Disclosing Your Debts

Many times when I am meeting with someone who has financial difficulties, they wish to keep one of their credit cards, or keep paying one of their creditors themselves.

Bankruptcies and proposals done under the Bankruptcy and Insolvency Act ("BIA") must include full disclosure of all assets and liabilities. The BIA was designed to be a transparent process that treats each creditor equally. Thus you cannot pick and choose which creditors you wish to include in the process; you must disclose all of them fully. Even secured debts such as mortgages and car loans, and non-dischargeable debts such as student loans are listed so they are aware of the process and can file the necessary paperwork to confirm their documents are in proper order.

If you do not disclose all your creditors, there is the chance they will find out after the process has started and you will again be faced with phone calls and threats of legal action. Although those creditors are captured under the bankruptcy/proposal process, there may be questions as to what else you did not disclose.

Finally, if a creditor is only aware of the bankruptcy/proposal when the process is completely finished, if there were monies paid to your other creditors, that creditor is entitled to obtain from you the percentage amount of monies paid to the other creditors. It would be much better to have those monies paid out of the funds received by the trustee rather than by you after the bankruptcy or proposal process is finished.

Should you wish to discuss this issue or your financial situation, please e-mail us or call us at 310-PLAN.

Posted by Norma Yau, Trustee @ 1:52 PM

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