Yes, you do. The court does not allow you to pick and choose which debts will be included, and which will not. But there are a few wrinkles to that general rule.
To begin with, there are three main types of debts: 1) secured debts (such as a mortgage or car loan); 2) priority debts (such as taxes and child support arrearage); and 3) unsecured debts (such as credit cards, payday loans, and medical bills). Let’s look at an example of each category, and see how a St. Louis bankruptcy affects them.
An automobile loan on your vehicle is a common debt. It is considered to be “secured” because the debt has collateral (i.e. the car itself). When you file for bankruptcy, the debt owed to the car creditor has to be listed, but that doesn’t mean you have to lose the car. Most often, people wish to retain ownership of the vehicle. And this goal is normally achieved. The main question is whether or not the car has a great deal of equity. If indeed the car has much more than $3,000 of equity (or $6,000 if you are filing jointly with your spouse), then it is possible the Bankruptcy Trustee will want liquidate the vehicle. So for example, if you have a car that has a loan against it for $10,000, and the car is worth about $12,000, then your state exemption of $3,000 will more than cover any equity that exists. (12K – 10K = 2K; but the 3K exemption that the state gives you covers the 2K of equity). In this kind of situation, you can keep your car and continue making payments on it.
Tax obligations are considered to be “priority,” meaning they cannot typically be discharged. But even though they cannot be knocked out, it is still necessary to disclose the amounts owed. In a St. Louis Chapter 7, you can make arrangements to pay on the tax debt after your case has been discharged (usually three to four months after you file). And in a St. Louis Chapter 13 bankruptcy, that debt is paid back over the course of three to five years.
The last category of debt is described as “unsecured”. This would be things like payday loans, credit cards, old cell phone bills, medical bills, etc. All of these debts must be listed, too (even if you have a million of them!) A frequent question that I will get is: “Can I leave this medical bill off? I really like my doctor.” Having a good relationship with your doctor is great, but unfortunately, you cannot leave them off the bankruptcy schedules. Of course, if you wish to make good on a debt owed to your doctor, you can certainly pick up that tab after you get a discharge on the rest of your debts. It’s just that you will not have any obligation to pay towards those debts.
We have two main offices: in the Central West End of St. Louis, at 1 North Taylor, 63018; and the Twin Cities of Festus / Crystal City, at 1000 Truman Blvd (Highway 61/67), 63019. The initial consultation to discuss your case is free of charge. So call today to learn more!!