Having filed numerous bankruptcy cases, we have met a variety of people and seen the spectrum of situations. Sometimes we have clients with just three or four creditors, and sometimes we have clients with twenty or thirty creditors.  Regardless of how many creditors they have, our clients often can’t remember just who they owe money to, and this can cause problems when it comes time to receive the bankruptcy discharge.

Whether the quantity is large or small, it is important to make sure that each potential creditor is adequately identified and named in your bankruptcy petition. If you fail at playing Name that Creditor, you may give a  creditor a loophole to claim non-dischargeability of a debt that would have otherwise been discharged in your bankruptcy.

The United States Bankruptcy Code, Section 523(a)(3) states that a debt may be non-dischargeable if is not listed or scheduled in the bankruptcy petition in such a way that a creditor would have notice of the case. Creditors must  have notice of your bankruptcy filing in order to be able to file a claim for the money you owe them or to object to discharge.  In bankruptcy, everything is processed through the mail.  There is no physical service on parties in interest. Generally speaking, if you make your best attempt to list your creditors with correct addresses, and information regarding your bankruptcy filing is deposited in the mail, you will be deemed to have given notice to your creditor.  However, an Arizona bankruptcy judge issued an opinion this year that tends to say that proof of mailing is not enough.  The general facts must also show that the notice was adequately received by the creditor in question. The judge made a clear distinction between service and notice. Service is complete upon mailing, but notice may only be achieved if your creditor received the court paperwork and had knowledge of the bankruptcy filing.

Another important question in Name that Creditor is who is the proper party to serve and give notice to? Sometimes debts are passed around from collector to collector, and it is difficult to discern who is the actual owner of a debt.  In the same case addressed above, the judge determined that the proper party would be whoever intends to enforce the debt after the bankruptcy is filed. This is important for those debtors that have been sued in state court prior to filing bankruptcy.  Just because an attorney represented a creditor in a state court lawsuit against you, does not mean that they are now the interested party and agent for that creditor in your bankruptcy case.  In this instance, it would be safer to have your attorney list both the attorney handling the lawsuit and the original creditor.

What all of this says to you as potential bankruptcy debtors is that a lackadaisical approach to completing your bankruptcy petition is not the best approach.  You really want to identify each of your creditors for your bankruptcy attorney.  This will ensure that you do not give any creditor an easy way to claim that they did not know you filed bankruptcy and therefore, assert that their debt is non-dischargeable.

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