You Can’t “File Bankruptcy On” Just Some Debts

Every now and then, a potential client says to me in reference to some debt or other, “I don’t want to include that in my bankruptcy.” Maybe it’s an amount owe to a doctor they like, or maybe to a family member. Maybe it’s a credit card they’ve had for ages and that bears a picture of their cat.

What I have to tell people at this point is that filing a case with the Bankruptcy Court isn’t a matter of “including” or “not including” specific debts. You don’t file bankruptcy “on” specific debts and “not on” others.

The Bankruptcy Code is very clear on this topic. When you file your case with the Court, you must provide a list of your creditors. That list must include the names and addresses of everybody to whom you owe even a penny. The law then puts your creditors into categories, based on the nature of the debt. For example, the debts in the “general unsecured” category (e.g. credit cards and medical bills) are subject to discharge. On the other hand, recent taxes go into the category of debts that are not subject to discharge.

The reason for this is that the Court can’t abide by similarly situated people being treated differently. Imagine you had five credit cards, and paid 100% to one, but nothing to the other four. One bank got its money, but the other four got the shaft, and the Court doesn’t like that. In order to preserve basic fairness, they all have to be treated the same.

So when you file your case, you have to list everybody. And when you get your Discharge Order, It applies to everybody. There isn’t any personal discretion involved.

What’s more, the reason why you’re going through all of this is to get rid of your debts. Why keep any of them? Even if it didn’t violate fairness principles, the fresh start, the very thing you’re trying to accomplish, would be impaired.

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