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FAQ'S

Wednesday, September 17th, 2008

by Theodore Sliwinski, Esq.

Listing Creditors

1. Do I have to list all of my creditors?

Yes. You may not receive a discharge for any debt that is not listed on your schedules. In addition, you will sign a declaration under penalty of perjury that your schedules listing your creditors are “true and correct.” If you intentionally omitting a creditor then this could be construed to be a violation of this oath. Once again, the most important part of any bankruptcy case is to make sure that your paperwork is completed accurately, thoroughly, and with due diligence. Attending the meeting of the creditors is mostly a formality. The majority of the bankruptcy process consists of completing your petition completely and accurately. If you don’t know who all of your creditors are, then it is imperative that you order your credit report, and review all of your bills that are hidden in your desk drawer. Remember, your lawyer is not a mind reader. He can’t read your mind like Spock and determine who you owe money to. If you don’t list all of your debts then they will not be wiped out in the bankruptcy.

2. If my bank card or other account has been paid off, do I have to list it?

If you have an account with no balance (such as a Visa or MasterCard which has been paid off),  and if  you do not owe that company any money then it does not not have to be listed. The credit card company may still allow you to use the credit card account after the bankruptcy is finished. However some creditors (American Express, for example) may check bankruptcy filings and may cancel the credit card even if they are not listed.

3. Can I pay off a creditor to avoid listing it?

If you pay any creditor a total of more than $600 within 90 days before your case is filed, then you must list those payments in your schedules as a preference. If the creditor was a relative or a business associate, then any payment(s) which total $600 or more within one year before your case is filed are considered a preference(s) and must be listed. The chapter 7 Trustee may require the creditor turn over those payments to him to be divided among all of the creditors. In a chapter 13, then the amount of your payments may be affected by preferences.

4. Can I add a creditor after the case is filed?

Yes, if you add the creditor soon enough. In order to share in any assets which the Trustee distributes, the creditors must file a proof of claim within 60 days after date your meeting with the Trustee is originally scheduled. You can add a creditor only if the creditor receives notice of the bankruptcy in time to file a proof of claim.

5. After I received a discharge in a chapter 7, I have discovered two additional creditors. These debts were incurred before I filed for my chapter 7 case. According to your website, if I did not add these additional creditors to my bankruptcy then I am “SOL,” and I have to pay these debts. Is there anything that I can do to avoid paying these omitted debts?

There is good news. Many courts would hold that these debts will be discharged in a no‑asset chapter 7 case even if they are not listed. The bankruptcy code is not at all clear on this subject. While the trend appears to be that the unlisted debts in no‑asset cases are discharged without any further action, the code has been interpreted in differently in many courts. Some courts would allow you to reopen the case to add a debt. Others would rule that the debt cannot be added and therefore is not discharged.

The bankruptcy courts that have ruled that unlisted debts are discharged in a no‑asset case have carefully reviewed Section 523(a)(3)(A). This section bars debt from a discharge if they were not listed in time for the creditor to file a timely proof of claim. The proof of claim is used by the Trustee to determine the proportion to divide the debtor’s assets between the creditors. In a no‑asset case, there will be nothing to divide and no reason to file a proof of claim. As a result, in no‑asset cases the bankruptcy notice instructs creditors that they are not to file a proof of claim. The bankruptcy courts that take this position reason that since it will never be too late to file a proof of claim, a debt is not excepted from discharge because it has not been listed.