We commonly have clients tell us they do not want to include all of their creditors in their bankruptcy. Generally, clients are trying to keep a credit card or do not want to list family members who may have loaned them money. It is important that clients understand that their bankruptcy petition and schedules are signed under oath under the penalty of perjury. Furthermore, the Bankruptcy Code requires that debtors list all creditors in their bankruptcy schedules.
Specifically, the Bankruptcy Code defines a creditor as any “entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor.” In general terms, you must list everyone you owe anything to, whether you agree that you owe it or not. However, if a credit card has a zero balance at the time of filing, the issuer of that card is not a creditor and does not need to be listed. Keep in mind, this does not prevent the credit card company from cancelling the card if and when they find out a bankruptcy was filed. In addition, the bankruptcy trustee may pursue the funds used to pay off a balance prior to filing the petition.
It is a good idea to list creditors even when the debt is disputed. The schedules allow for debts to be specifically marked as disputed debts. Failing to list these debts could result in the debt not being discharged. This would allow that creditor to continue to pursue that debt which could result in costly litigation.
Failing to list a creditor on your bankruptcy schedules could have numerous consequences. First, the debt may not be discharged at the end of the case because that creditor would not have received notice. Furthermore, picking and choosing what to list in your schedules could result in a penalty of perjury, which could mean up to five years in jail.
Contact a Texas Bankruptcy attorney if you have any questions regarding listing your creditors in your bankruptcy schedules.