As hard as we try to find all of your creditors before a bankruptcy, every once in a while one slips through the cracks. What happens when a creditor gets left out?
1. First of all, don’t get any ideas. All creditors are “included” in bankruptcy. You can’t leave one out, purposely or accidentally. So there’s no point in “forgetting” to list a creditor, for example, in hopes that you can keep a credit card open. And remember, you sign your bankruptcy under penalty of perjury, so it’s illegal to leave any information out of your bankruptcy papers. And as your attorney, I know better and won’t let it happen. So don’t try.
2. In a no-asset Chapter 7 case, all debts are discharged whether listed or not. If a debt is dischargeable, then it’s wiped out in a typical Chapter 7 bankruptcy whether it’s listed or not (as long as it wasn’t left out intentionally.) Typically when a creditor has come out of the woodwork after a Chapter 7, we just send them a letter notifying the of the bankruptcy, and that’s enough to protect you. After that, any attempts to collect the debt would be illegal.
3. In a Chapter 7 cases with assets, debts may not be discharged unless listed. Unlike a no-asset case, in which a creditor generally has nothing to gain from being listed in the bankruptcy, in a case where assets are going to be distributed to creditors, it does harm the creditor to be unlisted. Section 523(a)(3) of the Bankruptcy Code makes a debt like this non-dischargeable if it wasn’t listed in the bankruptcy.
4. In a Chapter 13 case, a creditor must at least be added before the case is finished. In a Chapter 13 case, a creditor must have been listed in the plan to be discharged. So if you’ve forgotten to add a creditor, and you’re already in your Chapter 13 plan, it’s probably wise to go back and add the creditor. This is probably fixable, since Section 523(a)(3) doesn’t apply to Chapter 13.