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Should you list all creditors in bankruptcy papers?

If you are considering filing for bankruptcy in Washington, D.C., you may be uncertain about how to list your creditors. You may have debts that have been passed from collections agency to collections agency; as a result, it may seem as though you have an excessive number of creditors to list on your bankruptcy forms. Even though the life of your debt may be long and complex, you do not have to follow it to the smallest detail. Experts say it is generally sufficient to list the original creditor and one or two of the subsequent collections groups.

Federal laws govern the life span and destination of your debt. Under existing mandates, the original credit agency must charge off installment loans after four months' delinquency, while revolving accounts such as credit cards are charged off after six months. At that point, a collection agency receives the account either through assignment by the original creditor or by purchasing the debt for a nominal amount.

In either situation, you will no longer be paying the debt to the original creditor, as another company's name will appear on statements and solicitations related to the balance. This may get confusing as the debt jumps among collectors, especially if the debt has been around for a while.

The best course of action is to remember to pull a credit report immediately before you file bankruptcy. An updated credit report will list all of your creditors. If you are not sure which debt belongs to which original company, it is acceptable to list only the current collections agency on your bankruptcy documents, but it is better to list as many of the debt's administrators as possible, including the original creditor.

You do not have to provide a perfect history for your debt, but including additional information can decrease the likelihood that you will face a lawsuit during bankruptcy. Qualified bankruptcy attorneys can help protect filers learn more about the details of their paperwork to limit unpleasant consequences.

Source: www.foxbusiness.com, "List all collection agencies in bankruptcy?" Justin Harelik, Aug. 28, 2013

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