What Debts Are Included in My Bankruptcy?

Any debt you owe at the date you file bankruptcy is included in your bankruptcy.

Bankruptcy is a line in the sand.

All debts that exist before you go bankrupt are caught by the bankruptcy and can no longer be collected.

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One of the most important things to understand is how powerful that line actually is.

It splits time into two parts:

• pre-bankruptcy

• post-bankruptcy

Anything that exists in the pre-bankruptcy period is generally included in the bankruptcy.

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This includes tax debt.

The tax year is effectively split at the date of bankruptcy. Any tax owing for the period before you file becomes part of the bankruptcy. Anything after that date is post-bankruptcy.

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It also includes legal claims.

If you are being sued for something that happened before you filed, that claim is generally included—even if the lawsuit has not yet been decided.

You do not need to wait for a judgment to file bankruptcy. If the underlying event happened before you filed, it is typically caught by the bankruptcy.

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Secured debts are treated differently

Secured debts—like mortgages or vehicle loans—are still included in the bankruptcy, but they operate differently.

If you want to keep the asset, you continue making the required payments.

If you stop making payments, you can surrender the asset.

Any shortfall that exists at the date of bankruptcy is included in the bankruptcy.

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A simple way to think about it

Bankruptcy captures everything that exists up to the moment you file.

After that moment, a new financial timeline begins.

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Bottom line

Most debts that exist before you file bankruptcy are included in it.

Secured debts can be kept or surrendered, but any unpaid portion at the date of bankruptcy is still captured by the process.