is not allowed. Bankruptcy clients can not pick and choose which creditors they want to pay back and which creditors they don’t want to pay back.
The decision to file Bankruptcy is an important decision. The idea behind Bankruptcy is to get a fresh start, this means leaving behind debt. Although, not all debts in a Chapter 7 Bankruptcy may be discharged ,it does not mean that debtors are able to leave these creditors off of their petition. Bankruptcy Courts in both New York and New Jersey require that debtors fully disclose their debts and assets.
If you are in debt or being harassed by creditors and are thinking about filing for bankruptcy , then talking to an experienced New York or New Jersey bankruptcy lawyer can help you. For answers to this question and more questions about bankruptcy please feel free to contact an experienced New Jersey and Staten Island Bankruptcy Attorney, Karra Kingston or William Bonomo for a free consultation.