Do all my debts have to be included in bankruptcy?

You can’t pick and choose debts when you file for bankruptcy. All assets and all debts must be disclosed, including non-dischargeable debts such as most student loans and recent tax debt. What about that Kohl’s card you want to keep? That must be listed as well. All debts that can be discharged will be discharged in your bankruptcy. That even includes house debt. That’s right- mortgage debt can and will be discharged, but the lien remains. Translation: If you want to keep your house you have to keep paying or the bank will foreclose.

So do credit cards with zero balance have to be listed? No- cards with zero balance are not a debt, and thus should not to be listed on a bankruptcy petition. That being said most creditors monitor your credit report and instantly close accounts when you file a bankruptcy. Clients often ask about paying off the $200 balance on a Belk card before filing. You can certainly do that, but the card is likely to be cancelled and closed anyway.

What about family and friends you want to keep paying? Well you are free to pay whoever you wish after filing even if the debt is discharged. You legal obligation is discharged, but you may still feel a moral obligation and continue to make payments after filing. Just be careful about paying family and friends before filing, as paying them and not Visa is considered a preference and may result in the Trustee seeking to recoup monies you paid family and friends before filing. The last thing you want is Mom being sued by the Trustee because you filed bankruptcy.  Make sure you disclose all such payments to your attorney upfront as time look-back limitations do work in your favor. Waiting a week or a month to file may make all the difference in the world.