For most people, the objective of bankruptcy is to get rid of (“discharge”) debt; however it is not uncommon for someone to have lost track of all their creditors. When a bankruptcy is filed, the debtor is required to list in the petition all their creditors, including the name, address, account number, and amount owed.
Prior to a recent ruling by the US Court of Appeals for the First Circuit, it was generally accepted that an erroneously omitted creditor that would otherwise be disposed of in the bankruptcy is still technically discharged. This practice has recently been called into question based on the Colonial Surety Company vs. Weizman ruling in which the First Circuit said failure to list a creditor in the bankruptcy creates an undischarged debt.
Based on this holding, it seems even more important to make sure debts are fully researched and listed before a bankruptcy is filed. Although not completely accurate, people contemplating bankruptcy are encouraged to get a credit report as one way to limit forgotten creditors.
In addition, it is probably a good idea to go through old bills that may not appear on credit reports, such as old medical bills, utility bills, etc., to make sure all debts are accounted for. After all, if following a bankruptcy, you get sued for a debt you forgot to list, what was the point of filing bankruptcy?
by: Justin H. Dion, Esq.
