Bankruptcy By the Numbers - 521 - List Everything

A regular question I get from potential clients is what debts do they have to list on their schedules. The short version of the answer is: you have to list them all, no exceptions.

 The new list of creditors, effective 12/1/15

The new list of creditors, effective 12/1/15

The longer answer depends on the way the question was asked. Many people have an understanding that certain debts do not typically discharge in a bankruptcy (student loans and most taxes, for example), and their question is based on the thought that if it isn’t going away, do I have to list it?  Others have debts that also carry a “moral obligation,” and are reticent to list a loan from their parent or friend.

Section 521 of the bankruptcy code requires that a debtor file a list of creditors, and a schedule of assets and liabilities.  Anyone who files a bankruptcy petition is subject to federal criminal penalties if they knowingly and fraudulently make a false statement in their bankruptcy paperwork, as well as the possibility of having the discharge denied (which makes the debts stay basically forever). These are pretty stiff penalties, and usually aimed at people that are trying to defraud the system, but the risks are real, and most people take them seriously once informed.

Even more than the risk of criminal or civil penalties, failing to list creditors can affect your eligibility for certain chapters of bankruptcy. Chapter 13 debtors can only have a certain amount in debts, and listing a large tax debt can help a person qualify for a Chapter 7 in certain situations.  As for the debts with “moral obligations,” there is nothing in the law that says you can’t pay them back after your discharge, just that the lender can’t sue you or otherwise try to force you to pay.

The other question about completeness in listing debts is for those who don’t know all the debts they may have, and they wonder what happens if they forget or miss some creditors. This is not uncommon for debts that have been sold through the collection cycle, or older debts that have given up collection.

In this case, try to be as complete as you can. You can review your credit reports (available for free annually at, look at public records for judgments, and search the internet for creditor addresses that you remember, but don’t have paperwork for. Your attorney may also have a database of creditor addresses to help in this quest.

If you remember a debt after you file, just tell your attorney, and they can make sure that the creditor gets the appropriate notice of your filing. And in some cases, if a creditor pops up after your discharge, your attorney may be able to have the discharge apply to them as well.

The bankruptcy code requires you to be complete and honest in your paperwork. In almost every case, the benefit of complying with federal law outweighs any gain you may think you get from keeping a debt to yourself.