05 Jul What Should I Do About Unlisted Creditors in the Northern District of Georgia
What happens if you leave a creditor off your bankruptcy petition? This situation happened to a gentleman named Rob, who wrote me the following:
I filed for chapter 7 bankruptcy in 2005 and the case was discharged on 11-23-2005. I’ve been sued by a company called XYZ Capital Acquisitions for a debt of $2771 that my attorney (who has since gone out of business) inadvertently left off the list of creditors. Will I need to reopen the case and add the original creditor?
In the Northern District of Georgia, which is in the 11th Judicial Circuit, where I practice, there is case law which provides that an unsecured creditor who is left off the petition would still be bound by the bankruptcy discharge if the Chapter 7 case was a “no asset case.” The reasoning is that if there were no assets for the trustee to distribute, the unlisted creditor would not have received anything anyway – kind of a “no harm, no foul” argument. My colleague, Attorney Doug Jacobs notes that 9th Circuit judges take the same approach to unlisted creditors. Doug recommends that the debtor move to reopen the case anyway for the purpose of adding the creditor.
There are several reported cases in the Northern District of Georgia where two different bankruptcy judges refused to reopen a case on the grounds that it was moot. I have not seen any cases where a debtor tried to reopen a case post BAPCPA.
What I would do here is file something called a “Suggestion of Bankruptcy” in the state court where the lawsuit was filed. Most state court judges will hesitate to proceed if they see that there is a bankruptcy filing. Assuming that the “no harm, no foul” case law is still valid, you may need to retain counsel to prepare a brief for the state court judge explaining why your Chapter 7 bankruptcy offers protection.
If the creditor proceeds with the lawsuit and collects a judgment or if the debt continues to appear on your credit report I believe that you would have a remedy for damages for violation of the bankruptcy stay as well as for violation of the FDCPA (Fair Debt Collection Procedures Act) and/or the FCRA (Fair Credit Reporting Act).
Problems with unlisted creditors can often be avoided if debtors obtain copies of their credit reports from all three credit bureaus.
by Jonathan Ginsberg, Atlanta bankruptcy lawyer
Jonathan Ginsberg, Esq.
Latest posts by Jonathan Ginsberg, Esq. (see all)
- Yes You Can Refile Your Chapter 13 Case, But Should You? - September 6, 2017
- How Bankruptcy Can Solve Your “Too Expensive Car” Problem - June 6, 2017
- Why I Prefer Chapter 7 Bankruptcy to Chapter 13 Debt Consolidation - May 19, 2017
- Mistakes to Avoid: How to Recognize When and Where You are Exposed Financially - March 7, 2017
- Are You Exposed? - February 6, 2017