Chicago Bankruptcy Question: Do I have to list all of my creditors when I file for Chapter 7?

Chicago Bankruptcy Question of the Day: Do I have to list all of my creditors when I file for Chapter 7?  Short answer; yes, every single one of them.  When you file for Chapter 7 bankruptcy protection, one of the duties of the debtor is to submit to the court a series of schedules that list each of the creditors to whom monies are owed. There are separate schedules for secured creditors, priority creditors, general unsecured creditors and executory contracts & leases.

There are several reasons that all of your creditors must be disclosed.  First and foremost, all creditors are entitled to notice of any bankruptcy filing and failing to schedule a creditor deprives them of that notice.  Second, properly scheduling all creditors gives the court and the Chapter 7 trustee an accurate picture of your financial situation, assisting them in the determination that a bankruptcy filing is appropriate in your circumstances.  Finally, listing all creditors helps to ensure that there is no preferential treatment of or by any party in the process.

This is not to say that all of your debts will be discharged in bankruptcy.  A significant number of debtors file for Chapter 7 bankruptcy with the intention of keeping some of their debts.  Usually these are secured creditors, such as a mortgage or car payment, so that the debtor can keep the collateral (the house or car).  Additionally, there are a variety of debts that cannot or may not be discharged in a Chapter 7 bankrutpcy, such as recent taxes or child support arrears.  The creditors to whom these debts are owed still must be scheduled and given proper notice of the bankruptcy filing.

Once your Chapter 7 bankruptcy is discharged, your legal obligation to repay your dischargeable debts is eliminated.  You do still have every legal right to voluntarily pay those creditors that you choose to, regardless as to whether or not you elect to pay back others.  This is very common when a debt is owed to a family member, trusted physician or liked credit union.  There is no harm in listing these creditors, even if you do want to pay them back after your bankrutpcy is over.

The consequences of failing to schedule a creditor vary greatly with the circumstances.  If, before the case is filed, you make every effort to ensure that all of your creditors are listed, then even a creditor that is accidently not scheduled is generally discharged in bankruptcy.  If, however, a creditor is intentionally left off of your schedules, that debt is not discharged and may take collection actions against you once your case is over.  If several creditors are intentionally not scheduled, or if a very large or important creditor is not scheduled, then this could be considered fraud and your discharge could be denied by the court.

Having an experienced and hard-working bankruptcy attorney representing you is the most reliable way to ensure that all of your creditors get scheduled properly.  A good bankruptcy attorney will gather data from all available sources, ask you specific questions regarding your creditors and request documentation where appropriate to ensure not only that your creditors are listed, but they are done so accurately and completely.  The bankruptcy lawyers at Ledford & Wu have made it their careers to ensure that their clients receive the maximum benefit of filing for bankruptcy in the Chicago area.  Call for a free consultation today.

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