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Out of Luck If You Skip A Creditor?

By Cathy Moran

add creditor

So, you slipped up and left a creditor out of your bankruptcy schedules.  Can you add an omitted creditor after the fact?

In the fateful words of a careful lawyer, it depends.

Depends on when the amendment is made and what chapter you’ve filed.  And the effect of adding a creditor varies.

Let’s walk through the legal thicket to add a creditor  to your bankruptcy papers.

Amendment while case is open

At the most basic level, anytime the case is open in the bankruptcy court’s clerks office, you can file an amendment to your schedules.

Adding a name to the schedules gets the new name added to the master address list which parties use to give interested parties notice about the case.

Just because the filing is accepted doesn’t decide anything about the effect of the filing.  But it’s universally true that the sooner an omitted creditor is added, the better for the debtor.

There’s a fee for amending the lists of creditors, currently $32.

Does adding a creditor give timely notice?

Getting a creditor on the mailing list doesn’t necessary get them actual and timely notice of the case.

The clerk’s office sends out the notice of the bankruptcy filing at the beginning of the case. The notice of the case sets out the deadlines for creditor action in the case:

  • date of the first meeting of creditors
  • last day to object to discharge or dischargeability
  • bar date for filing proofs of claim

Unless the added creditor gets actual notice, just getting them in the bankruptcy papers may not be enough to bind that creditor to the deadlines in the case.

In my office, then, we amend the schedules, mail a copy of the notice of commencement of the case to the added creditor, and file a certificate of service showing that we gave the new creditor actual notice.

That way, there is no doubt that the creditor got notice.

When important deadlines have already passed

This is when the effect of adding a creditor gets dicey.

If the added creditor misses the first meeting of creditors, there are generally no adverse consequences.

Different story if the added creditor doesn’t get notice in time to challenge the discharge of that creditor’s debt.  As we discussed in our post on Missing Creditors, if there will be a distribution to creditors in the case, a debt not listed survives the discharge.

Further if the added creditor has a claim that may be non dischargeable, the window for bringing an adversary to contest discharge remains open.

If the missed deadline is the deadline to file a proof of claim, often a late filed claim will be allowed on the grounds that the creditor didn’t get notice.

Chapter 13 is unforgiving

While the law makes varying accommodations for an omitted creditor in Chapter 7, the approach to the omitted creditor in Chapter 13 is more rigid.

Almost all courts hold that a creditor who doesn’t get notice of the filing of a Chapter 13 case in time to object to confirmation is not bound by the discharge.  So, skipping a creditor in Chapter 13 stands to hurt the debtor’s fresh start by allowing the claim to survive

Takeaway

It’s worth a lot to get everyone affected by your bankruptcy case actual and timely notice of the case for the broadest possible discharge.

More

Why are bankruptcy papers so much work?

How to review your bankruptcy before you file

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Filed Under: How bankruptcy works Tagged With: 2018, amendment

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Bankruptcy Basics

About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

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