Do I Have to Include All My Debts in Chapter 7 Bankruptcy?

If you are considering filing Chapter 7 bankruptcy, you may be wondering whether you have to include all your debts. Perhaps you owe money to a favorite uncle, to a business partner or to your family dentist. You may hope to avoid involving certain people in your bankruptcy at all. You might rather not even tell them that you are going to file bankruptcy — and you certainly do not want them to receive official notices from the bankruptcy court stating that you are off the hook with regard to those debts.

Will Your Bankruptcy Harm Important Relationships in Your Life?

Such concerns are understandable and are natural for people who are contemplating bankruptcy. You may believe that to renege on your promises will damage your relationships.

On the other hand, some of your debts may be attached to things that are special and important to you such as your fishing boat or your child's musical instrument. So you wonder whether you can simply leave those debts off the list that you submit to the bankruptcy trustee and repay them as planned.

All Debts Must Be Included in Your Bankruptcy Filing

The truth about bankruptcy, however, is that you must include all debts to any debtor(s) anywhere in the world. Even your home mortgage and your car loan must be listed. Any debts that are dischargeable will most likely be discharged if your Chapter 7 bankruptcy is successful. Officially, those debts will cease to exist and your creditors (even your favorite uncle) will be banned from ever trying to collect on those debts.

In fact, however, once your Chapter 7 bankruptcy is complete, you are free to direct your money wherever you wish. With a clean slate, you will still be able to repay an old debt if you wish (such as a loan from your uncle), with the understanding that the former creditor has no right to try to collect from you.

In some cases such as with your mortgage and/or car loan, you may elect to reaffirm a debt in order to avoid repossession of your property by the former creditor. Talk to an experienced and knowledgeable bankruptcy law attorney about how to position yourself most favorably when filing Chapter 7 bankruptcy.

Discuss Your Debts With an Experienced Chicago Chapter 7 Bankruptcy Lawyer

Bring your tough questions to Ledford & Wu with confidence. Remember: only three lawyers in Chicago are certified in consumer bankruptcy by the American Board of Certification*. Two are partners at Ledford & Wu. Contact us to schedule a free consultation and take advantage of the wealth of knowledge at Ledford & Wu.

*The American Board of Certification is accredited by the American Bar Association and sponsored by the American Bankruptcy Institute and the Commercial Law League of America. Federal law recognizes board certification in bankruptcy. The Supreme Court of Illinois does not recognize certifications of specialties in the practice of law and the certificate, award or recognition is not a requirement to practice law in Illinois.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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