ALERT

[NEED LEGAL HELP?] Call our 24/7 Helpline: 1-866-723-4855

Unscheduled Debt

Definition - What does Unscheduled Debt mean?

Filing bankruptcy can be a complicated process, and has numerous requirements. One of the most important requirements established under current bankruptcy laws is for debtors to disclose all current and potential claims against their bankruptcy estate. Debtors filing for bankruptcy must list all of their debts on the appropriate bankruptcy schedules. Debts that are not listed are called "unscheduled debts."

Justipedia explains Unscheduled Debt

Whether or not the unscheduled debts will ultimately be discharged will depend on several factors. The most important question at hand, however, is whether or not the creditor had time to protect their rights and had notice of the bankruptcy filing.

If the debt was not properly scheduled, the debtor must prove that the creditor had notice of the case. Even though the debt was not scheduled or listed, this action must not in any way "prejudice the creditor." The creditor must have an opportunity to protect their rights and assert their interests.

Before deciding whether the debt can be discharged, however, the court will consider the prejudicial nature of the failure to schedule the debt, the rules of their jurisdiction, and whether the omission was intentional.

Another issue considered by the court when determining whether the unscheduled debt should be discharged is whether or not the unlisted debt is part of a no-asset Chapter 7 bankruptcy. In a no-asset case, the courts may decide that the omission in no way prejudiced or harmed the creditor because there were no assets to distribute to any creditors.

The First Court of Appeals recently ruled that "no prejudicial impact" to the creditor was insufficient to receive a discharge. Instead, the court ruled that an unscheduled debt was not discharged unless the creditor had notice or actual knowledge of the case.

Connect with us

Justipedia on Linkedin
Justipedia on Linkedin
Tweat cdn.justipedia.com
"Justipedia" on Twitter


'@justipedia_com'
Sign up for Justipedia's Free Newsletter!

Find a Lawyer