Brent’s Credit and Debt blog

When you file for bankruptcy, you may choose to keep some of your debts. For most debts, like credit cards, you just keep making payments and your creditor will probably never say a thing.  All debts must be included in your bankruptcy so that your creditors may be notified that you have filed.  This list of creditors will be notified by the courts that you have filed for bankruptcy, and they can choose to close your account or to let you keep it.  Keeping an account may require an affirmation of debt.

It is fairly common for a debt to be missed in the list of creditors provided to the court.  Omitting a creditor intentionally is perjury.  The law allows you to add creditors to a certain point in the proceeding.  If you do not specify a creditor, and the court determines that perjury was committed, they may discharge your case and you may be subject to other penalties as provided by bankruptcy law.  When I worked with my lawyer to put together my list of creditors, I forgot a couple of creditor, such as my utility company and cable television company.  We had to petition the court to add these in later, and I had to pay extra for the filing, so be careful to get everything included.

When I filed for bankruptcy, I decided to keep my truck. That was actually a fairly bad decision, as it needed work and was worth less than I owed on it, but I was worried that I wouldn’t be able to get another car loan.

The truck was listed on the bankruptcy. After the bankruptcy was discharged, I talked to my credit union that held the loan, and told them I wanted to keep the truck. They had me sign a document called a ‘Re-affirmation of Debt’ that allowed me to keep the truck and continue to make payments on it.

This document actually protects the lender. Because the truck was included in the bankruptcy, I could have walked away from it at any time. The bank would have had no recourse but to take the truck as included in the bankruptcy. However, the re-affirmation allowed the bank to be able to repossess the truck if I defaulted on it, and also allowed them to go after collections if I owed money. It is basically a new contract, and as it was signed AFTER the discharge, they hold all the power.

A couple of things to consider if you think you want to re-affirm a debt:

1. If you have a secured loan, consider if whatever you are getting a reaffirmation for is worth the money. You have an opportunity to wipe the slate clean and start fresh. That may be a better option for you.
2. You will be legally obligated for the debt you sign for once you re-affirm. The bankruptcy no longer has any authority over that loan.

You probably can get credit following a bankruptcy, but it is getting much harder to get. You should make sure you re-establish credit quickly with a secured loan or other credit option, and the sooner you start the better off you are.

To learn more about how to fix your credit and keep it clean, get my e-book ‘Credit Cleanup’ by clicking the link. ‘Credit Cleanup’ will walk you through how to repair your credit, and tell you how to keep your credit clean.

If you are getting calls from debt collectors, you should read my FREE  e-Book ‘The Top 10 Questions A Debt Collector Might Ask You’. This book takes you through a list of things you might be asked by a collector, and how they use information they get against you.  Just click here, or the link above, to get your copy now!

When you file for bankruptcy, you will be asked to provide a list of your creditors, and any accounts that are to be included in bankruptcy. This list is intended to be exhaustive. The court will take your list, and use it to notify your creditors that you have filed for bankruptcy protection, and let them know that they can no longer pursue collections against you.

When I filed for bankruptcy, I kept a single credit card account, my Kohl’s card, and I also kept a loan for my truck. Other than that, I wanted everything included. I kept those two accounts because I wanted to be able to buy clothes at Kohl’s, and I needed a vehicle and couldn’t afford a used car loan. I listed everything else I knew about, and my lawyer pulled information from my credit report for inclusion in the bankruptcy. I thought everything was included.

However, after my bankruptcy was over and discharged, I found a couple of accounts that had been missed. They hadn’t reported to my credit reports until later. One was for my satellite TV, and the other a doctors’ bill that went to collection, that wasn’t even mine. Since both accounts were opened before the bankruptcy, they were included automatically.

Why? The US 6^th Circuit Court of Appeals ruled that all accounts that were open at the time of a bankruptcy are included, regardless of whether they were included in the filing or not. While that hasn’t gone to the Supreme Court, it has held up when tested. This means you don’t have to include a debt your self for it to be included in your bankruptcy.  However, deliberately omitting a debt from your creditors list is illegal.

But what about the things you want to keep? Typically, you sign a re-affirmation for a debt you want to keep, and continue to make payments on it. This will exclude it from your bankruptcy, and will allow the debt to be kept by the consumer. Your creditor has the right to refuse to re-affirm the debt, but if they do that they lose their money, so they will usually work with you.

The answer to the question is that you can keep some of your debt in a bankruptcy, but any account you keep needs to be re-affirmed. Otherwise, they will be considered as included in the bankruptcy.

To learn more about how to fix your credit and keep it clean, get my e-book ‘Credit Cleanup’ by clicking the link. ‘Credit Cleanup’ will walk you through how to repair your credit, and tell you how to keep your credit clean.

To get a copy of my FREE e-Book ‘The Top Ten Ways You Can Wreck Your Credit’, just click the link. You will be taken to a page where you can get more information about downloading the e-book. This book tells you what you should avoid doing concerning your credit, and what negative impacts can occur if you treat your credit wrong.

Getting sued is a terrible thing. The prospect of having to go to court, the possibility of a judgment on your credit report, and having to meet a debt collector face to face fills most people with dread. Unfortunately, once that suit is filed, there is very little you can do to get out of going to court.

Filing a suit costs a collector money, which they hope to collect in the judgment. But, that cost is a risk the lawyers take. Therefore, by the time they file suit, they are fairly sure about the following:

1. You ARE the debtor that is responsible for the debt.

2. You probably have the ability to pay after the judgment.

3. You probably have an asset they can place a lien against.

4. It is unlikely that you have a defense.

Now, if you really aren’t the debtor that is responsible for that account, simply take that documentation to court and you will win. Similarly, if the collector has violated the FDCPA, you can win the case. However, if you really owed that money, you could be in trouble from the start. You will also win if the debt is older than the statute of limitations in your state has expired for legal action on a debt.

If you are not responsible, you will need to file a response to the suit with the court that you have been summoned to. The response process is different depending on the jurisdiction, but your court probably has a web site that details the process. Be detailed in your response, and make sure the court has the information it needs to settle the case.

On the other hand, it could really be your debt. In that case, you have two options: You can go fight the suit and probably lose, or you can try for a settlement with the collector.

If you choose to settle, remember that the collector has invested money in the case, and they will want to recover those costs. So, the amount you pay will go up. Also, you are basically out of bargaining power at this point. They have a case prepared, and they have a high level of confidence that they will win.

If you run into this situation, a settlement early is often a good thing to do. Try to get the collector to waive interest, and as much of the principle as possible. Then, get a payment schedule set up and make the payments on time.

Remember, they sued you once. If you default on a payment schedule, they will absolutely sue you again.

To learn more about how to fix your credit and keep it clean, get my e-book ‘Credit Cleanup’ by clicking the link. ‘Credit Cleanup’ will walk you through how to repair your credit, and tell you how to keep your credit clean.

To get a copy of my FREE e-Book ‘The Top Ten Ways You Can Wreck Your Credit’, just click the link. You will be taken to a page where you can get more information about downloading the e-book. This book tells you what you should avoid doing concerning your credit, and what negative impacts can occur if you treat your credit wrong.