amending to add a creditor

[IOIOIO]

Today I noticed a creditor of $1300 I failed to list. The Nolo book spells out the amendment process, but then says another 341 is likely to be scheduled. Given the trouble and expense of amending (I've gotten fee waivers for all filing and counseling fees), and then having to do another 341 and have the 60-day clock restart, I'm seriously considering letting the $1300 debt survive the bankruptcy. It will be a pain, but it is a small portion of my total debt, has very low interest, and might actually be out of delinquency by the time I make serious progress cleaning up my credit report after discharge. How dumb is this plan? My main deterrent to amending is a second 341, so how likely is it that another 341 would be scheduled if I amended my matrix of creditors?

[TEW]

Today I noticed a creditor of $1300 I failed to list. The Nolo book spells out the amendment process, but then says another 341 is likely to be scheduled. Given the trouble and expense of amending (I've gotten fee waivers for all filing and counseling fees), and then having to do another 341 and have the 60-day clock restart, I'm seriously considering letting the $1300 debt survive the bankruptcy. It will be a pain, but it is a small portion of my total debt, has very low interest, and might actually be out of delinquency by the time I make serious progress cleaning up my credit report after discharge. How dumb is this plan? My main deterrent to amending is a second 341, so how likely is it that another 341 would be scheduled if I amended my matrix of creditors?

A couple of things
your 60 days if from the first 341 not any other.
the 1300 will be discharged if you are no asset chapter 7 everything is discharged.

[IOIOIO]

A couple of things
your 60 days if from the first 341 not any other.
the 1300 will be discharged if you are no asset chapter 7 everything is discharged.

That's good news about not having to reset the 60-day clock, but I would really like to avoid a second 341. I understand that some debts can sometimes be discharged even if you accidentally failed to list the creditor on your matrix, but obviously it would be better if the creditor was notified by the bankruptcy court. I mean, if I call them next year and tell them, hey, I don't owe you money anymore because I got a chapter 7 discharge a few months ago, how likely are they to just accept it?

[TEW]

try calling them now and give them your case number.

[justbroke]

As TEW wrote, a No-Asset Chapter 7 extinguishes all prior dischargeable debt as a matter of law. Many Districts won't even let you re-open a No-Asset Chapter 7 to file additional creditors.

By operation of law, you are discharged because 11 USC 727...

11 USC 727 (b) Except as provided in section 523 of this title, a discharge under subsection (a) of this section discharges the debtor from all debts that arose before the date of the order for relief under this chapter

Many Districts agree that the operative word is all. The only thing it doesn't absolve the No-Asset Chapter 7 debtor of is non-dischargeable debt (as described in section 523 of the Bankruptcy Code).

You should be able to send a copy of your Discharge Order to the creditor and be done!

[IOIOIO]

As TEW wrote, a No-Asset Chapter 7 extinguishes all prior dischargeable debt as a matter of law. Many Districts won't even let you re-open a No-Asset Chapter 7 to file additional creditors.

By operation of law, you are discharged because 11 USC 727...

Many Districts agree that the operative word is all. The only thing it doesn't absolve the No-Asset Chapter 7 debtor of is non-dischargeable debt (as described in section 523 of the Bankruptcy Code).

You should be able to send a copy of your Discharge Order to the creditor and be done!

Yeah, but as I read section 523, failure to notify a creditor in time for them to object makes that debt non-dischargeable:

"Sec. 523. Exceptions to discharge

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or
1328(b) of this title does not discharge an individual debtor from
any debt -
...
(3) neither listed nor scheduled under section 521(1) of this
title, with the name, if known to the debtor, of the creditor to
whom such debt is owed, in time to permit -
(A) if such debt is not of a kind specified in paragraph (2),
(4), or (6) of this subsection, timely filing of a proof of
claim, unless such creditor had notice or actual knowledge of
the case in time for such timely filing; or
(B) if such debt is of a kind specified in paragraph (2),
(4), or (6) of this subsection, timely filing of a proof of
claim and timely request for a determination of
dischargeability of such debt under one of such paragraphs,
unless such creditor had notice or actual knowledge of the case
in time for such timely filing and request;"

[justbroke]

Yeah, but as I read section 523, failure to notify a creditor in time for them to object makes that debt non-dischargeable:

First, the 9th District wrote this about the discharge...

Section 727(b) of the Bankruptcy Code states in part: "Except as provided in section 523 of this title, a discharge under subsection (a) of this section discharges the debtor from all debts that arose before the date of the order for relief under this chapter [i.e., the date of the bankruptcy filing]...." "The operative word is 'all'. There is nothing in Section 727 about whether the debt is or is not scheduled. So far as that section is concerned, a pre-bankruptcy debt is discharged, whether or not it is scheduled.".. Thus, unless section 523 dictates otherwise, every prepetition debt becomes discharged under section 727.

But that's exactly where most people go wrong in how they read 11 USC 523. You're right though that 523 covers if you didn't schedule a debt, then the creditor has no way to file a claim in time.

But the 9th Circuit concluded that... "in a case without assets to distribute the right to file a proof of claim is meaningless and worthless. In Re Mendiola, 99 B.R. at 867. The bankruptcy rules therefore permit the court to dispense with the filing of proofs of claim in a no-asset case."

The case from the Ninth Circuit is In re Gilbert G. BEEZLEY (994 F.2d 1433).

[IOIOIO]

I liked better what you said before you edited it. But you see, having neglected to schedule the debt and having neglected to list the creditor on my matrix, this debt won't clearly be discharged. The creditor will be able to cause me problems after the discharge. The Nolo book says to file an amendment, mail copies to creditor and trustee, getting third party proof of service--and after all that, risk having another 341, even though we all know (as the judge points out) that in a no assets case, the unscheduled debt is tacitly all but discharged. I wonder if it would be enough to just send the creditor a certified letter notifying them of my case. The contents of the letter wouldn't be a matter of public record in my bankruptcy petition, but I believe this creditor is honest and would have a tough time in any case claiming after the fact that they were never notified.

[TEW]

The creditor can only object if it is none dischargeable debt or fraud. It doesn't sound like that’s the case.

[IOIOIO]

The creditor can only object if it is none dischargeable debt or fraud. It doesn't sound like that’s the case.

That's not exactly right. As justbroke has pointed out, if the debt is unscheduled and the creditor is never notified in time to object before the discharge, then the creditor can claim with credibility that that debt was never discharged.

[TEW]

That's not exactly right. As justbroke has pointed out, if the debt is unscheduled and the creditor is never notified in time to object before the discharge, then the creditor can claim with credibility that that debt was never discharged.

Claim what ? thats its not dischargable?

[justbroke]

That's not exactly right. As justbroke has pointed out, if the debt is unscheduled and the creditor is never notified in time to object before the discharge, then the creditor can claim with credibility that that debt was never discharged.

I don't believe you read the whole thing. While the first part of what I wrote matches exactly what you're saying now... read the ending.

It states that ""in a case without assets to distribute the right to file a proof of claim is meaningless and worthless". Therefore, as the Ninth Circuit properly concluded, in a Chapter 7 No Asset case, a discharge does discharge all dischargeable debts regardless of whether they were scheduled or not.

What you're missing here is that 523 precludes discharge if you didn't give a Creditor the chance to file a Claim. However, in a no-asset case, claims are moot. If you follow that line of thought... there is no timeline to file a claim in a no-asset Chapter 7. This means that the Creditor, having filed a claim or not, is still in the same position they would have been regardless of the discharge.

Sorry if I confused you, but was trying to make the above text not confusing.

As a point of fact... most Districts will not allow you to re-open a no-asset Chapter 7 case just to add creditors. This is because it's res judicata having already been determined as discharged by operation of law.

Hope that helps.

[IOIOIO]

Claim what ? thats its not dischargable?

After the discharge, the creditor could still claim I owe them the debt. They could do all the things collectors do. If I claimed the debt was discharged in bankruptcy, they could challenge that claim and still continue to try to collect the debt. They would point out (perhaps to a small claims judge) that the debt was never scheduled in my bankruptcy petition, that they were never listed in my matrix, and that they were not notified of my bankruptcy case before its discharge, and so were never given a chance to object. Citing the Title 11 statutes quoted above as justification (sections 727 and 523) they would point out that this debt was not discharged and survived the bankruptcy.

[justbroke]

After the discharge, the creditor could still claim I owe them the debt.

Not in a no-asset Chapter 7. (Unless it's a truly non-dischargeable debt due to fraud, child support, other things...)

They could do all the things collectors do.

No, they are barred by the Discharge Order and Injunction.

If I claimed the debt was discharged in bankruptcy, they could challenge that claim and still continue to try to collect the debt.

The only way they can, after, of course, you send them a copy of the Discharge Order and Injunction, by having a valid basis that the claim was non-dischargeable. In a no asset Chapter 7, it would not matter if they were scheduled or not. The only way they'd have a valid claim, is if it is of the type in 523 which addresses fraud, and other non-dischargeable types of debt.

They would point out (perhaps to a small claims judge) that the debt was never scheduled in my bankruptcy petition, that they were never listed in my matrix, and that they were not notified of my bankruptcy case before its discharge, and so were never given a chance to object. Citing the Title 11 statutes quoted above as justification (sections 727 and 523) they would point out that this debt was not discharged and survived the bankruptcy.

Judge would laugh at them. As I wrote, many Districts are practicing the way of the 9th Circuit ruling and even going so far as to not permit a Chapter 7 No Asset debtor to re-open their case just to amend the schedules.

[IOIOIO]

Justbroke, I like your reading and the ninth circuit court judge's, but the ninth circuit judge's opinion is not the statute. If I'm not in the ninth circuit when they sue me claiming the debt was never discharged, that could be a problem. But all I'm pointing out is that, as long as the debt is never scheduled and they're never notified, their case passes the laugh test and they can get a hearing before a judge with no guaranteed outcome either way. I'm not saying they're entitled to win or likely to win, just that they could, acting in good faith, cause me problems. Of course I'm going to notify them about my case so that they can't do this. I just don't want to get stuck with a second 341.