For consumers filing bankruptcy, it is especially important to disclose all of your creditors to the bankruptcy court. This disclosure is part of the bankruptcy petition which is filed with the bankruptcy court, and assists the Clerk of Bankruptcy Court with sending case notifications to all of the creditors. Bankruptcy debtors are not allowed to “play favorites” and leave certain debts out. While the Bankruptcy Code may allow for some creditors to be treated differently, they must still be disclosed as part of the filing. COMMON QUESTIONS THAT BANKRUPTCY ATTORNEYS HAVE TO ANSWER FOR POTENTIAL CLIENTS
In the past, a credit report provided fairly comprehensive information regarding creditors, in the absence of the actual bills received directly from the creditors themselves. Credit reports were especially helpful for consumers who had moved frequently, and some of their past due bills had not yet caught up with them. Credit reports also provided the names of collection agencies to whom past-due debts had been assigned. However, there have been changes in both the credit reporting industry and state/federal laws which may limit the information provided on a credit report. For example, this is a list of debts that may not appear on credit reports.
1) Medical bills – because of HIPAA (Health Insurance Portability and Accountability Act), many healthcare providers stopped reporting debts to the credit bureaus in order to stay in compliance. HIPAA does not apply to collection agencies, so once the debts were turned over for collection, they would then appear on credit reports. DEBT COLLECTION STATISTICS RELEASED: COMMON REASONS FOR DEBTS TO GO INTO COLLECTION However, the three main credit reporting agencies have indicated that they will no longer report medical collections in amounts less than $500. If you have dentist bills, doctor bills, hospital bills and pharmacy bills, you will probably need to provide the actual bills to your bankruptcy attorney so that an accurate bankruptcy petition may be prepared.
- Income taxes – some credit reporting agencies may show tax liens on property since these are a matter of public record. However, if you owe past-due income taxes and no property lien has been filed, that information will not appear on your credit. You will need to provide any correspondence that you have received from the federal or state government regarding past-due income taxes so that the information may be disclosed in the bankruptcy petition.
- Divorce and child support obligations – if you owe alimony, child support or any other court ordered domestic obligation, it is unlikely that it will appear on your credit report. It is for this reason that most attorneys will request copies of divorce decrees and other Family Court documents as part of the bankruptcy consultation.
- Court fines/traffic tickets/probation fees – like divorce and child support obligations, it will be rare for these debts to appear on a credit report. Some government agencies do use private collection firms to assist in debt collection, and in that event the obligations may appear on a credit report.
- Garnishments – while a lawsuit TIS THE SEASON TO BE WARY OF OUTSTANDING JUDGMENTS is a public record and will appear on a credit report for between 7 – 10 years, a garnishment [GARNISHMENT] arising from that lawsuit is considered an action against a consumer’s employer, and not the consumer. As a result, the garnishment will not appear on your credit report. If you are filing bankruptcy because of a wage garnishment, you will need to obtain a copy of that garnishment from your employer and provide it to your bankruptcy attorney. [IF A CREDITOR HAS A JUDGMENT AGAINST ME, CAN THEY TAKE MY SOURCES OF INCOME?]
There are other debts that may not appear on your credit report simply because the businesses are not members or participants with any credit reporting agencies, or do not consider it worth their time to report it. But the failure of a business to list a debt on the credit report does not prevent them from collecting the debt through all legal means available. Likewise, just because you dispute a debt on your credit report does not mean that it should not be disclosed in your bankruptcy petition! If you have a question about a debt that does not appear on your credit report, or a debt that you dispute, notify your bankruptcy attorney so that they can take the appropriate steps to address it in your bankruptcy petition. WHAT TO EXPECT ON YOUR FIRST VISIT TO A BANKRUPTCY ATTORNEY