They say the three most important words in real estate are location, location, location. Likewise, the three most important words in bankruptcy are disclose, disclose, disclose.

I will often have clients tell me I dont want my car to be part of my bankruptcy, because I want to keep my car and keep paying on it. This comment is misguided on several fronts. For starters, the vast majority of debtors keep all the property they want in a chapter 7 or 13 anyway, so the presumption that including it will cause the debtor to lose the vehicle is erroneous. Not to mention, the trustee would find out about your car anyway, even if it was not on the petition.

Another reason the debtor is thinking along the wrong lines is because the debtor is making a voluntary petition under oath in which he/she signs under the penalty of perjury that the debtor has listed all his/her assets and liabilities. To intentionally exclude the car could go unpunished, but it could also lead to the debtor having the discharge denied or revoked, among other consequences.

Finally, leaving off a creditor means the creditor does not get notice of the debtors filing. In immediate terms, it could mean the creditor keeps calling or bothering the debtor because it is not aware of the debtors filing. It could also mean if you get behind on your car payment during the bankruptcy that the car is repossessed, because the creditor was not aware of the debtors bankruptcy protection. Long term it could mean a creditor trying to collect against a debtor during or after the debtors bankruptcy, especially if the debtors case becomes an asset case.

The same thing applies with debts to family members. You list all your debts to family members (again, because you have to under the penalty of perjury), and those debts get legally discharged. There is nothing in the bankruptcy code that precludes you from voluntarily paying off a discharged debt to anyone, so you can still voluntarily pay back the family member later.

There are plenty of consumer protections in the bankruptcy laws, and debtors rarely lose things they really want to keep. Do not assume you know more than your attorney about protecting your assets or which creditors to list. Discuss your concerns and goals frankly with your attorney, and you might be surprised that some of your worries are unfounded.

By Peter Bricks, P.C.

With offices conveniently located in Atlanta, Cumming, Dunwoody, Jonesboro, and Woodstock.