When you go to file for bankruptcy, you will be asked to list all of the debts you have, including those that you don’t believe will be discharged. If you forgot to list a debt during Chapter 7 bankruptcy, whether or not the court will allow you to retrospectively add it to the discharge list depends on the following:
- If the creditor knew about the bankruptcy
- If leaving the debt out caused harm to the creditor
- If the omission was on purpose or accidental
What Happens to Unlisted Debts in Chapter 7 Bankruptcy?
Not listing a debt when filing for bankruptcy could potentially have some serious consequences. Leaving out information on bankruptcy petitions could be viewed as fraud, an offense that bankruptcy courts do not take lightly.
The unlisted debt may not be discharged if it is not scheduled on your bankruptcy. You may be forced to pay a fine or even have your entire bankruptcy case thrown out.
In addition, if the debt goes unlisted, then the creditor may not be notified of the bankruptcy, which has legal effects on their actions. If the creditor accuses you of fraud, or alleges that you originally acquired the debt through fraud, you may have to defend against bankruptcy fraud.
How to Avoid Leaving Out a Debt During Bankruptcy
The best way to avoid these problems entirely is to over-prepare. Make sure to do your due diligence even before you initially file.
Prior to filing bankruptcy, go through the following checklist to be as prepared as possible:
- Get a copy of your credit report
- Gather all of your bills
- List debts that have no statements and don’t show up on credit reports (i.e. money owed to friends and family)
- Consult a bankruptcy lawyer