In most bankruptcy filings, all the creditors are included in the bankruptcy petition, and a decent bankruptcy attorney will advise debtors to bring a recent credit report to their first consultation. All the creditors should be listed there. However, there are occasions when debtors forget to list a creditor on their petitions, and the question arises: what happens? Do the debts get discharged? The answer—as is often the case in bankruptcy practice—is that it depends on the circumstances.
- First of all, it should go without saying that you should not willfully omit a creditor on your petition. Remember, it’s a sworn, legal document. Perjury isn’t something worth dealing with on top of your debts. List all debts on your bankruptcy schedules, even informal ones (e.g. gambling debts) and debts you suspect cannot be discharged (child support arrearages, student loans).
- Regardless of what chapter you file in, when your case is open, you can amend your petition. If it’s already closed, then things work differently. In a Chapter 7 case where there’s no distribution to the creditors, i.e. a “no asset” bankruptcy, then your debt may’ve been discharged automatically. If there was a distribution, then the debt is certainly not discharged, leaving you vulnerable to their collection efforts. You might not be able to discharge omitted debts for several years after your bankruptcy—one more reason to be sure to include them.
- If you filed in Chapter 13 and the case is closed, the debt is not discharged. This makes sense as you’ve already paid off some of your creditors as in a Chapter 7 bankruptcy with a distribution.
- Since you’ll be ineligible to file a new case and discharge your omitted debt, your best bet is to file a motion with the bankruptcy court to reopen your case. The catch is that going through this process again might be more expensive than paying the debt off.
Forgetting to list a debt on your petition is worth avoiding by ensuring that you know what you owe and to whom. It helps to hire an experienced New York bankruptcy lawyer.
For more questions about omitted debts, the bankruptcy petition, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced New York Bankruptcy Bruce Weiner for a free initial consultation.
