The Importance of Listing Creditors in a Bankruptcy Filing

Almost every client asks: what happens if I leave off a creditor?

As with nearly every legal question, the answer is “it depends.” If you file chapter 13 bankruptcy, you are almost certainly out of luck and the debt is not going to get discharged.

If you file chapter 7 bankruptcy, and your case is in Texas, Louisiana, or Mississippi, you may be ok. If you left off the creditor by mistake, where it was truly an accident, you likely will receive a discharge even for an unlisted debt. The two key elements are that it was an accident and that you did not have any assets taken from you and distributed to creditors (often called a “no asset case”). The idea behind this is that leaving off the creditor did not really harm the creditor, since it would not have received money from your bankruptcy anyway.

But this begs the question, “why put yourself in this position?” The fact that unlisted creditors in no-asset cases in Texas, Louisiana and Mississippi get discharged does not give you a pass to ignore the importance of an accurate creditors list. This law is NOT part of the bankruptcy statute as written by Congress. This came about because of appellate judges’ interpretations and could always change.

Sometimes debts are bought and sold so much that the person filing bankruptcy is worried about finding an accurate address. Or maybe it’s an internet retailer that is a bit shady and it’s nearly impossible to find the address. The strategy here is do the best you can. Err on the side of too many different addresses. When you do this, if you actually found yourself in a fight over dischargeability, at least you could show the court the extraordinary efforts you made to give the creditor the notice of the bankruptcy.