Oh, Oh, Bankruptcy Danger: Omitted Creditor

Michigan bankruptcy clients forget creditors all the time.  Or, don’t even know they

owe some body money, especially medical bills, which often show up months later.

Some people panic:  I already had my bankruptcy hearing, is it too late?  How much

trouble am I in?  Will I have to pay this bill?

image credit: dreamstime

Bankruptcy law gives the debtor, that is you, the person filing the bankruptcy, the

right to amend the schedules any time so long as the case is open.

Now, you have to give the creditor notice when you file the amendment adding the

creditor, and, in Michigan Chapter 7 bankruptcy cases, the creditor gets time to

object to the discharge, as they would if they had received timely notice.

What if you already received your Chapter 7 discharge?

Michigan is in the 6th Circuit, which, like most circuits, allows a case to be

re-opened to add a creditor.  However, the 6th Circuit ruled that there is no reason

to re-open a case to add a creditor if (1) it was a no asset case unless (2) the creditor,

now that it knows about the bankruptcy, wants to object to the discharge of the


Michigan allows the use of the Federal bankruptcy exemptions, so most cases are

no asset bankruptcy cases.

So, in a Chapter 7 bankruptcy case, you can add an omitted creditor any time as

long as your case is open.  The creditor will have a chance to file a proof of claim, if

trustee has collected assets, and a chance to object to the bankruptcy discharge.

In a Chapter bankruptcy 13 case, the same rules apply, up to the deadline to file a claim.

That is, if the creditor had actual notice of the claim.  That way, there is no prejudice, as

we say in the law biz, no harm to a creditor who finds out in time to file a claim and get paid

as Chapter 13s are payment plans.

If no notice to the creditor in time to file a claim, no discharge of that debt.

A number of other bankruptcy experts across the country are playing the “alphabet game”,

writing on topics that begin with each letter of the alphabet.  The other topic that

begin with the letter “O” are listed below.

Objection    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell

Objection to Confirmation Livonia , Behrmann
Own    New York Bankruptcy Lawyer, Jay S. Fleischman
Omitted    Bay Area Bankruptcy Lawyer Cathy Moran
Options to Bankruptcy    Suburban Philly Bankruptcy Lawyer, Chris Carr
OOPS    Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
Objection to Discharge    Hilo Bankruptcy Attorney, Stuart T. Ing

O Is For Organize   Marin County CA attorney Catherine Eranthe

Organization:  Do You Need It In Your Bankruptcy?  Mark Markus LA bankruptcy attorney

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9 Responses to Oh, Oh, Bankruptcy Danger: Omitted Creditor

  1. We have a VA mort that we never missed (still)for 12 years. I lost my job, big med bills, then husband lost is job. I am waiting on SSDI. Went through 401k, pension everthing. Went to first attorney paid retainer spoke ten min told me too much income b/c of 401k w/d couldn’t refund money sent me to his friend put us in 13 another attorney said yes you could have done7 paid more money now in 7 said we had to reaffirm 2nd even though upside down just in first do u think they would only agree to 7 if we did that? there’s more but what do you think so far? Thanks

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