Listing a Debt in Your Las Vegas Bankruptcy Petition Doesn’t Mean It’s Discharged

And failing to list a debt in a Las Vegas bankruptcy petition doesn’t mean it will not be discharged.

What does this mean?

Whether a debt is dischargeable depends on the kind of debt that it is, not whether you listed it on your petition. For example, most debtors cannot prove that repaying their student loans would be an undue hardship, so it would probably not be discharged. However, debtors must list it anyway. The same goes for tax debts, which can be discharged only under specific circumstances. Those debts must be listed too. Debtors must even list debts that they don’t want to discharge and wish to pay off in the future, such as loans made by family members.

Debtors must also list debts owed to secured creditors like home mortgages and car loan creditors, even though the debtor might not want to surrender his or her house or car to the bank. That’s not what’s important for the bankruptcy petition. The petition is designed to notify the debtors creditors of the debtor’s bankruptcy filing, especially creditors that are in the process of foreclosing on the debtor’s property. Creditors also have a right to challenge the debtor’s petition if they believe the debtor is committing bankruptcy fraud. For Chapter 13 cases, creditors need to know that the debt is in bankruptcy so they can file their proofs of claim with the bankruptcy court. Finally, creditors deserve to know what other creditors the debtor owes money to, so they can ascertain how much, if any, of the money they are owed can be recovered. Debtors who omit debts from their petitions might face adversary proceedings from listed creditors claiming that they are making preferential transfers to unlisted creditors.

The petition has no bearing on the debtor’s intent regarding the debts, merely that they are what he or she owes. After the 341 meeting of the creditors, the debtor can decide whether to reaffirm or surrender property that secures debts to creditors.

Importantly, though, the discharge order the debtor receives at the end of a Chapter 7 and most Chapter 13 bankruptcies is “good against the world.” In other words, if a debtor forgets to list a debt owed to a creditor in his or her petition, the debt is still discharged.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.

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