Bankruptcy law requires that you make a full disclosure of your financial situation when you file. If you forget to list a creditor, you should correct your error as soon as possible. Failing to disclose all relevant information to the court could get you in serious legal and financial trouble. However, if you catch your mistake in time, you can usually avoid any problems.
Chapter 7 No-Asset Case
U.S. bankruptcy law states that an omitted creditor is not included in a bankruptcy. Even if you forget about a creditor in a Chapter 7 case, there likely will be no consequences. Most Chapter 7 bankruptcies are "no-asset" cases, meaning you have no money or assets that the court can liquidate to pay back your creditors. If your omit a creditor in a no-asset Chapter 7, adding that creditor later is usually unnecessary and can even inconvenience the court since the creditor is not entitled to payment anyway. However, you may wish to consult with an attorney, since bankruptcy law is complex and rulings can vary among court districts.
Chapter 7 Asset Case
Omitting a creditor in a Chapter 7 "asset" case is another situation entirely. In an asset case, the court has rendered a verdict that you have valuable assets that can be seized, liquidated and distributed to your creditors. In an asset case, creditors must file claims against your estate to get a fair share of the distribution. If you have omitted a creditor, it has no knowledge of your case and will therefore not get a distribution to which it is entitled. In this case, your debt will usually survive your bankruptcy, meaning you will still be liable for 100 percent of it even if you get a discharge of your remaining debts.
A Chapter 13 bankruptcy differs from an "asset" Chapter 7 in that you pay creditors with cash rather than liquidated assets. Since there is always a distribution -- in the form of monthly payments -- to creditors in a Chapter 13 case, failure to list a creditor can have the same negative consequences as in a Chapter 7 asset case. Specifically, debts you omit in a Chapter 13 case are typically not dischargeable, according to Nolo.com. The exception in a Chapter 13 case is the same as in a no-asset Chapter 7; if a creditor wouldn't have received any payments in a Chapter 13 anyway, which is a very unlikely occurrence, then it's possible the debt can still be discharged.
Amending Your Petition
The 341 meeting, commonly called the meeting of creditors, is a mandatory meeting for all bankruptcy debtors. It takes place about a month after filing. If you catch your omission before this meeting, it's usually not a problem. Most courts allow you to amend your petition by filing paperwork and possibly paying a fee. You'll have to get the right paperwork from the website of your local bankruptcy court, or by visiting the bankruptcy clerk's office, as most courts have their own local rules for how to amend a petition.
- Rochester Bankruptcy and Debt Relief: What Happens If A Creditor Is Omitted in Chapter 7 Bankruptcy
- Office of the Clerk, U.S. Bankruptcy Court, Eastern District of California: Information for Persons Considering Bankruptcy
- Lawyers.com: 341 Personal Bankruptcy (Creditors) Meeting
- Nolo.com: Debts That Survive Chapter 13 Bankruptcy
- U.S. Trustee Program: The Law of Reopening, Revisited
- United States Courts: Discharge in Bankruptcy
- Bankruptcy Law Network: I Forgot To List A Creditor in My Chapter 7 Bankruptcy, Now What?
- United States Courts: Chapter 7
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