Do Bankruptcy Courts Check Your Credit Report?

Reviews of credit reports are not a part of the standard application process for filing for bankruptcy. The bankruptcy court expects you to list all of your debts, and failing to do so could result in your bankruptcy case being dismissed -- or you could be charged with federal bankruptcy fraud, a felony.

Required Documents

The bankruptcy court does require you to provide pay stubs and tax returns to verify your income. However, most people filing for bankruptcy are happy to list all the debts appearing on their credit reports and other debts as well, such as debts owed to family and friends. The goal of bankruptcy is to reorganize or eliminate debt and there is really nothing to gain from not offering a complete list of your obligations.

All Inclusive

It is not possible to selectively file for bankruptcy by listing say, only your credit card debt on the bankruptcy application while not mentioning home mortgage payments or auto loan obligations. The bankruptcy court expects you to accurately list all of your debts and assets.

Penalties

When you sign the bankruptcy application you pledge that the information is complete and correct. People sometimes make honest mistakes, such as forgetting to list a small debt or an insignificant asset on their bankruptcy application. Such oversights can be corrected with the help of your attorney or the bankruptcy trustee assigned to your case. However, there could be big problems if the court finds that you are intentionally hiding assets related to open debts. Bankruptcy fraud is a punishable by a fine of $250,000 and/or three years in prison.

Counseling

People interested in filing for bankruptcy must attend pre-bankruptcy counseling led by a nonprofit credit counselor certified by the U.S. Trustee Program -- a division of the U.S. Department of Justice. Among other things, the counselor will stress the importance of being truthful on your application and will review your debts and assets. Your attorney -- unless you are representing yourself -- will also review your application for completeness. Your credit report will not come into play if you are being truthful about what you owe.

The 341 Meeting

Once you complete counseling and officially file, you will attend what the courts call a "Section 341 Meeting." This is also referred to as a "meeting of creditors," and is a highly formal event conducted by the trustee. The trustee will review your bankruptcy application, and your answers will be a part of the public record. Creditors who choose to attend can also ask you questions about your financial situation. It is important that your statements be consistent with information you provided on your application. After the 341 meeting your bankruptcy process will continue under the direction of the trustee.

References

• Nolo: Should I File for Bankruptcy FAQ
• Moran Law Group: Bankruptcy In Brief -- Credit Reports
• MSN Money; Your 5-Minute Guide To Bankruptcy; 2009
• Federal Trade Commission: Before You File for Personal Bankruptcy: Information About Credit Counseling and Debtor Education; Nov., 2006
• U.S. Trustee Program: Chapter 3-5: Section 341 Meeting; March 24, 2006