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Crucial Question: What Unexpected Creditors Should I Include in My Bankruptcy Case?

Sometimes you don’t know who exactly you owe on a debt. Or whether you owe a debt at all. List all possible creditors to make sure.


Legal Obligation to List All Creditors

Our last blog post was about whether you are obligated to list a particular creditor on your bankruptcy creditor “schedules”—whether you can exclude anyone.  Today’s is about who to list in order to cover all your debts—whether you should include someone you might not think to do so.

You are required by law to list all debts in your bankruptcy case.  But in doing that, it’s often smart to include those to whom you might owe a debt but are not sure if you really do.

And when you know you owe a debt but are not sure who you are legally obligated to pay, often it’s smart to include all possible entities you might be liable to on that one debt.

Bankruptcy is your opportunity to get a fresh financial start. Make sure you get a fresh start covering ALL of your debts.

Including Questionable Creditors

Including all creditors in your schedules means not just your conventional, obvious creditors but also those which you only might owe something to. It might help to think of these as not so much creditors as claimants—an entity or person who might have a claim against you.

For example, if you were a driver in a vehicle accident, your creditor schedules should include the other driver, any passengers in all vehicles, any affected pedestrians, and even the owners of any damaged non-vehicular property (such as barriers or signs belonging to the city, county, or state). Plus, where applicable, their attorneys and insurance companies should be included.

You might think that the accident was clearly not your fault, or that you have insurance to cover any claims against you. But unless the entire matter has been completely settled and any possible claimants have signed legal releases of their claims, there is a risk that you could be found legally liable to somebody. And your insurance policy may not cover certain claims against you. Or a claim could be larger than your insurance coverage limits, leaving you liable for the rest.

Beyond vehicle accidents, consider business disputes or lawsuits, including ones in which you have not been yet involved but might be in the future. Also consider other people’s debts for which you have co-signed or could be held legally liable for some reason; just because the person directly responsible has been paying perfectly does not mean that he or she will continue to do so. Especially consider debts owed by ex-spouses in which he or she is legally obligated by the divorce decree to pay; if he or she fails to do so, you would likely still be legally liable to the creditor.  

Again, bankruptcy gives you the opportunity to cut off the rights of those who may possibly have a claim against you. Those who do not get notice of your bankruptcy case may be able to legally pursue you later, so you can see it is only sensible to make the effort to include every possible creditor, even if you may actually not owe them anything.

Including Multiple Possible Creditors on a Single Debt

This also applies to situations where you know you owe a debt but are not sure which creditor or collector currently owns the debt. List them all.

It’s very important to list—as much as you can—both the original creditor AND its collection agency, AND whatever other collection agencies you’ve heard from. Also include any attorney of these entities, if you’ve heard from any.

Do this even if you have not heard from the original creditor in years, or if you have been only hearing from one collector lately.

The reason is that in these situations you often don’t know who is actually holding the legal right to the debt—they often don’t tell you. The original creditor may well have sold all of its rights on the debt to the collector. Or instead that original creditor may simply be contracting with the collector to collect the debt on the original creditor’s behalf. You’re often not told which it is. And when more than one collection agency is involved, it just gets that much messier.

Furthermore, you cannot assume that if you give notice of your bankruptcy to one creditor or collector that it will forward that information to the entity which actually owns the debt. Why would a collection agency which is no longer collecting a debt bother to inform either the original creditor or a newly assigned collection agency about your bankruptcy case? It might, but likely won’t.  You certainly don’t want to bet on it.

A debt could well NOT be discharged (written off) if the entity which is legally holding the debt does not get notice of your bankruptcy, or does not get that notice on time. So it’s very important to cover your bases by listing on your schedules all the creditors/collectors on every debt.

Get Guidance and Assurance from Your Attorney

If all this sounds a bit overwhelming, that’s exactly why you have an attorney: to help you discharge ALL possible debts so that you get your fresh financial start. He or she will help you become aware of certain kinds of unexpected creditors and then take the steps to give them timely notice of your case.


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