This is a question for a bankruptcy attorney. With the cease and desist letter, at least there is a potential creditor. Your bankruptcy attorney will be able to help you.
The answer intends to provide the general principle of the law and should not be construed as legal advice. No attorney-client relationship is formed from the provision of the answer.
Yes. You are obligated to list all your creditors, even those who you believe to have bogus claims, and you would want to.
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Yes, you should include the monetary demand on your creditors list. The demand is not, moreover, "extortion." It is presumptively a valid and legally supportable demand in exchange for settling copyright infringement claims against you.
The above response is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry.
It is a claim against you, so you should list it. Consult your bankruptcy attorney.
"Free images off Internet"??? "now I am filing bankruptcy" "notorious extortion letter" I am not getting any sense that you respect your legal obligations with respect to copyrights any more than you respect your obligations to pay your bills. I am not getting any sense of a reason we should do anything for you here.
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.