When you think about creditors, your mind goes to folks like Citibank, Chase and Wells Fargo. You know, faceless institutions that send you statements in the mail. But there’s more to it.
According to Wikipedia, that source of all knowledge in the world (anyone else remember having 280 pounds of encyclopedias cluttering up the bookcase?), says that a creditor is a person, organization, company, or government to whom money is owed.
Read the entire sentence. It’s not just a company. A creditor can be a person or a government.
Like your Aunt Mary. Your mom or dad. Your brother or cousin. All of these folks can be considered a creditor.
When you’re going into bankruptcy (or just thinking about it), it’s important to consider every creditor past and present.
The Ghost Of Creditors Past
With respect to past creditors, part of your bankruptcy statements speak to payments made to others in the run up to your filing. If you’ve paid debts prior to filing your case, Section 547 of the U.S. Bankruptcy Code gives the trustee the ability to recover those funds and distribute them among everyone you currently owe money to.
For “outsiders” (anyone who’s not a family member or a friend) we look to payments made within the 90 days immediately prior to filing. For “insiders” (relatives, business partners or corporations in which you have an ownership interest) the trustee will look back a full year.
If you paid back a family member in the past year, you may want to give a heads-up that the payment will be listed on your bankruptcy papers and the trustee may come knocking for the money. A failure to voluntarily turn over the money may mean your relative gets sued in bankruptcy court.
These payments are called preferences, and the goal is to keep you from favoring one creditor over another.
Present Creditors
Part of the bargain you make in bankruptcy is full disclosure – you disclose all of your debts and assets in exchange for the protection of the bankruptcy court. Fail to disclose, fail to get protection. Pretty simple.
Once again, you need to disclose all of your debts. That includes friends and relatives. No excuses.
A failure to disclose all creditors is a false oath, which is a very bad thing in the world of bankruptcy. In addition, failure to list a creditor may (under some circumstances) lead to that debt surviving bankruptcy.
In the end, it’s simple: tell the court everything, tell your lawyer everything, and notify everyone. Even Aunt Mary.
Other Folks Who Are Playing The Bankruptcy Alphabet Game:
San Francisco Bankruptcy Attorney, Jeena Cho
Marin County Bankruptcy Attorney, Catherine Eranthe
Ormond Beach, Florida Bankruptcy Attorney, Lewis Roberts
Taylor Michigan Bankruptcy Attorney, Christopher McAvoy
Jacksonville Bankruptcy Attorney, Monica D. Shepard
Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
Los Angeles Bankruptcy Law Monitor, Christine A. Wilton
Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
Cleveland Area Bankruptcy lawyer Bill Balena
Northern California Bankruptcy Lawyer, Cathy Moran
Colorado Springs Bankruptcy Attorney Bob Doig
Oahu Bankruptcy Attorney, Stuart Ing
Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
Wisconsin Bankruptcy Lawyer, Bret Nason
Chicago Bankruptcy Attorney, Kyle A. Lindsey
Los Angeles Bankruptcy Blog, Mark J. Markus
Daniel J. Winter, Chicago Bankruptcy Attorney
St. Clair Shores MI Bankruptcy Attorney
Philadelphia Bankruptcy Lawyer, Raymond Kempinski
Livonia Michigan Bankruptcy Attorney, Peter Behrmann
Image credit: Leo Reynolds
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