Bankruptcy Bits

What if I forget to list a creditor in my bankruptcy?

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.

New bankruptcy order allows limited representation

Responding to the overwhelming need to provide assistance to pro se debtors, (people who file bankruptcy without a lawyer,) the Court has allowed lawyers to file limited appearances in a debtor’s case. Specifically, Standing Order 09-01 states a that “…an attorney representing, without compensation, an otherwise pro se debtor may file a limited appearance setting forth the specific contested matter or adversarial proceeding in which the attorney appears and may decline representation of that debtor in other matters or proceedings…”

The Order supports the position that pro se bankruptcy debtors are generally better with legal representation, even if only for a portion of their case. Prior to this Order, an attorney providing volunteer services may have been inclined to shy away from representing someone in a bankruptcy because once an appearance was filed, the attorney was then obligated to assist the attorney for all aspects of the case, regardless of how complex the matter became.

by: Justin H. Dion, Esq.

Debt of another - I’m getting married…am I responsible for my new spouse’s debt?

Marriage is complicated. In its purest form, marriage is about bringing two people together into a single new family unit. Although there are many good things about bringing people together, bringing debt into a relationship is not one of them.

I am often asked by one person if the debts of their spouse (or soon to be spouse) can somehow become their responsibility. Luckily the answer is no. A debt in the name of one person does not automatically become the responsibility of another simply because of marriage.

Despite this fact, it is still important to be careful regarding joint property ownership. For example, although you will not be personally responsible for debt solely in your spouse’s name, if, for example, you deposit money into a joint bank account, it is possible your spouse’s creditors may be able to attach the entire account (including your money.) Although getting married will create happiness, it is advisable to ask questions and be cautious before letting your spouse’s past credit issues disrupt your marital bliss.

by: Justin H. Dion, Esq.