What Happens With Creditors I Leave Off my Chapter 7 Bankruptcy?
- When filing a chapter 7 bankruptcy, debtors are required to file a petition with schedules showing all of the assets and debts they hold. Secured and unsecured debts should be listed along with your intentions. Withholding any information in these documents or leaving any information out can result in penalties and even dismissal of the case. In the event of a dismissal, all protection from the bankruptcy will lift, leaving all of the accounts at risk for collection efforts and the debtor completely responsible.
- In the case that you forget to add a creditor, it is possible to amend the schedules and add a creditor along with the amount of debt associated with it. Keeping documents accurate is very important, as the trustee will be scrutinizing your accounts and holdings for assets. Any inaccurate information that is found will be brought to the attention of the judge and creditors.
- Most creditors utilize some form of bankruptcy notification software to inform them of bankruptcy filings that may involve them. Banko is one of the more popular software solutions and searches court databases of bankruptcy filings against personal information that the creditor has on file. Any matches of social, name and address will flag the account for review and prompt the creditor to investigate into the bankruptcy case further. Creditors will have access to your schedules and petition in order to verify that you have listed them correctly.
- In that case that a debtor does not want a debt to discharge in the bankruptcy, chapter 7 bankruptcies allow for an arrangement known as reaffirmation. Reaffirmation allows debtors to formally request that a debt be taken out of the bankruptcy and reaffirm their original contract. The debtor will need approval from the court to continue with the reaffirmation and, once approved, the debtor can work with the creditor get the account in order. Reaffirmation agreements must be signed by both parties and approved by the judge.
- After all of the creditors have been notified, the meeting of creditors has taken place, and the trustee prepares his report, a discharge will hopefully be granted by the judge. A discharge will allow the debtor to be free and clear of all outstanding debts and begin with a clean slate.