As an Asheville Bankruptcy lawyer I am frequently asked by clients if they have to list all of their creditors in their petition. The simple answer is “yes.” A debtor is required to list- and give notice to- all of her creditors when she files for bankruptcy protection. Let me explain why and the ramifications for not doing so.
First of all, here’s why: The Bankruptcy Code requires it. This is based on fairness. Congress has determined that if you are getting a discharge of your debts then your creditors should be able to participate in the case if they choose. At the least, they should have actual notice that you are seeking to discharge their debts. Even if you intend to pay the debt you should list the debt in your bankruptcy petition. Regardless of whether you intend to repay or not, the effect of a bankruptcy is to discharge your repayment obligations. Congress believes that each creditor know about your case. Many of my clients have a small credit card that they with to retain. This is understandable. However, many- if not most- credit card issuers run periodic credit report checks. So, even if you did not list the credit card in your petition and you pay the balance timely and fully, then the credit card company will most likely close your account based on the bankruptcy filing. Finally, if you don’t list the debt and you wish to discharge it, then the debt may not be discharged.
Not getting a discharge is the primary ramification for not listing all of your debts. Courts vary, but as a WNC debt lawyer I can tell you that there is a NC bankruptcy case stating, among other things, if creditors receive money in your case (ie, through a ch7 liquidation or through a ch13 repayment plan), debts owed to non-listed creditors is NOT discharged. Mostly, this is due to fairness. The court assumes that a creditor who was not listed could have received money in your bankruptcy case. However, because they were not listed they did not have an opportunity to participate and receive a distribution; therefore, they were prejudiced by not having notice and thus not participating in the distribution. Finally, creditors sometimes have legitimate reasons to object to a bankruptcy discharge. If you do not list the creditor then it can later challenge the discharge by asserting it did not have an opportunity to object to the discharge in your bankruptcy case.
Most bankruptcy cases do not result in payments to creditors. Most creditors do not object to discharge. However, if your case happens to be one that falls into these scenarios then you may end up dealing with creditor issues after your bankruptcy.
If you have concerns about a creditor then talk with us about it. Attorney Rod Kight has represented bankruptcy clients in over 2000 cases to date and would be happy to discuss your situation with you. Most likely, we can help.