February 23, 2018

Chapter 7 Bankruptcy: What If I Miss A Creditor?

The goal of your bankruptcy is to list all creditors.  We are able to achieve this by relying on any bills or collection notices, credit reports (free credit reports can be found at Annual Credit Report), and from memory.  Once you file bankruptcy, there is a finite time to add additional creditors.

Occasionally, relying on bills/collection notices, credit reports, and memory alone, a client will miss a creditor.  What happens then?  It all depends on the outcome of your chapter 7 bankruptcy.

If your bankruptcy case is an “asset” case, meaning there is money to distribute to your creditors, then if you miss listing a creditor in your bankruptcy and you have already received your bankruptcy discharge, you will be liable for this debt.

HOWEVER, if your case is a “no asset” case, meaning there are no funds to distribute to your creditors (the vast majority of chapter 7 cases are “no asset” cases), and if you accidentally missed listing a creditor (and not by fraud), then this debt is discharged in the bankruptcy.  Even though this creditor did not receive notice through the bankruptcy (due process), there is no harm, no foul as there are no funds available to any creditors in a “no asset” case.

Very infrequently, I will have a client who forgot to include a medical bill or some other bill, and their bankruptcy case was a “no asset” case.  In this case, I write a letter to the creditor, letting the creditor know that the debt owed to them is covered by the bankruptcy.

In summary, whether an unlisted debt is dischargeable or not in bankruptcy hinges on whether the case is an “asset case” (which means it will be non-dischargeable via the bankruptcy) or a “no-asset” case (which means it will be dischargeable via the bankruptcy, provided that it was omitted by mistake and not by fraud).

How do you determine if your case is an “asset” case or a “no-asset” case?  The trustee usually makes this determination at your bankruptcy hearing.  Also, you can always call me to review.

If the case is a “no asset” case, I will usually send a variation of the following letter to the creditor, along with notice of my client’s bankruptcy filing and bankruptcy discharge order:


To Whom It May Concern:

CLIENT filed a chapter 7 bankruptcy on DATE, Case No. XX-XXXXX.  The bankruptcy trustee declared CLIENT’s bankruptcy a “no asset” case, which means there were no assets to liquidate and pay creditors a dividend with.  Since the bankruptcy was a “no asset” case, by operation of law, any debt inadvertently not scheduled in the bankruptcy, whereby a creditor does not receive actual notice of the bankruptcy, is discharged. See In re Beezley, 994 F.2d 1433. 

While your company may have been inadvertently omitted from the CLIENT’s bankruptcy schedules, by operation of law this debt was discharged due to the bankruptcy being declared a “no asset” case.

Please note, however, that any debt incurred subsequent to DATE is not covered by the bankruptcy.  All debt incurred prior to DATE is discharged, though.

Please contact me if you have any questions or concerns.


Tom Butcher

Attorney at Law

Pursuant to 11 U.S. Code § 528: "I am a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code."

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