Can I Leave Creditors off My Bankruptcy?
Bankruptcy laws in the United States are designed to give deserving debtors a fresh start when they do not have a realistic chance to get out of debt on their own. In a personal bankruptcy, you are required to file with the court a list of all of your creditors, called a creditors' matrix. All of your creditors are notified of your bankruptcy from this list.
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Secured Creditors
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You may want to exclude a creditor from a bankruptcy because you want to keep an asset that they have a secured interest in. Your intention may be to keep paying the bill as though you had never filed for bankruptcy. The secured creditor still needs to be named in the bankruptcy. The court needs a complete picture of your financial situation. You can reaffirm the debt, which means you promise to pay it as though the bankruptcy had never happened.
Unsecured Creditors
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The same rules apply to unsecured creditors. All of your creditors must be included in the bankruptcy by law. You may want to try to exclude a credit card from bankruptcy, in hopes that you can keep the card open after you have filed for bankruptcy. Do so and you risk bankruptcy fraud. If an account has no balance, then you don't need to report them in bankruptcy. They may still find out about it when they do a routine check of your credit report. Most credit card companies will then close your account on their own.
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Penalties
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Excluding creditors from a bankruptcy is illegal. Doing this can have various effects, ranging from minor to serious. You may slip through unnoticed in the entire process. This is not likely to happen, because creditors will likely find out from your credit report. You may be asked to file an amended petition, which means that you update your filing to include the creditor. You could have your bankruptcy challenged, and risk not receiving a discharge. In some cases, you could be accused of having committed criminal fraud.
Best Practices
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Include all of your creditors on your creditor matrix in your bankruptcy. If you forget one, file an amended petition. Do not intentionally leave anyone out of your bankruptcy filing. This includes friends and family members that have loaned you money. You can pay them back after the discharge if you want to, as that is not prohibited, but do not pay them off within six months before filing. This could be termed a preferential payment that the trustee could go back and confiscate. Be honest and truthful, and exclude nobody.
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