I am frequently asked if a particular debt or item of property can or must be “included” in a bankruptcy.    For example, if one wants to repay their mother or sister, do one have to list that debt?   Or, does one have to list a particular item of property?

A common misconception about bankruptcy is that there is some choice about what to include.  The truth is that one has NO choice what to include in a bankruptcy.  All relevant information MUST BE listed.  To file a bankruptcy, one must answer detailed questions about his/her assets (property), liabilities (debts), income, expenses, and other aspects of one’s financial affairs.  All debts must be listed.  All property must be listed.  It is technically a crime to knowingly fail to fully answer the questions. 

As far as what happens with a debt or an item of property, that is a different question.

If, for example, you want to keep the automobile on which you are making payments, you must list the debt owed to the secured creditor.  But you can keep it if you continue making the payments and reaffirm the debt.

If you want to repay your sister, you still have to list her in the bankruptcy petition.  If it is a Chapter 7 you are filing, there is nothing stopping you from repaying her (or any other creditor you want to pay) after the bankruptcy.    On the other hand, if you are filing a Chapter 13 (a full or partial repayment plan), then your sister must be treated the same as all the creditors – meaning she will be paid the same percentage of the debt, and at the same payment schedule, as the rest of your creditors.

For a free consultation regarding your rights and options, call (213) 509-1515.