This is a question that comes up often in bankruptcy. As a general rule, you want to list all of your creditors in your bankruptcy case for two main reasons (1) the law requires that you list all your creditors; and (2) it makes administration of your case easier and less expensive. However, innocent mistakes are made from time to time and the bankruptcy code and the bankruptcy courts recognize that sometimes a creditor will slip through the cracks. Generally speaking, if you fail to list a creditor it is not the end of the world.
One way to guard against this issue is to use as many creditor list resources as you can find. This usually involves pulling your credit report and listing all the creditors you owe money to shown on that report on your bankruptcy forms. However, all your creditors are not always listed on your credit report. This is especially true for creditors like medical providers, short term loan lenders (pay day loans or high interest consumer loans), or, what I will call, deficiency lenders (i.e. back rent you owe or similar debt). In addition to your credit report, you should consult any statements you have been receiving in the mail or any creditor you remember having. Beyond those three sources, it is hard for an attorney to find creditors by other means.
The question of what to do if you discover an omitted creditor is easy to answer if you discover that creditor before discharge. Simply amend the appropriate creditor list, file that amendment, pay the filing fee, and mail the new creditor notice, usually the amended filing and the Section 341 hearing notice. That will add the creditor and put the creditor on notice regarding the bankruptcy case.
In Maryland, the solution is also similar in a situation where you have received your discharge, the case has closed, and your case was a “no asset case.” The term “no asset case” simply means that after administering your bankruptcy estate, the assigned Chapter 7 Trustee has determined there are no assets for him/her to seize and distribute to creditors. Usually this is because your claimed exemptions exceed the value of your assets. In sum, no omitted creditor was harmed because no creditor got a distribution. In addition, as long as your debt does not fall under one of the general fraud exceptions to discharge, as applied by Section 523(a)(3), there is still no need to reopen your case to add the omitted creditor because the provisions of Section 727(b) apply.
The situation becomes slightly more complicated if your case does involve the distribution of assets. In such a case, if the creditor is not listed then that creditor's debt is not discharged. There are generally two exceptions to this rule (1) the debt will still be discharged even if the creditor is not listed if the creditor had notice of your bankruptcy case and/or (2) the debt will be discharged if the creditor had time to file a proof of claim while your case was still pending. If neither of these circumstances apply it may make sense to request that the Court reopen your case.
Reopening a case is at the court's discretion, involves filing a motion, paying a filing fee, and demonstrating to the court that you are entitled to some kind of relief or for other good cause. Depending on the circumstances of the creditor omission, a court may decline to reopen the case. However, reopening the case would allow for a discharge of the debt and distribution to that creditor in a share proportionate to what that creditor would have received if properly listed. Reopening cases can be expensive. As a consequence, the debts often forgotten are less than the cost of reopening the case. However, if the debt is a large debt this procedure may make sense.
Mistakes happen in the bankruptcy process and the important thing is to try to minimize their impact on your case. This issue simply illustrates the importance of taking the time to get your list of creditors together correctly and to review your draft schedules very carefully.
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