What Happens to Debt Not Listed in Your Bankruptcy Schedule of Debts?

TRI Writer • July 16, 2020

When filing bankruptcy , there’s a lot of paperwork. Among the paperwork, bankruptcy petitioners are required to list all their income and assets. The paperwork also includes a complete list of all debt, including a full list of creditors. This information is used to notify creditors of the bankruptcy. It’s also a stressful time, and even the most careful and well-intentioned bankruptcy filer may overlook some info. But what happens when a bankruptcy filer makes an honest mistake and forgets to list a creditor in their bankruptcy?

Forgetting to List Creditors in Your Bankruptcy:

You may wonder why it’s such a big deal to forget to list a creditor in your bankruptcy petition. It’s essential for several reasons, but one crucial aspect of this issue is that creditors have important legal rights in your bankruptcy case. So forgetting to include them in the list of creditors could deny them their rights.

How Are Creditors Notified of Bankruptcy Filings?

Bankruptcy petitioners must include every creditor (large or small, mean or nice, old or new, friend or foe or family) in their list of creditors, alongside contact information. The list mainly serves as the bankruptcy court’s creditor mailing list. The list includes all creditors, even nondischargeable debt, such as student loans. The bankruptcy court uses the list of creditors to sent each one notice that one of their debtors filed bankruptcy. Creditors need notice of the bankruptcy because they can choose to be involved during the bankruptcy process.

What Can Creditors Get Involved in During the Bankruptcy Process?

Depending on what type of bankruptcy is filed, creditors may need to be involved in the reaffirmation of any debts, paying out liquidated assets, approving payment plans, etc. Creditors who wish to receive their “portion” of the bankruptcy estate must file a proof of claim with the court. If they don’t receive notice, they have no way of filing a proof of claim and are not included in payouts from the bankruptcy estate.

The Creditor Mailing Is Also for the Protection of the Bankruptcy Filer:

Creditors benefit from their inclusion on the bankruptcy’s schedule of creditors, but the filer also benefits. When you file bankruptcy, the automatic stay immediately goes into effect, protecting collection efforts. The automatic stay essentially stops all collection calls, letters, etc. A creditor cannot comply with the automatic stay if they are not aware it exists. Additionally, leaving one of your creditors off your list during bankruptcy can also affect your bankruptcy case’s overall outcome. If the court deems the omission purposeful, you could face penalties.

What Happens to Debt That Isn’t Listed in Your Bankruptcy?

If you leave a creditor off your bankruptcy, that debt is not included in the bankruptcy and is not discharged. So that creditor can try to collect from you after your bankruptcy discharge.

If you are considering filing personal bankruptcy and aren’t sure where to start, please don’t hesitate to contact our experienced bankruptcy attorneys to discuss your options. Most bankruptcy offices in the Chattanooga area don’t have a single Consumer Bankruptcy Specialist on staff. Our office is the only one in Chattanooga with two. You are in good hands with Kenneth C. Rannick P.C.

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