Can I File for a Partial Bankruptcy?
Many residents of South Florida find themselves in situations where they may be current on certain debts and up-to-date with particular creditors, but falling significantly behind with others. For example, you might be avoiding payments on credit cards and medical bills in order to ensure that you are paying your mortgage each month and remaining in good standing with your mortgage servicer to the detriment of your relationship with other creditors. In these kinds of situations, consumers often want to know: can I file for a partial bankruptcy? In other words, debtors frequently inquire about filing for Chapter 7 bankruptcy to receive a discharge for some debts, or Chapter 13 bankruptcy to reorganize some debts. Unfortunately, this is not possible.
A debtor cannot file for a partial bankruptcy. Our South Florida bankruptcy attorneys can explain in more detail, and we are here to speak with you today about your financial circumstances if you have any questions or want to find out more about your bankruptcy options.
Partial Bankruptcy Filings Are Not Possible
The US Bankruptcy Code does not allow a debtor to file a partial bankruptcy. To be clear, it is not possible to file for bankruptcy and to have only debts of your choosing discharged, or debts of your choosing reorganized through a repayment plan. Rather, when you file for any type of bankruptcy, you will need to provide information about all assets and all debts, and everything will be considered in your bankruptcy case.
When You Are Current with Some Creditors
You might be wondering what will happen if you are current with certain creditors but need bankruptcy protection in connection with other debts. The outcome will depend on the specific details of your case and the type of bankruptcy you are filing for.
If you are planning to file for Chapter 7 bankruptcy — a liquidation bankruptcy — all non-exempt assets will need to be liquidated, and eligible debts will be discharged. But if you are current with a particular secured creditor, for example, and want to keep the property (such as a motor vehicle or a home), you may be able to reaffirm that debt. By reaffirming debt, you will enter into an agreement with the creditor that the debt will not be discharged and that you will continue to be liable for it even as other eligible debts are discharged. You will need to work with a lawyer to ask the court to approve a reaffirmation agreement, and the creditor will also need to agree.
If you are planning to file for Chapter 13 bankruptcy, you can account for existing up-to-date loan payments along with other debts you will be repaying as part of your repayment plan. In a Chapter 13 (or other reorganization bankruptcy) case, all secured creditors will need to be repaid in full by the end of your repayment plan terms, anyhow.
Failing to List Certain Debts
To be very clear, you cannot file for bankruptcy and only list certain debts, or only disclose certain assets. Doing so can amount to bankruptcy fraud and can have serious consequences. All debts and assets, along with other detailed financial information, must be disclosed to the bankruptcy court.
Contact Our West Palm Beach Bankruptcy Lawyers Today
If you have any questions, one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller can speak with you today. Contact us for more information.
Sources:
law.cornell.edu/uscode/text/11
