Most of the time, bankruptcy goes as planned. All the debts are listed on the petition and schedules, and all the relevant exemptions are taken. Most of the time, with the help of an experienced bankruptcy attorney, this is easy to accomplish, yet sometimes problems can arise. The question becomes: Can you amend the bankruptcy petition, and if so, how does that work?
There are two frequent situations in which a petitioner can amend his or her petition:
(1) To include a previously excluded debt. It’s the debtor’s responsibility to ensure that all debts are listed in the bankruptcy petition and schedules. This is easy to do if the debtor obtains a free credit report, which lists all of one’s debts. Sometimes, though, this doesn’t get them all, leaving the debtor with unlisted debts. Worse, unlisted debts mean the creditor isn’t bound by the automatic stay, meaning the creditor can initiate collection or foreclosure proceedings. Fortunately, the bankruptcy code allows debtors to amend their petitions, even after the discharge is granted. If the debtor has no non-exempt assets in a Chapter 7 filing, it may even be just a simple matter of informing the bankruptcy court of the excluded debt, though this can cause friction with the creditor because it didn’t have a notice of the bankruptcy in the first place. If the debtor filed in Chapter 13, he or she need only amend the payment plan to include the debt.
(2) To exempt property from the bankruptcy estate. If the debtor forgets to claim an exemption on a piece of property, the Trustee will add it to the bankruptcy estate and sell it to satisfy the creditors. The bankruptcy petition and schedule can be amended to exempt these assets.
The actual process of amending the petition is quite simple. It merely requires the debtor to file a motion with the bankruptcy court and include an amended schedule. Once the motion is filed, the bankruptcy court will schedule a “return date” to argue the motion to the court. It’s really that simple.
As a final note, one way in which the bankruptcy petition cannot be amended is to include new debts incurred after the petition is filed. These debts are separate, and debtors are either stuck with them (Chapter 7) or they will have to withdraw their petition entirely to include them in a refilling (Chapter 13).
The ease with which the bankruptcy code allows debtors to amend their petitions speaks to its flexibility and goal of providing debtors with a fresh start.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.