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Understanding Bankruptcy Cases and Outcomes

Hello, my name is Quianna Ridalgo. I enjoy talking to others about bankruptcy case outcomes. Court officials handle each type of debt, from credit cards to home loans, differently. Debtors must carefully prepare themselves for the court proceedings to cope with the outcome appropriately. The way creditors handle the discharged debt also interests me. Bankruptcy attorneys assist their clients with each step of the bankruptcy process from filing paperwork to meeting with creditors. Debtors and creditors both receive counsel that helps them move forward appropriately at every point in the case. The information I share on my site may help you learn about everyone's role in these complex cases. Feel free to come by anytime to learn more information about this interesting subject.

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Understanding Bankruptcy Cases and Outcomes

What If I Forget To List A Creditor During Bankruptcy?

by Loretta Harris

When filing for Chapter 7 bankruptcy, you are expected to list all of your creditors. These creditors will be the individuals whose debts will be discharged. However, if you forget to list a creditor during Chapter 7, your debt for the creditor will not be discharged, except under certain circumstances. 

A bankruptcy trustee will be appointed to sell any of your non-exempt property. This will be to benefit the creditors who will receive a portion of the sales. For this reason, any creditor not listed will still be able to pursue collection of the debt you owe under some forms of bankruptcy.

Some Forms of Bankruptcy Allow for Debt to be Discharged Afterwards

If you are filing under no-asset Chapter 7 bankruptcy, you'll be able to discharge debt even to creditors who you failed to list. The courts will decide whether the debts may be discharged. The factors that affect this include whether the creditor knew about the discharged debt, whether the failure to include the debtor hurt him or her, whether the debt was omitted fraudulently, and the jurisdiction that the bankruptcy falls under.

You Can't Discharge Secured Debt

When you leave a secured creditor off of your list, you may face more serious consequences. A secured debt is linked to a piece of property and is not discharged through bankruptcy. Instead, it is surrendered, reaffirmed, reorganized, or simply still in place as a debt. For example, if you are making car payments, you may need to continue making car payments. If you fail to do so, your car could be repossessed. 

Some Debt Can't Be Discharged

Some types of debts are not discharged through bankruptcy. For example, spousal support, recent taxes, and child support cannot be discharged through bankruptcy. Tax debts can be discharged if they are more than three years old, you have filed a tax return for more than two years, and your tax debts have been assessed 240 days before you file for bankruptcy. Therefore, you will still owe your most recent tax debts. Also, if you have committed fraud to hide tax debts owed, you won't be able to discharge your debts.

If a creditor claims that you failed to list a debt or you listed a debt that is not dischargeable, you may be forced to go to bankruptcy court to litigate the issue. You'll want to contact a bankruptcy attorney from a firm like Phoenix Law who can help you prove that it was an honest mistake.