Are Creditors Not Listed On My Bankruptcy Petition Discharged, Or Do I Have To Pay Them?
By: Gregory Arcaro
This dilemma has long faced debtors who have filed a Chapter 7 case, received a discharge, and are then contacted by a creditor demanding payment because the debt was not listed on the petition. Or worse, a debtor, after having stellar credit since filing a bankruptcy, is attempting to buy or refinance a home, and has what purport to be unpaid creditors on their credit report, and when contacted, the creditors indicate that payment is due because the account was not listed on the bankruptcy petition, thus halting or delaying the purchase or refinance. In these circumstances, it is important to know your rights, as it may avoid paying a debt that has already been discharged. The first question that must be answered is whether or not the creditor demanding payment has a debt that was incurred prior to the filing of the bankruptcy case. If the debt arose after the bankruptcy was filed, then it was unaffected by the bankruptcy. If the debt arose prior to the case being filed, then it may have been discharged, despite the fact that the debt was not listed. The next question that must be addressed is whether or not your Chapter 7 case was an “asset” case or a “no – asset” case. This designation refers to whether or not the bankruptcy trustee sold any of your property during the bankruptcy case. If so, then your case was an asset case, and if the creditor demanding payment was not listed, then the debt is not discharged. If, however, your case was of the no – asset variety, then it was likely discharged. A call to the bankruptcy clerk in the Court where your case was filed is all that it will take to determine if your case was an asset case or a no – asset case. Most Chapter 7 cases filed by individuals with consumer debt are no – asset cases. It is important to note that the unlisted creditor may still object to its debt being discharged under certain circumstances. For example, if creditor has reason to believe that the debt was incurred by fraud or false statement, then it may seek to have its debt declared non-dischargeable. There are several other exemptions to discharge that may be asserted by the creditor, but, most importantly, the debt is not excepted from discharge for the sole reason that it was not listed on a bankruptcy petition, if it was a no – asset case. Once the determination is made that the creditor’s debt arose prior to filing the Chapter 7 petition, the creditor must be informed that its debt is subject to the discharge. Some creditors take the approach that the bankruptcy case must be opened, and the petition amended to reflect the new creditor(s). This costly and potentially time consuming process was rendered moot by the Judge Lorraine Murphy Weil’s decision in the re Kim Elizabeth Refino Case, which can be found at www.ctb.uscourts.gov. In her decision, Judge Weil succinctly states that unlisted creditors are subject to the bankruptcy discharge despite the fact that they were not listed, and opening the case to add them is not necessary. Unfortunately, some creditors will not be convinced by simply showing them Judge Weil’s decision. If they are not, court action may be needed, at which time, an attorney should be consulted to insure that the court procedures are handled in the most efficient manner, so as to not further delay the closing