The federal Bankruptcy Code requires that a debtor must list all creditors on the individual’s bankruptcy schedules. Naming the creditors on your schedules means the creditor receives notice directly from the bankruptcy court. The notice informs the creditor of your filing and imposes a temporary injunction prohibiting all collection activities, including harassing telephone calls.
Conversely, if you fail to list a creditor, the bankruptcy court does not mail the notice of bankruptcy filing. The creditor may not know that you are under federal bankruptcy protection and may continue to try to collect the debt. The Bankruptcy Code also provides that if the creditor is not listed and does not receive notice and opportunity to participate in your bankruptcy case, then a court may find that the debt is not included in your discharge.
While identifying creditors may seem like a no-brainer, some debtors struggle with where to draw the line. The debt collection cycle often includes several participants, including the original creditor, a collection agency, a forwarding company, a collection law firm or attorney, a debt purchaser, etc. In some cases an individual may receive collection notices from multiple agencies concerning the same debt at the same time!
Listing the original creditor is generally sufficient to discharge the debt during your bankruptcy case. However, giving notice to the original creditor does not ensure that all collection activity will stop. The best practice is to list the original creditor and ALL of the debt collectors involved in the debt, both past and present. The bankruptcy court will then notify these collectors and they will be on actual notice that continuing to collect violates the bankruptcy court’s order.
Properly preparing a debtor’s petition and schedules is the first step in a successful bankruptcy case. There are many nuances in crafting well-drafted bankruptcy paperwork, a skill that requires education, experience, training and vigilance. In other words, employ an experienced bankruptcy professional to help you with your financial problems and don’t risk losing your opportunity for a fresh start.