TwitterGoogle+EmailStumbleUponTumblrLinkedInFacebookPrintFriendlyShare

When you file a bankruptcy case, you must list (i.e. “include”) all assets wherever on the planet earth or the universe they may be located, and all debts no matter who they are owed to (yes, this includes your mother, your best friend, and any other person or entity to whom you owe a debt).

You Cannot Pick and Choose Which Assets and Debts to List

One of the most common misconceptions people have about bankruptcy is that you can pick and choose which debts one “files bankruptcy on” (I hate that phrase) or which assets can be included.

Not a week goes by that I don’t get at least 2 or 3 people start out their consultation with me by saying “I only want to include these debts”  or, “I have property in another state (or country) that I don’t want to include”.

There are few questions in the law that have simple answers but, happily for this article,  this one is easy.

What About My Spouse?

If you live in a Community Property state, such as California, you must list all debts and assets of your spouse–even if they are not joining in the bankruptcy filing– if they were incurred or obtained during the marriage and are not separate property.   If you’re unsure about this, talk to a bankruptcy and/or family law attorney.

Does that mean I can’t repay my family or friends?

No.  To my knowledge, there has never been a law passed in the history of mankind that prevented someone from repaying a debt to another.   Bankruptcy simply takes away the legal obligation to do so.  If you want to file bankruptcy, discharge your debts, and then pay them all back anyway, you may do so.

This article is part of my bankruptcy alphabet series

For others writing on the letter “L” see:

 

 

 

Image courtesy of Mr. Mystery