Anyone who files for bankruptcy protection, whether Chapter 7 or Chapter 13, is required to completely disclose any and all debts that are owed. The Bankruptcy Code is clear that debtors are not allowed to simply pick and choose which loans they would like to bankrupt, instead, everything must be put on the table. The law is also clear that any debtor who is found to have intentionally omitted debts from his or her bankruptcy filing can be subjected to severe punishments, including in some extreme cases, jail time.
The Bankruptcy Code explains that debtors are required to conduct due diligence to ascertain all their debts and identify all potential creditors. This means that debtors must make an effort to hunt down anyone who they might owe money to, regardless of how big or small the amount. The law says that the list must be true and complete, something you must attest to, so that creditors are notified and have a chance to make any objections prior to the completion of the bankruptcy. Another reason why it is so important to record every creditor is because if a creditor and its accompanying debt are not listed then the bankruptcy will not result in a discharge of the debts.
How do you track down creditors?
The best way to meet your obligations under the bankruptcy code is to start by pulling current copies of your credit report with all three major credit-reporting agencies. Go through the reports, any and all account statements, collection notices and other information you receive regarding your debts to compile a list of all those who you owe money to.
What happens if you leave a creditor off your list?
Despite our best intentions, we are all still human and it is possible you may have left a creditor off your list. What do you do then? Well, if the omission was accidental and you have not yet been granted a discharge by the bankruptcy court, then you can try to file an amended schedule of debts. When you file your new schedule be sure to include the new creditor and its debt. You’ll need to ask the court’s permission to amend your initial filings, something the court will generally allow though there may be an additional fee involved. The court will then give your creditor an opportunity to respond to the bankruptcy, something that will slow down the process but is better than not having the debt discharged.
What happens if your bankruptcy is already over?
If you discover a missing creditor after your debts have already been formally discharged things can be much more difficult. In this case you will have to ask that the court reopen your bankruptcy case, not a sure bet. Though courts often allow a reopening in cases where the omission was unintentional, they will likely charge a substantial fee to do so. Given the expense involved in reopening a case it is important that you do your homework from the beginning to make sure and list every debt the first time around.
If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.
“The Law of Reopening: Revisited,” by Alexander Edgar, published at Justice.gov.
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