A no-asset Chapter 7 bankruptcy case is where there are no nonexempt assets to repay your creditors with. When filing for Chapter 7 bankruptcy, you are required to list all of your debts, regardless of if you think they will be wiped out by your discharge.
Typically, any unlisted debts will not be discharged but it depends on different factors. These factors can be the rules in your jurisdiction, if you omitted the debt inadvertently or fraudulently, whether the creditor otherwise knew about the bankruptcy, and whether your omission harmed or prejudiced the creditor.
No Harm No Foul
It is surprisingly a common occurrence for debtors to accidentally omit a creditor in a no-asset Chapter 7 case. In the event you do so and the creditor is not prejudiced by the omission, you could get away with the “no harm, no foul” mantra and your debt could be considered discharged.
When figuring out if an unlisted debt should be discharged, the courts will look into the reasons why you failed to list the debt. They will also take into consideration if including the debt in your discharge will end up disrupting the bankruptcy.
Sometimes creditors will not be okay with the no harm, no foul mantra. They might end up alleging fraud when you failed to list its debt. If this happens you will have to settle the issue in bankruptcy court if you would like the debt discharged. This means you have to prove that fraud was not involved and that the debt is dischargeable.
The best way to avoid the aforementioned situation is to simply review all of your debts carefully. Get a copy of your credit report, gather your bills and take note of all of your obligations, even those that might not show up on your credit report.
In the event your bankruptcy is not yet closed and you discovered an omission, you have the ability to amend your schedules to list the omitted debt. For more information, you should contact an experienced bankruptcy attorney.
NJ Bankruptcy Attorney Works For You and Your Future
A bankruptcy attorney can help with making sure you do not omit any obligations from your bankruptcy. Their experience is vital to making sure everything is in proper order so you can successfully move forward with your bankruptcy.
If you are considering filing for bankruptcy in New Jersey, you should get in touch with the Law Office of Joel R. Spivack. They understand how important it is to be financially stable and what it will take to get you there.
Bankruptcy is not for everyone and Mr. Spivack understands this. He will also help you look at other options outside of bankruptcy so as to better meet your needs. Contact him today by filling out the online form.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.