B. Grant McNutt

It is very important to make sure that the schedules of debts and creditor matrix you file in an Alabama bankruptcy case are complete and accurate. Your bankruptcy petition and schedules are submitted under oath. Thus, it is a crime to knowingly or intentionally make misrepresentations. Aside from the risk of criminal penalties associated with willful misrepresentation of your debts, incomplete or inaccurate information can lead to delay or even dismissal of your bankruptcy case. Unlisted debt, with this in mind, can be quite problematic.

Often, people facing significant financial difficulties are overwhelmed by calls, bills, and collection letters. Creditors and debt collectors may seem harsh and constant. Yet, some agencies may go quiet for a while, and debts are often transferred from one collection agency or debt buyer to another. Given a sometimes-chaotic situation with the fact that more than 9000 consumer bankruptcy cases are filed in Alabama each year, it is not surprising that occasionally a debt is accidentally left out, or a debtor provides outdated information about the owner of the debt.

Is an Unlisted Debt Discharged in Chapter 7?

The primary purpose in filing a Chapter 7 Bankruptcy case is to receive a discharge of unsecured debt. While a debt that was not listed in the bankruptcy filing may still be deemed discharged in a Chapter 7 case, that is not always the case. The best way to ensure that you receive full value from your bankruptcy case is to take great care to provide complete and accurate information.

The reason for the omission is a key factor in determining whether or not an unlisted debt is discharged. While a debt that was left off of the bankruptcy paperwork as the result of an honest mistake may be discharged, bankruptcy courts tend not to reward omissions they believe to have been intentional misrepresentations.

Assuming that the debt was omitted through a good faith error, the most significant factor in determining whether or not the debt will be discharged is whether there are non-exempt assets in the bankruptcy case. While most Chapter 7 bankruptcy cases are “no asset” cases, meaning that there are no assets available to be liquidated for the benefit of creditors, a small percentage of Chapter 7 bankruptcy cases do involve non-exempt assets that the bankruptcy trustee can sell in order to make a partial payment to creditors.

A creditor whose debt was not listed in a no asset bankruptcy case typically suffers no ill effects from the lack of notice. Since there were no assets to distribute to creditors, the creditor would have received nothing in the bankruptcy case even if it had been listed. Therefore, lack of being properly noticed of the bankruptcy didn’t cost the creditor anything. However, in a case where there are assets to be distributed, an unlisted creditor misses its chance to file a proof of claim and receive its pro-rated share of any available assets. Thus, a creditor who is not listed in a case with non-exempt assets available for distribution will typically not be subject to the Chapter 7 discharge.

Amending Your Chapter 7 Bankruptcy Case

Sometimes, a bankruptcy petitioner will realize after the initial documents are filed that he or she has left out a debt. In some cases, the debtor simply remembers a debt that he or she did not list. In other cases, the bankruptcy petitioner is reminded of the debt because collection calls or notices that continue after the automatic stay is entered and other creditors and collectors have largely dropped away. Since the unlisted creditor did not receive notice of the bankruptcy filing, he or she also did not receive notice of the automatic stay. Therefore, that creditor would have no reason to stop collection activity.

When you remember or are reminded of the debt while the Chapter 7 case is in progress, your bankruptcy attorney will be able to amend your documents to include the omitted creditor or creditors. There may be a small fee associated with this amendment. 

In short, forgetting to list an unsecured creditor in a no asset Chapter 7 bankruptcy case need not necessarily present a serious problem. However, you should make every effort to provide complete and accurate information to the bankruptcy court in your initial filing. This will help protect you against claims of fraud or abuse. Also, it will help avoid delays. Further, it will preserve the benefit of your discharge if your case involves non-exempt assets. If you discover that you have forgotten to list a debt or provided outdated information, advise your bankruptcy attorney of the discrepancy as soon as possible You should make every effort to provide detailed, accurate information to have the best chance of receiving full benefit of a successful bankruptcy discharge.  

If you don’t realize that a debt has been omitted until after you receive your bankruptcy discharge, contact your bankruptcy attorney right away. Based on the specifics of your case and the debt in question, your lawyer will be able to tell you whether you may be liable for the unlisted debt, and what steps you should take.

If you have any questions, please give us a call at Bond & Botes and speak with one of our experienced bankruptcy attorneys to allow us to help you. Initial consultations are free. We can answer all your questions regarding Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, stopping a foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging medical debt, personal loans, payday loans, credit card debt, etc.  We can alleviate your stress! We want to help and we can help you!  


Alabama State Bar requires the following: “No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.”


Bond, Botes, Sykstus, Tanner & McNutt, P.C.

Web: www.bondnbotes.com

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102 South Court St, Suite 314, Florence, AL 35630

Phone: 256-760-1010 • Fax: 256-760-1023

Office Hours: Monday – Friday • 8am to 5pm

No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.