What Happens if I Forget to List a Debt in Bankruptcy?

Key Takeaways

• Bankruptcy schedules are sworn documents; omissions draw scrutiny.
• In a no-asset Chapter 7, an ordinary unlisted debt is usually discharged anyway.
• Debts involving fraud, embezzlement, or willful injury are not.
• Amending before your case closes is free; reopening costs $245.

When you decide to file for consumer bankruptcy, you are required to list all of your outstanding debt on specific forms, like Schedule D for secured creditors and Schedule E/F for all other creditors. Understandably, you may be in a rush to get this paperwork submitted so that you can be granted protection from your creditors’ aggressive collection activities with the court’s automatic stay order. While you may be desperate for this relief, it is still important to ensure you fill out these forms properly. With that being said, please continue reading to learn what happens if you forget to list a certain debt and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can help you rectify this error when possible.

What Happens if I Forget to List a Debt in My Bankruptcy Paperwork?

You must understand that your bankruptcy schedules are legally sworn documents. So if you make any omissions regarding your debts, even if done unintentionally, this suspicion of concealment may be taken very seriously and prompt an inquiry by your appointed bankruptcy trustee. Here, you may have to attend a mandatory meeting, in which your trustee may review your financial records, verify all your assets and debts, investigate your recent transactions, etc. In the end, your trustee may identify non-exempt assets to potentially liquidate and sell to pay back the creditors that you initially left out.

At the very least, forgetting to list a debt in your bankruptcy paperwork may make it ineligible to be legally wiped out at your case’s close, even though on paper it can be classified as a dischargeable debt.

This is to say that the creditor associated with this debt can legally resume collection activities, and you may be financially responsible for paying it off in full.

The only exception here may be if you opted for a no-asset Chapter 7 bankruptcy case, in which you do not possess significant non-exempt property that could have been used to reimburse creditors. This is because your creditors would not have received funds anyway, even if your debt was listed properly.

Why the No-Asset Exception Works

During a no-asset case, the court will not set a deadline for creditors to file a claim, and the rule that punishes an omission only applies if a creditor misses a deadline. Without a deadline to miss, there is no harm in the omission. In fact, several federal appeals courts have held that this debt is discharged regardless.

Reopening the case to add the creditor changes nothing, as dischargeability does not hinge on listing a debt.

The Exception Has an Exception

However, this does not apply to all omitted debts. There are three categories of debts that will survive an omission in the event of a no-asset case:

• Debts arising from fraud or false pretenses
• Debts arising from embezzlement or a breach of fiduciary duty
• Debts arising from willful and malicious injury

The creditors who hold these debts have the right to ask the court to declare the debt as non-dischargeable, and leaving them off of your bankruptcy schedules deprives them of the opportunity to do so. As such, an unlisted credit card balance is very likely gone, while an unlisted judgment arising as the result of a fraud claim is very likely not.

Can I Add a Forgotten Debt After Filing Bankruptcy Paperwork?

If you catch that you accidentally missed a debt in your bankruptcy paperwork, you should not sit idly by and hope the error goes unnoticed. Rather, you must take action while you still have the chance to and file an amendment with the bankruptcy court that discloses the omitted debt.

If your case has already reached the discharge stage, you may file a motion to reopen the bankruptcy, along with submitting a reopening fee. However, this motion may only be granted if you can prove that a retroactive discharge would not unfairly change the outcome of your case, such as depriving or reducing other creditors of money they would have otherwise received.

Amending before your case closes costs nothing beyond the effort. Reopening a closed Chapter 7 afterward carries a $245 fee, which is reason enough to check your schedules against your credit report before you file rather than after.

Contact Our Experienced New York Bankruptcy Firm

There is no need to wait any longer to hire a skilled Rockland County bankruptcy attorney if you are already ready to get on with your bankruptcy case. Reach out to our law firm, The Law Offices of Allen A. Kolber, Esq., P.C., at your earliest possible convenience.