Why Do I Have to Include ALL My Creditors in Bankruptcy?

by Brett Weiss, Esq.

August 16, 2011

One of the most common questions I am asked is why a clients need to list their mortgage, their car loan, the “credit card that payments are current on that’s just used for emergencies and I really need” or the loan from Mom on their bankruptcy schedules. While the short answer is, “Because you have to,” the full answer is more nuanced than that.

First, the Bankruptcy Code and Rules require that all creditors be scheduled in your bankruptcy filing. This is primarily so that they will receive notice of the bankruptcy filing, and stop all collection activity pursuant to the automatic stay. If they are not scheduled, they do not get notice and do not know to stop. The Bankruptcy Code defines “creditor” as “An entity that has a claim against the debtor that arose at the time of or before” the bankruptcy is filed. This includes the mortgage, the car loan, the credit card, and Mom. (Many people are worried that merely scheduling their mortgage or car loan means that they will lose their house and car. This is not true. The overwhelming majority of people who file for bankruptcy keep everything they have.) Failing to list all of your debts can get you into trouble in your case.

From a creditor’s perspective, bankruptcy is all about the same type of claims being treated in the same way. For example, all general unsecured debt–credit cards, medical bills and most personal loans–receive the same distribution in a bankruptcy case, regardless of who is owed the money. This means that Mom gets the same amount as Bank of America. It means that the hospital bill for saving your life is treated the same as the credit card bill for dinner. If you do not schedule all creditors, they cannot be treated the same.

Failing to include all of the required information also is perjury. You sign the schedules under penalties of perjury, stating that you have listed “all entities holding claims”. At the Meeting of Creditors, you are typically asked, under oath, whether you listed all of your assets and all of your creditors.

So when your bankruptcy lawyer asks you to list all of your creditors, please make sure that you list all of your creditors!

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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.

Last modified: October 22, 2012