Every single amount of monies owed is supposed to be included in the paperwork for your bankruptcy filing. This applies whether you are seeking to file for Chapter 7, Chapter 13, or really any other form of bankruptcy.
Many individuals are surprised to find out that they are expected to include “informal” debts owed to family and friends on their bankruptcy filings. While certain agreements to borrow money may seem casual and based on the “honor system,” the reality is that these arrangements still affect your financial situation. Further, the goal of the bankruptcy process is to satisfy all creditors to the extent possible, so the U.S. Bankruptcy Courts expect the list of creditors to be comprehensive and include every single relevant debt.
Further, debts that aren’t really part of the overall bankruptcy agreement must still be considered. Alimony, child support, tax liens, restitution fees for crimes committed, and other types of debts are ineligible to be included in bankruptcy proceedings. Secured debts, including car loans and home mortgages, also should not be involved. Even still, these debts must be listed so that the court can obtain an overall picture of your financial situation.
The goal of bankruptcy is for the filer to lay all of their situations bare to the court and to their creditors. All of their debts and obligations are considered, including things like rent and living expenses. Also included are all of their current assets, investments, retirement accounts, life insurance policies, income, and other financial holdings.
By comparing the total amount of obligations to the total amount of holdings, the filer along with the court’s help can determine the best way to address the situation. In Chapter 7 bankruptcy, this means the filer will liquidate all non-exempt assets in order to pay off as much debt as possible while discharging the remainder. With Chapter 13 bankruptcy, the filer is expected to make monthly payments to each creditor, and the amount on these payments is set in part by comparing total obligations to total assets.