If one of your creditors is not included in your “schedules” you risk continuing to owe that debt after your bankruptcy is finished.
Legal Obligation to List All Creditors
Overall you are required by law to list all your debts and their creditors on your bankruptcy schedules. You can’t do a partial bankruptcy, listing most of your debts but hiding one or two that you don’t want to be affected. You must include every debt on which you are legally obligated.
Debts Not Included May Not Be “Discharged”—Legally Written Off
If you do not include a debt in your formal bankruptcy documents when you file your case you risk not discharging that debt at the time all your other debts are discharged. See Section 523(a)(3) of the Bankruptcy Code.
In a Chapter 7 “straight bankruptcy” case the discharge happens quite quickly—usually about 3 to 4 months after your case is filed. In a Chapter 13 “adjustment of debts” the discharge almost always doesn’t happen until you finish the payment plan, which is usually 3 to 5 years after your case is filed.
Adding Debts after Your Case is Filed
If you forget to include a debt at the beginning of your case, you can usually add it through a “supplemental schedule.” But you would have to pay an additional filing fee, so it’s better to get it right from the start.
There are exceptions but usually you must add any debts within about two months after your case—either Chapter 7 or Chapter 13—is filed in order to do so on time.
Debts Not Included Still Discharged
If a creditor finds out about your bankruptcy filing even if you neglect to list the debt, that debt may still get discharged. The Bankruptcy Code refers to this as a creditor with “notice or actual knowledge of the case.”
But the creditor must receive this notice or knowledge of your case in time. When the deadline is depends on the type of case—Chapter 7 or 13—and depends on specific details of the case—for example, in a Chapter 7 case whether the bankruptcy is collecting any assets for distribution to the creditors.
But in general the creditor need to get notice or have knowledge of your case as stated above, about two months after your case is filed.
It’s of course risky to not formally list a debt but rely on the creditor getting notice or having knowledge informally. So it’s usually better to list every debt at the beginning, or to add any additional one through a “supplemental schedule.”
Including Questionable Creditors
Because you certainly don’t want to go through a bankruptcy case only to be left owing a debt that you could have discharged, you should of course be thorough about including all your debts. Your bankruptcy attorney will help you to know how to do that, including using credit reports and other tools.
It’s also prudent to also include those to whom you may owe a debt but are not sure, in order to cut off their rights to pursue you later. So include not just your conventional, obvious creditors but also those which you only might owe something to. It might help to think of these as not so much creditors as claimants—those who might have a claim against you.
For example, if you were the driver in a vehicle accident, your creditor schedules should include the other driver, any passengers in all vehicles, any affected pedestrians, and even the owners of any damaged non-vehicular property (such as barriers or signs belonging to the city, county, or state). Plus, where applicable, their attorneys and insurance companies should be included.
Beyond vehicle accidents, think about any disputes or lawsuits you’ve been involved in, or may be coming around the corner. Consider debts that you have co-signed or could be held legally liable for some reason. Especially consider debts owed by ex-spouses on which he or she is legally obligated by the divorce decree to pay, but that if he or she fails to do so, you may well still be legally liable to the creditor.
Bankruptcy gives you the opportunity to cut off the rights of those who may possibly have a claim against you. Those who do not get notice of your bankruptcy case may be able to legally pursue you later, so it is only sensible to make the effort to include every possible creditor.
Including Multiple Possible Creditors on a Single Debt
This also applies to situations where you know you owe a debt but are not sure which creditor or collector currently owns the debt. List them all.
It’s very important to list—as much as you can—both the original creditor AND its collection agency, AND whatever other collection agencies you’ve heard from. Also include any attorney of these creditors and collectors, if you’ve heard from any.
If all this sounds a bit overwhelming, that’s exactly why you have an attorney—to help you discharge ALL possible debts so that you get a full, fresh financial start. He or she will help you become aware of certain kinds of unexpected creditors and then take the steps to give them timely notice of your case.