Recently I’ve had several clients call and tell me that they just realized that they had forgotten to include a creditor in their bankruptcy.
This doesn’t happen often as I spend a lot of time reminding my clients that they must be extremely thorough in making sure that they have listed each and every one of their creditors. And we take steps to ensure that we’re not forgetting any creditors such as obtaining the client’s credit reports.
But occasionally even the most organized client forgets a creditor. Then what do you do?
Well, it depends on where you filed your bankruptcy case and what kind of bankruptcy case you filed.
If your case is a no-asset Chapter 7 bankruptcy, meaning that none of your property will be taken and liquidated and the proceeds paid to your unsecured creditors, some bankruptcy courts require you to amend your bankruptcy schedules and give notice to the added creditor in order to have the debt officially discharged. If your case has already been discharged and closed, then you would have to file a Motion to Reopen you case and then amend your bankruptcy schedules and give notice to the added creditor. And be aware that there are court costs associated with filing amended schedules ($26.00) and motions to reopen cases ($260.00).
In one of the federal bankruptcy districts in which I practice, Judge Dana L. Rasure held in In re Cerrudo, 214 B.R. 500 (Bankr. N.D. Okl. 1997) that an unlisted debt that would otherwise be dischargeable is discharged without further action by the debtor if the case was a Chapter 7 in which no assets were distributed. In the Cerrudo case, Judge Rasure denied the debtor’s Motion to Reopen finding that unscheduled debts are not excepted from discharge by virtue of 11 USC Section 523(a)(3) unless the debt would be non-dischargeable under one of the intentional tort exceptions contained in Section 523(a)(2), (4), or (6) and that pursuant to Section 727(b), an unscheduled debt in a no-asset chapter 7 case is discharged unless the debt could have been found to be non-dischargeable under the intentional tort exceptions if the creditor had been given an opportunity to timely seek such relief.
The above rules apply only in a no-asset Chapter 7 bankruptcy. If your case is a Chapter 13 case or a Chapter 7 case where assets were liquidated and made available to unsecured creditors, then a creditor who was left out was harmed by not being included in the case and therefore not being able to receive funds that were available to unsecured creditors. And therefore, that unlisted debt would survive the bankruptcy and the debtor would still be liable for the money owed that particular creditor.
If you realize that you have forgotten to list a creditor in your bankruptcy, contact your bankruptcy attorney as soon as possible for advice regarding your specific situation.
