Honesty is the best policy when it comes to dealing with the bankruptcy court and communicating with the bankruptcy trustee. The Trustees usually have enormous experience in working with debtors, and know when someone is not truthful. It is therefore critical that you be entirely truthful in your petition.
All Income, Expenses, Creditors & Debts Must Be Listed
Whether you are filing for Chapter 7 or Chapter 13 bankruptcy, along with all of your creditors, income, and expenses, you must list all your debts, no matter how small. This covers everything from your mortgage and car loans, to credit cards, gambling debts, and yes, friends and family. Once you list all these debts, including those personal loans which may not have seemed like much at the time, everyone will be notified of your bankruptcy. You therefore may want to notify them about your bankruptcy ahead of time if that is something you think will take them by surprise. Be careful not to pay them back within one year of filing, as you could then be accused of preferential transfer which could put your bankruptcy in jeopardy.
The Automatic Stay Prevents Creditors from Collecting
Many filers have questions about smaller debts-especially the loans where nothing was ever put in writing; however, if you borrowed money and are expected to pay it back, it must be listed. The court will need all the details of the loan, as well as full contact information for the ‘creditor.’ You cannot pay them back on your own once the bankruptcy is in force, as this payment decision is up to the trustee-and with that automatic stay in place prohibiting any collection activity, the friend or family member cannot ask you to pay up during that time. If you do wish to pay back a debt even if it has been discharged within the bankruptcy, that is completely fine too.
Contact Us for Help Now
The experienced attorneys at Levitt & Slafkes, PC can answer all your questions regarding bankruptcy issues. Contact us today so one of our attorneys can evaluate your case and discuss the best options available to you. We are here to help! Call us at 973-323-2953, or contact us online to schedule a free consultation.
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