Dealing With Debts Not Listed in Bankruptcy
All debts should be listed in a bankruptcy if the debtor wants to include them as part of the bankruptcy. If a debtor does not list or schedule (depending on if they file Chapter 7 or Chapter 13) in the bankruptcy, they risk not being forgiven as part of the bankruptcy. Section 523(a)(3) of the U.S. Bankruptcy Code specifically indicates that these types of debts may not be included in the bankruptcy if not listed or scheduled. But what happens if a debtor simply forgets about a debt, or does not know of a debt due to the fact they moved or another reason?
Consequences of Not Listing Debts in Bankruptcy
The best assumption to make is that if you forgot to include or list a debt in your Chapter 7 or Chapter 13 bankruptcy, you will continue to owe that debt and it will not have any effect or impact on your bankruptcy discharges or debt schedules.
If you forget to include a debt on a list in a Chapter 7 bankruptcy, you lose the legal right to discharge that debt under the law. Chapter 7 bankruptcies only take a few months to complete from start to finish. The purpose of a Chapter 7 bankruptcy is to obtain a fresh financial start with the option of discharging debts. If you fail to include certain debts within your Chapter 7 bankruptcy, you will likely have to continue paying this unavoidable debt.
Chapter 13 bankruptcies allow a debtor to “lump” all debts together and create a payment plan. If a debtor neglects to include or list a debt in this schedule then this debt can never participate in this reorganization plan. Instead, a debtor will have to continue to pay that debt in full the way they would have if they had never filed for Chapter 13.
Avoiding Missed Debts
The best way to ensure that you have all of your debts listed is to take steps prior to filing for bankruptcy to understand clearly where all of your debts are located and how much you owe. Make sure to start with your credit report, which is offered for free by all three credit reporting agencies once a year. Even if it costs you money, you should absolutely make sure that you have an accurate and recent credit report from which to work when listing your debts. However, a credit report may not have a complete listing of all of your debts. Make sure to go back and look through all of your paper bills and computer files to see if there are any other debts you may have that may not be listed in a credit report. Unpaid medical bills, unpaid landlords, bounced checks, or even loans from friends or family members. Consider any car accidents in which you may not have a claim now, but the statute of limitations (deadline) has not run yet, and you could be liable to compensate a victim for their injuries due to your negligence. Think of any previous divorces, closing of businesses or non-marital relationships in which you owed another person any type of money. Even if you can not remember the exact amount, it is critical that you include as much information as possible.
Contact Us Today for Help
If you are considering bankruptcy, make sure that you have listed all of your debts to ensure that all of your legal rights are protected. Contact us for a free consultation to see how an experienced West Palm Beach bankruptcy attorney at Kelley, Fulton & Kaplan at 561-264-6850 can help you understand your legal rights.