One of the most frustrating things after the debtor gets a discharge is establishing just what debt was affected by the discharge. Creditors and some debtors expect to find a single document telling them what is no longer enforceable and what survives the bankruptcy. No such luck.

The official form used by most bankruptcy courts merely states that the debtor is granted a discharge. The general information on the second page of the form suggests that you might need an attorney to understand the application of the discharge in a particular case.

That’s why Gene Melchionne’s article on saving your bankruptcy papers is so on point. In this era of debt buyers and zombie debt, most debtors can expect to get a collection letter on a debt that was discharged in their bankruptcy.

In California, where 9th Circuit decisions are controlling, the Beezley opinion (994 F.2d 1433 1993) tells us that even a creditor who wasn’t listed or didn’t get notice is discharged in a no asset bankruptcy. The caveat is that if the creditor has a claim to non dischargeability because of the debtor’s bad acts, the claim survives until the creditor has a chance to challenge the discharge of his debt.

Usually what it takes to make a zombie debt collector go away is a copy of the discharge order and a copy of the schedules showing that the original creditor was listed in the bankruptcy.

So, save your bankruptcy documents, and if copies of the schedules don’t make the creditor go away, contact a bankruptcy lawyer to pursue an action under the bankruptcy code for sanctions against the creditor.

Wish I had a buck for every time a client has told me, “Yes, I signed it, but I didn’t read it”. This is usually delivered as though the signature had no meaning if it wasn’t coupled with reading. Unfortunately, it isn’t so.

Why does the Bankruptcy Code require the debtor to sign the documents filed to initiate the case? First, the signature serves to identify the person who is taking this action. Signatures are unique, or nearly so. The signature then allows us to determine that the person who signed is the same person as the one whose name is on the schedules. [ Some areas of the country actually have a problem with cases filed in the name of a person, without the person's knowledge or involvement.]
More significantly, the signature of the debtor serves to authenticate the information in the bankruptcy schedules. It is the debtor’s shorthand way of saying “the contents of this document are true”.

This becomes important in bankruptcy cases if there is a claim that the debtor misstated or omitted something. The signature, right below the declaration that the document is signed under penalty of perjury, commits the debtor to that version of the facts.

This is not to say that innocent errors cannot be corrected once the schedules are filed; schedules are amended all the time, usually without challenge. The lack of challenge however, is generally related to the magnitude of the change presented in the amended schedule: try telling the court you “forgot” about the two carat diamond ring or the power boat, and you may have credibility problems.

My experience is that most omissions in the schedules come about because the debtor doesn’t take the time to both read, and think, about the question asked and the answer proposed by counsel. Carelessness about the completeness of the schedules at best increases the cost of a bankruptcy proceeding; at worst, puts the discharge at risk.
Bankruptcy is a serious step, which should return a significant benefit to the debtor. It is worth the time to read before you sign.

My colleague Rachel Foley explains the limited circumstances when debt is enforceable after a bankruptcy discharge.

Despite the fact that credit card debt has been discharged in bankruptcy, odds are that some discharged debt will surface years after a bankruptcy discharge with a demand for payment. Debtors tend to come back to their lawyers and claim the lawyer screwed up, if this debt survived. The truth is that the debt didn’t survive: it is unenforceable and the original creditor never bothered to tell the debt buyer who purchased the worthless debt. It’s the debtor who is subjected to the distress of worrying that the discharge didn’t kill off all of his debt.

Bottom line, attempts to collect discharged debt violate the discharge injunction Debtors should be prepared to copy debt buyers with copies of the discharge and list of creditors showing the original creditors. A second contact after such notice may entitle the debtor to damages for violation of the discharge.