What If A Creditor Didn’t Know About My Bankruptcy?

When you file for bankruptcy, all your creditors get notice that you are filing for bankruptcy. This is for two main reasons.

The first reason is so that your creditors know to stop collecting against you, because of the immediate automatic stay that happens when you first file for bankruptcy. The second reason is so that creditors get notice that their debts are about to be discharged, and so that they have the chance to respond if they want to do so.

How Do They Know?

Your creditors know about the bankruptcy, because when you fill out your bankruptcy paperwork, every single creditor and potential creditors—even those that you are current on payments with, or which you are paying as agreed—must be listed on your bankruptcy paperwork.

Forgetting a Creditor

But many people, especially those with a lot of creditors, may accidentally forget to list a creditor. The bankruptcy case proceeds, a discharge is entered for the debtor, and the debtor is now free of all or most all of his or her debts. But what about that omitted creditor? Has that creditor’s debt been discharged, given that the creditor was left off of the original bankruptcy paperwork and was never provided notice that the bankruptcy was even going on?

Double Check Creditor Claims

When a creditor says it didn’t know about the bankruptcy or it wasn’t informed of the bankruptcy, never take the creditor at its word.

Many will say this, when in fact, they did get notice of the bankruptcy. Many large companies have special departments that handle bankruptcy paperwork, and if the proper procedures aren’t followed, the information doesn’t get to who it needs to get to within the company, even though the company or creditor was, in fact, notified.

When the Case is Still Open

Sometimes you realize a creditor was omitted, but the case is still open—that is, a discharge hasn’t been entered just yet. In that case, your bankruptcy attorney can just file paperwork amending your bankruptcy, to include the forgotten creditor.

If you had assets which were taken and given to other creditors, the omitted creditor may have a claim, and an ability to challenge your discharge.

However, if you had a “no asset” bankruptcy—that is, no creditor got any of your property in the bankruptcy—the omitted creditor could likely not deny your discharge, given that it is in the same position it would have been in had it been notified—it didn’t get any of your assets, because you had none to distribute.

If the case is closed and the discharge is entered, the analysis is still the same—if no creditors received any of your property, the omitted creditor cannot challenge your discharge, or continue to collect on its debt. Its debt is considered discharged, just as it would have been had the creditor been named in the first place.

Handle your bankruptcy the right way. Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 today.

Sources:

nolo.com/legal-encyclopedia/are-unlisted-debts-discharged-no-asset-chapter-7-bankruptcy-case.html

uscourts.gov/forms/bankruptcy-forms