Determining Your Debt

The main purpose of bankruptcy is to discharge your debt and get a fresh start. The first step should always be determining what are your debts exactly. This sounds simple enough, and for the most part it is. However, it should not be overlooked. When you meet with an experienced bankruptcy attorney, you will want to have a firm grasp of your debt for a couple reasons.

First, your bankruptcy attorney will need to know what type of debt your have so that they can determine whether or not it can be discharged. Not all of your debts can be wiped out in bankruptcy. For instance, credit cards and medical bills can be discharged, but most student loans and taxes cannot. Your attorney will need to know all of your debts in order to advise you as to what can be included. Remember, your attorney will not know your debts, it's up to you to make sure they have the complete picture of your situation. 

Second, all of your debts must be disclosed in order for them to be discharged. Debts not included in your bankruptcy petition will survive the filing. That means creditors can collect on these debts, even if they should have been discharged. Now, in most cases, your attorney will be able to amend your bankruptcy filing to included these debts. However, that will cost money and take time. It is better to have everything up front for your bankruptcy attorney to review.

So, how should you go about organizing all of your debt for your attorney? The first step in determining your debt should be running a credit report. These will give you a list of most creditors who claim you owe money, though sometimes not all, as I will discuss later. A good credit report should show all of your reported credit card debts, bank and car loans, and mortgages. It should also include old, closed out accounts. Review this credit report closely to make sure nothing is missing. You can order your free yearly credit report, or my office can order a bankruptcy specific report for a fee. It is worth the money and time.

Next, you will want to gather any bills that do not show up on your credit report. Credit reports agencies will not show debts that are not reported to them. Medical bills are often not reported, therefore you should make sure you gather up all medical statements. Medical bills can grow large, and fast, so make sure you find them all, even if you need to call and ask for a statement.

You should also gather any utility statements and payday loans, as these are also often not reported. If you don't have statements for everything the first time you meet your attorney, that's OK. But, make sure your attorney knows everything you know. He or she can determine if the information is important and relevant to bankruptcy. It is better to share too much than too little. I have had numerous clients, for instance, who have had far more medical debt that they initially assumed. Once they started looking for medical statements, they unearthed more and more.

Finally, take an expansive view of "debts" when you speak with a bankruptcy attorney. It is not just credit cards and medical bills. It can also be money owed to an old landlord, a family member, or an insurance company. It can include relatively new debt, or old debts from years ago. And there are sometimes exceptions for debts that are not normally discharged, such as school tuition and taxes. If in doubt, tell your bankruptcy attorney.

Contact us if you would like to set up a free consultation to review your debts. We can discuss whether or not your debts can be discharged, and look at all of your options.