Unlike civil litigation with its rigid timetables for serving process on parties and pleading requirements, federal law is quite resilient when debtors make mistakes in their New York bankruptcy petitions. Usually, amending a petition is not a problem—and one that doesn’t pop up as much for those who hire experienced bankruptcy lawyers to handle their cases. Here are the biggest reasons to amend a bankruptcy petition.
The most likely scenario is forgetting to list a debt in the petition. In a chapter 7 bankruptcy the best way to prevent this from happening is getting a credit report before filing the petition. However, some private debts might not appear there, and credit reports are known to contain errors. An unlisted debt is problematic for chapter 7 debtors because the creditor doesn’t have notice of the bankruptcy and therefore isn’t bound by the automatic stay, so it may attempt to collect on the debt or in rare cases foreclose on a home.
Amending the bankruptcy petition, then, is a good idea, and the process is straightforward depending on a few of the case’s facts. For no-asset bankruptcies, the petition might not even need to be amended because the omitted creditor would not have gotten anything from the bankruptcy case anyway. The amendment can occur even after the discharge has been entered. For bankruptcies where there will be a distribution, however, the debtor will certainly have to move the court to amend the petition with an explanation for why the debt was included. If the court is dissatisfied with the reason, then the debt stays, and the debtor will either have to dismiss the case and refile or find some other way to handle the debt. For chapter 13 bankruptcies, the debtor will have to file a motion to amend the repayment plan rather than amend the petition.
The other common reason for amending the bankruptcy petition is on the other side of the ledger, i.e. the debtor forgot to include an asset or claim an exemption. This situation can happen in both chapter 7 and chapter 13 bankruptcies. It’s a situation where prompt action is absolutely necessary because losing an exempt asset is obviously not something a debtor wants, but forgetting a salable asset might result in some kind of adverse action by the trustee, such as a fraud claim, which can lead to a denial of discharge.
Importantly, the petition cannot be amended to add debts incurred after the petition was filed.
Mistakes in bankruptcy can happen, but they are both avoidable and, alternatively, correctable. If you want to ensure your bankruptcy goes without a hitch, consult with an experienced New York bankruptcy lawyer instead of trying to go through the process alone.
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 business bankruptcy lawyer Bruce Weiner for a free initial consultation.
