What Do I Do When I Leave Out a Creditor in a Bankruptcy?

By Elizabeth Stock

When you file the initial petition for bankruptcy, you will complete a schedule that lists all of your creditors and the amount of debt you owe for each. Each creditor listed on your bankruptcy schedule is included in your bankruptcy case. Once you realize you have excluded a creditor from your petition, there might be a few things you can do to correct the omission. However, sometimes adding a creditor to a bankruptcy petition is impossible, and you might be left with a debt that survives your bankruptcy case.

When you file the initial petition for bankruptcy, you will complete a schedule that lists all of your creditors and the amount of debt you owe for each. Each creditor listed on your bankruptcy schedule is included in your bankruptcy case. Once you realize you have excluded a creditor from your petition, there might be a few things you can do to correct the omission. However, sometimes adding a creditor to a bankruptcy petition is impossible, and you might be left with a debt that survives your bankruptcy case.

Chapter 7 vs. Chapter 13

Eligible individuals can file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is a liquidation process that involves selling your property to raise funds to repay your creditors. A Chapter 7 bankruptcy is fairly quick, taking about four months to complete from the date you file your bankruptcy petition to when you receive the bankruptcy discharge. In contrast, a Chapter 13 bankruptcy creates a repayment plan that allows you to keep your property while you make monthly payments to the bankruptcy trustee to go toward your debt. Most repayment plans take three to five years to complete. Whether you file for Chapter 7 or Chapter 13 bankruptcy will affect your ability to add an omitted creditor to your bankruptcy case.

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Non-Dischargeable Debts

A debt that is not included in your bankruptcy case will not receive a bankruptcy discharge at the conclusion of your case. A discharge means that the debt is no longer legally enforceable. For example, if the bankruptcy court refuses to let you amend your bankruptcy petition to include the omitted creditor, that debt will not be discharged. Therefore, you will still be responsible for repaying the debt and the creditor can enforce the debt by filing a lawsuit against you.

Amend the Bankruptcy Petition

You may be able to amend your bankruptcy petition to add an omitted creditor. An amendment to a bankruptcy petition allows you to add the excluded creditor and involves refilling the schedule that contains the omission. If you filed for Chapter 13 bankruptcy, you may not need to amend your entire bankruptcy petition. Rather, you can just add the forgotten creditor to your payment plan. If you have already received a Chapter 7 bankruptcy discharge, you might have trouble adding an omitted creditor to your bankruptcy case. However, you might be able to file a motion to have the case reopened to include the debt.

Reopening a Bankruptcy

You might be able to reopen a Chapter 7 bankruptcy case if certain circumstances exist. For example, Section 350 of the Bankruptcy Code allows the court to reopen a case to provide relief to a debtor. Courts have reopened bankruptcy cases to allow debtors to add omitted creditors in no-asset Chapter 7 cases in which the creditor was omitted without fraudulent intent. A Chapter 7 no-asset case means there are few to no assets to sell to raise funds to repay creditors. To reopen a case, you must file a motion with the court requesting the case be reopened and the reasons for such a request.

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How to Reinstate a Dismissed Bankruptcy

References

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What Happens When Chapter 13 Is Dismissed?

Chapter 13 bankruptcy allows you to create a three- to five-year repayment plan to catch up on your debts. If your case is dismissed, either by you or the bankruptcy court, prior to completion of the repayment plan, you will not receive a bankruptcy discharge, which erases the debts covered by your bankruptcy case and makes them unenforceable by your creditors.

Are You Liable for a Debt Not Included in a Bankruptcy?

It's not uncommon for a person who files a petition for bankruptcy to overlook a debt he owes, perhaps to a credit card company or to a doctor or dentist. Whether you are still liable for that debt after your other debts have been discharged, or excused, by the bankruptcy court is a thorny legal question. In some jurisdictions, the answer is no and in others, the answer is yes. In the latter circumstance, you can petition the court to reopen your case and get the omitted debt formally discharged.

How to Amend Chapter 7 After it Has Been Filed

Filing for bankruptcy requires you to honestly state information regarding your financial situation, including your debts and current financial status. If you've made an error or circumstances have changed, you can amend the information contained in your filed bankruptcy petition or one of the bankruptcy schedules to include the omitted information. According to Rule 1009(a) of the Federal Rules of Bankruptcy Procedure, you can amend your bankruptcy paperwork at any time until the case is closed.

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