Picking and Choosing: Bankruptcy & Creditors - Westgate Law

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Picking and Choosing: Bankruptcy & Creditors

When you file for bankruptcy, you do not have the choice of choosing which creditors to list in your bankruptcy – there is no picking and choosing! Your list of creditors should be all-inclusive even if you plan to pay them off yourself or even if they are not eligible for discharge. Student loans, delinquent income taxes, delinquent alimony or child support, non-dischargeable income taxes, criminal restitution will all need to be reported in your bankruptcy filing. Some debts you may intend to keep, but must still be listed. (Please note: personal family loans should also be included in your list of creditors).

If your intentions are to keep as much good credit as possible by not listing certain credit cards, let me be clear. This will not work. Clients often attempt to do this and are disappointed to discover that bankruptcy filing is not a secret. Your creditors really don’t need an official notice of your bankruptcy filing to make them aware that it’s happening. Many of your creditors process their payments through a centralized company. GE, Money Bank, Citibank and Wells Fargo are a few of the big names that process payments not just for themselves but for other smaller companies too. Once a lender knows of your bankruptcy filing, your accounts are frozen and/or closed.

Remember those offers you get in the mail in regard to more credit or balance transfers, etc.?  As the computer generates these offers, it recognizes that you filed bankruptcy. Again, all accounts are automatically closed out.

Credit Unions are a little different due to their policies. Credit Union accounts can be included in your bankruptcy and the accounts still remain open after completing the bankruptcy. You will be required to work directly with the credit union once you have filed.

Don’t get too attached to any particular creditor because there are plenty out there who will be willing to work with you after your bankruptcy. You will be able to rebuild your credit slowly but surely. And surprisingly enough, some of your old creditors might be willing to give you another shot!

Get in touch if you would like additional information about filing for bankruptcy or recovering your credit post-bankruptcy. One of the experienced southern California bankruptcy attorneys at Westgate Law can answer your questions.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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