Life goes on after a New York bankruptcy case, and in the ten-year period that the bankruptcy filing appears on a credit report, probably most debtors will try to apply for loans. The question one might ask is, will lenders require any information about a bankruptcy and if so, what?
Surprisingly, upon running a credit check on a debtor who has filed bankruptcy some time before, many lenders will ask for a copy of the discharge order, the bankruptcy petition, and the bankruptcy schedules. They might then discover that one or more creditors’ debts still appear on the credit report, even though they were discharged, leading to a round of hassles in contacting the creditor to clear the errors. How often do you think that this creditor also asks for the same three documents?
The answer is that it’s too common, which is why I opened the last paragraph with the “surprisingly.” Throughout this hypothetical, the creditors were asking for far more information than they needed. The only thing any post-bankruptcy creditors need to know are (a) whether you received a discharge, and (b) when you filed your case. Everything else is unnecessary.
The reason they would need to see the discharge order is simply to have proof that it exists. Many people go through bankruptcy and don’t obtain one, so it’s important for creditors to know that it actually happened. This is why the discharge order is one of the crucial documents debtors should save after bankruptcy. (See: “What Do I Need to Save From My Bankruptcy and Why?“)
Debtors should also have their cases’ filing dates, which will be on their stamped petitions, to prove to creditors that their debts existed before the bankruptcies and were discharged. Even if creditors don’t know about a bankruptcy—or claim they don’t know—petition dates will prove it.
Why would creditors want to see the schedules, which can go for scores of pages? The answer is that they don’t know or are misinformed about how bankruptcy works. A discharge applies to all creditors, whether they knew about the bankruptcy or not or even if their debts were properly scheduled. The schedules, then, will tell them nothing they need to know. Although, there is an important exception to this rule: when the bankruptcy case is an asset case, and the creditor didn’t know about it and didn’t file a claim in time to receive a share of the distribution. It’s an uncommon situation.
Although debtors should keep the schedules and amendments to their petitions after their bankruptcies, that doesn’t mean they should be ready to photocopy all of them just to indulge a loan officer’s curiosities. The purpose of holding on to those documents is to give debtors a sense of what happened in their cases. This information can be a springboard for additional document searches. If anyone else asks for them, then debtors should direct them to the bankruptcy courts where their cases were filed. They can use the database called “PACER,” which stands for Public Access to Court Electronic Records.
Just remember that lenders that deny anyone credit because they don’t provide them with the schedules for their past bankruptcy cases may be a violation of the discharge injunction.
If you are struggling with debt, then hiring an experienced New York bankruptcy will best help you strategize your options and help you deal with post-bankruptcy concerns.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy lawyer Brooklyn NY Bruce Weiner for a free initial consultation.
