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What Happens to Debt Not Listed in Your Bankruptcy Schedule of Debts?
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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*$0 down to get your Chapter 7 case started applies to clients who choose to file a Chapter 7 bankruptcy with the U.S. Bankruptcy Court through Kenneth C. Rannick, P.C. We will open a Chapter 7 file for a client with as little as $0 down, however, our office will not file a client's Chapter 7 without an affordable down payment on attorney fees.
*$0 down to get your Chapter 13 case started applies to clients who choose to file a Chapter 13 bankruptcy with the U.S. Bankruptcy Court through Kenneth C. Rannick, P.C. Our law office will file a Chapter 13 without requiring any costs or attorney fees paid upfront for qualified clients who 1) have not had a prior chapter 13 dismissed within the past year, and 2) are not trying to stop a foreclosure within 20 days of filling bankruptcy.We are a debt relief agency.
We help people file for bankruptcy relief under the Bankruptcy Code.
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