Filing bankruptcy is only beneficial if the debt you have is either eliminated altogether, or reduced to an amount that is more manageable for your budget. You are required to list all of your debt when you file, even if you plan to continue making the payments. Most people decide to keep paying for their home and cars, but the lender for these loans is still included in the case and given notice that bankruptcy has been filed. The notice of filing prevents the lender from contacting you, and this can give you a chance to make a choice about what to do with certain debts if you were undecided when you first filed. This break from communication and collection efforts is also welcome even if you do know your intent with regard to specific debts at the time of filing. But what do you do when you get a call from a lender that you forgot to list on your bankruptcy petition?
The answer is simple, because even creditors that were left off of a bankruptcy filing can be considered to have notice and their debt discharged, but there are some limitations to this general rule:
- If your case is a no asset case, an unsecured creditor who did not get notice of the filing will be entitled to what they would have received had they been given notice. In a case without assets, that entitlement is basically nothing. So the consequence of leaving an unsecured lender off of a case without assets is that the lender omitted is not allowed to try and collect their debt.
- The same is true of a case where there are assets; and that is that omitted creditors are entitled to receive what they would have received had they been give notice. If you have assets, even a small percent, this means a lender not listed on the filing is entitled to receive the percentage of their debt they would have received had that lender been listed. If this happens to you, you do have the option to reopen the case to add the creditor and make sure any portion paid to them is the right amount.
Bankruptcy is a paper intensive undertaking, and it is not at all out of the question that things are forgotten. When information is not provided when a case is filed, and the omission is an honest mistake, there are remedies. Call us today to find out what to do when getting ready to file bankruptcy, so you are your case is done properly.
For more information about bankruptcy, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that fit the facts of your case, and thoroughly review all of your information so you are comfortable with the way your case is prepared.