Leaving Debts Off of a Bankruptcy Filing
We are commonly asked whether debts may be excluded from a bankruptcy filing. Below are several common examples:
1. A secured debt where the debtor wants to keep the collateral
2. A credit card that the debtor needs for:
b. travel arrangements
c. internet purchases
3. A loan owed to a family member or friend
4. An obligation to a preferred retailer
5. A loan owed to an employer
6. An obligation owed to a service provider where future services may be needed
7. A credit union where the debtor wants to maintain a membership
With regards to these examples, the debtor would be required to list the debt on the bankruptcy if an obligation is owed at the time of the filing and the creditor would receive a notification of the filing. In chapter 11 and 13 bankruptcy, the debtor’s plan can provide for the secured debts to be paid. In most, but not all, chapter 7 cases, the debtor can retain the collateral and continue making the regular contractual payments. As to the unsecured debts (items 2-7 listed above) the debtor can elect to make voluntary payments at some point but there is no guaranty that the creditor will extend credit privileges or services in the way that the debtor desires. As it relates to credit cards, it is likely easier to apply for new credit cards as opposed to trying to hold on the existing cards. Also, even a credit card that has a zero balance on the filing date and is not listed on the bankruptcy paperwork may still be terminated if and when the issuer is notified of the bankruptcy filing. As it relates to credit unions, it is likely easier to move to a new credit union or bank as opposed to trying to maintain the existing membership in the instance where an unsecured debt is owed.
So the answer in regards to whether or not a debt may be excluded from a bankruptcy filing is no.