When filing a bankruptcy, how to find debts in the process has been the subject of questions asked recently on some bankruptcy forum websites. The experience of initially finding out you are bankrupt can be traumatic enough for anyone, but understanding the bankruptcy process can be just as traumatic, especially if you do not understand how to do specific simple things like know exactly which debts to list in filing.
Knowing which debts to list in filing a bankruptcy is easy; bankruptcy law simply states you must list all of them. The problem for most first time filers, then, becomes knowing how to find debts so you do not leave any out. Following is some general thoughts you might want to understand for helping you organize your current debt for filing formal bankruptcy papers in a bankruptcy court.
Understanding What Kind of Debts There are to List
Since all debt must be listed in your bankruptcy application, it would be wise to understand the different kinds of debt and how the bankruptcy court views them. Debts can be broken down into two categories:
Secured Debts. Secured debts are debts where you have normally signed a contract document, and collateral has been set forth in the document to collateralize the debt. A lien is associated with secured debt and includes debts like those for a mortgage or automobile.
Unsecured Debts. Unsecured debts are debts that may or may not have a contract document associated with them, but they do not have collateral or any lien associated with them without a court judgment. Unsecured debts includes such debts as credit cards, some personal loans, and utility bills without deposits.
Dischargeable Debts. Understanding that bankruptcy law will only discharge certain kinds of debts under certain types of bankruptcy is useful in helping you find debt.
Non-Dischargeable Debts. There are certain types of debt that bankruptcy will not discharge. These can include certain taxes, spousal support, child support, and student loans. All of these debts must still be listed on bankruptcy documents as debts.
Understanding Where to Look for Debts Possibly Hidden
Most of you know what you owe, but sometimes you forget your debts; the debts are not so readily recognizable. Sometimes, they appear to be hidden, so where do you look for them? Here are some suggestions for helping you find all your debts.
Check all your current bills; this might include utility bills, house payments, credit cards, car payments, medical bills, insurance bills, and the like.
Check out all three major credit reporting agencies. Although the credit companies do not always have everything perfectly accurate, it may give you a heads up on assignees you were not aware that now own your debt.
Sift through all mail, carefully paying attention to third party billing statements; they may have been recently assigned your debt. Legal type letters is usually a tip off some collection firm has been assigned your debt. It is important to include them in your bankruptcy application, so open all mail.
Understanding Why It is Important to Prepare Your Lawyer
Most first time filers are ill-equipped to prepare a bankruptcy filing. Hiring an experienced bankruptcy lawyer is not only a good idea, it can save you stress, grief, and money in the long run. Here are some things you might want to remember about listing your debts for your lawyer:
Do not assume your lawyer knows anything about your debts. List every debt you can think of, even those you are not sure are a debt or will be at the time you file. Your lawyer is the expert on bankruptcy and will know whether or not to include the item.
Provide addresses of creditors and assignees, account numbers, the amount you owe on the debt, a short description of the debt with what kind you think it is, and when and if you are making any current payments on the debt at the time you give your lawyer the information.
For further help in understanding how to find all your debts, contact us.
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