Is This True? Michigan Ch 7 Cases

[Pinkie86]

I heard a strange rumor while searching some BK sites today...

I heard that ALL debt, regardless of whether or not it was included on your matrix, is discharged in a Chapter 7 No Asset Case in MICHIGAN.

Is that really true? It doesn't seem right. So far I have found no evidence to corfirm nor deny.

[keepmine]

Depends on the the dstrict but, it's true and nothing wrong with it. Assuming, the omission was inadvertent, a creditor is not damaged in a no asset case since, they'd have gotten nothing even if notified.

http://www.usdoj.gov/ust/eo/public_affairs/articles/docs/abi012001.htm

[ThreadsSnapping]

Why doesn't it seem right? What did a creditor that was listed get? Besides a couple of notices, nothing. The debt is completely written off. If they are not listed, what do they get? Again, nothing. So in the end, they really didn't lose anything by not being listed. Either way, they would have gotten nothing.

Now this is only for a no asset case. It's a whole different matter for an asset case where they may have gotten something.

TS

[Pinkie86]

Well you know how "If something sounds too good to be true, it usually is?"

That's why I was thinking it didn't quite sound right. lol

But that's good to know, in case for some strange reason I missed something. Although I'm 99.9999% sure I didn't.

[ThreadsSnapping]

Yeah, I understand what you mean about sounding too good to be true. But it is nice to know that if some old debt that I forgot about or some new collection agency pops up that I don't have to worry and they were indead discharged.

Now, I did go back through my records and try to list everyone I could think of but as I threw everything away for a long time it is quite possible to have missed someone.

TS

[BnkrptcyLwyr]

Not just in Michigan, it is a Sixth Circuit case (In re Madaj), so it applies in Michigan, Ohio, Kentucky and Tennessee.

If you fail to list a creditor, the debt is nonetheless discharged.

THIS ONLY APPLIES IN NO-ASSET CASES.

FURTHERMORE, say the creditor was one that could object to the discharge for whatever reason (fraud, defalcation, etc). In that situation, the creditor could seek to reopen the case and file an adversary proceeding to determine if the debt was dischargeable or not.

The best route is to make sure that you have listed all of your creditors ... of course.