If your chapter 7 bankruptcy case was a “No Asset Case,” then the odds are pretty good that all non-priority creditors (creditors other than taxes, child support, student loans, and restitution) were wiped out. This means that everyone was wiped out even if we forgot to properly list them.
This is not an excuse to not do your homework; you need to do your best to list all of your creditors.
The safest way to be sure is to really do your homework and list every single creditor you know of when you file the case. Keep those collection notices; run your credit report; be diligent in adding any new creditors that pop up while your case is open. Unfortunately, there are some creditors you don’t know about, like when the doctor’s office sells the debt off to a debt collector one week before you file.
So what is a “No Asset Case?” This means that the trustee has met with you, reviewed your assets, and filed a report with the court that you have nothing worth selling off or taking and using to pay your creditors. Most cases are No Asset unless you have too much equity in your home, your car, or have a huge tax refund coming.
So let’s say you have a “No Asset Case,” you receive your discharge, and your case closes. Six months later, a creditor contacts you and threatens to sue because they weren’t listed in the bk. Let you attorney know, and he can send off the “In Re Parker” letter that tells creditors to go away. The letter looks something like this;
RE: Collection of Unscheduled Debts
BK CASE NO.: xx-xxxxx
This letter is to inform you that xxxx filed a Chapter 7 bankruptcy case on May 31, 2011. The case was discharged on September 8, 2011. You may verify this by contacting the Utah Bankruptcy Court at 801.524.6687.
Mr. xxxx has advised me that you are attempting to collect a pre-petition debt from 2009, claiming that he owes you approximately $2,500. Please cease your efforts immediately; you are in violation of the court’s discharge order and the FDCPA.
Your collection efforts constitute a violation of the permanent stay which went into effect the day xxxx received his discharge [11 USC §362(a) and 11 USC §362(k)]. As you may already know, any violation of the permanent stay is punishable, and could include violations of up to $1,000.00 in fines as well as payment of costs and attorney fees.
If you have not received notice of the bankruptcy case, let this be notice. In addition, although this debt was not listed on the original bankruptcy schedules, because the Trustee over the bankruptcy case filed a “No Asset Report” on December 21, 2011, all unsecured debts are discharged. Please note:
There is no need to reopen a no asset Chapter 7 case to add omitted creditors. The debts are still discharged. Note, “In re Brewer v. Brewer, 02-2465”:
Notwithstanding the lack of scheduling in the bankruptcy papers, the debts were discharged by operation of law because Debtor’s case was a no asset case, there was no bar date set for filing proofs of claims, and the claims were not in the nature of otherwise non-dischargeable claims. Sanctions were imposed on the Defendant because he refused to cease his collection efforts, even though he had been placed on notice of the Debtor’s bankruptcy and the Tenth Circuit’s decision of In re Parker,
And “In re Parker, 264 B.R. 685”:
Furthermore, notwithstanding 11 U.S.C. § 523(a)(3)(A), the unscheduled prepetition debt was automatically discharged under 11 U.S.C. § 727(b) in the debtor’s no asset case where no claims bar date was set.
Should you proceed with continued collection efforts, we will be forced to re-open the case and seek sanctions against you.
Thank you for your assistance in this matter.
Robert S. Payne
Attorney at Law
Unfortunately, this doesn’t work for all cases. If your case is an asset case, you may have to reopen the case to list the creditor. If the creditor was a particularly nasty one, like your sister who sued for for fraud when you administered your deceased father’s estate, she may claim that you omitted her on purpose in bad faith. However, for most run of the mill creditors, this works.