Do you have to explain to the court your reasons for filing bankruptcy?

I have noticed that many people are hesitant to consider bankruptcy as a viable option because they mistakenly believe that they would have to provide very personal details about themselves and their relationships and personal and financial choices, and mistakenly believe that they would have to give reasons for filing bankruptcy as part of the bankruptcy petition. It’s unfortunate that this barrier is stopping many people from fully exploring bankruptcy as an option to clear debts and start fresh. I have compiled some recent questions on this topic from potential clients, as well as my answers.Bay Area bankruptcy attorney Victoria Maydanik

Frequently Asked Questions

Do I have to provide detailed account to the court as to why I am filing bankruptcy?

But I think it would help to explain my situation better. I have diabetes and high blood pressure and needed costly emergency care last year. Should I provide my medical file and doctor’s certifications to the court?

Health care, especially emergency care, is very expensive and battling sickness and high medical bills at the same time is awful. But please do not proffer personal medical information to the court. First of all, providing information that the court does not request, generally does not help and may only complicate and delay your case. Second, it’s not a good idea to needlessly put your medical history and other sensitive information in the public record where it can be potentially found by anyone, such as scam artists, insurance companies, exes and more.

I hesitate filing bankruptcy because I am embarrassed that the judge would have me declare how and why I accumulated all these loans and credit cards. I make good money, and earn good hourly compensation, so I think the judge would be particularly critical. What may not be clear right off the bat, and what I want to explain, is that in the last few years I’ve had only intermittent contract work with no benefits. How should I prepare for the judge’s questions?

Part of my debt is due to bad business decisions and investments that flopped. How much information does the court need about these business decisions and investments?

The court does not need specifics of these deals.
You have to briefly describe the business if you’ve owned it in the last six years – such as the nature of business, address, EIN, years of operation.
One area where you do want to be very thorough is the list of names and addresses of all potential creditors – business partners, clients, lessors, lenders, vendors, anyone else who could try to go after you financially for any reason – to ensure that the court can properly notify them about the bankruptcy case, and you receive full bankruptcy protection.

I was taken advantage of by my ex. My ex had me borrow money from my retirement account for ex’s personal needs and used my credit cards without my consent last year. Does the court need to have more details about this situation?

The court would likely only need some additional financial information (not any personal details about your relationship) if you have any joint accounts together or your ex owes you money, or you owe any money to him or her. If you have any joint credit accounts together, your ex is a co-debtor and would still be liable for these accounts. If he or she owes your money, then the money owed to you is an asset, and either you or the bankruptcy trustee may be able to recover it from your ex. If you owe any money to your ex, then you would need to list your ex’s name and address among the contact information for other creditors.

What is particularly important to the bankruptcy court in my situation, if not my explanation of the reason for filing?

Are you saying that reasons for filing bankruptcy don’t matter?

I wouldn’t say that the reasons don’t matter. You should discuss your reasons and objectives for filing the bankruptcy case with your bankruptcy attorney to make sure that the case would properly meet your objectives. There are different types of bankruptcy and different options that you may have during the case, and explaining these to you and fine-tuning them to meet your goals are parts of your attorney’s job. For example, if the main reason you are considering filing bankruptcy is recent large tax debt, then a Chapter 13 case, which can help you clear tax penalties and set up a plan to pay for the rest of the recent tax debt without new interest or penalties, may make much more sense than other types of bankruptcy.

Talk to us. We can help!

If you are burdened with debt, I would encourage you to keep an open mind about all options you are legally entitled to, and to talk to a local experienced bankruptcy attorney to see if bankruptcy may be a good financial solution in your situation.

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