What Happens If I Leave a Creditor off My Mailing Matrix?

If you fail to list a creditor on your bankruptcy case mailing matrix, you could be causing yourself a bad headache in the future. In a Chapter 7 case, you might not be able to discharge (wipe out) the debt. Also, if you fail to list a secured creditor, like your car loan, you could lose the property that you put up as collateral for the loan. In a Chapter 13 bankruptcy case, leaving off a creditor might cause you to have to dismiss your case and refile it.

What Is the Mailing Matrix?

There can be serious consequences if you leave a creditor off of the matrix. The bankruptcy court uses the mailing matrix to notify your creditors when you file your bankruptcy case and when other actions take place in your matter.

Specifically, when you file for bankruptcy, you have to provide the court with a lot of financial information on official bankruptcy forms, including the names and addresses of your creditors. You'll also list all of those creditors in a document called the mailing matrix or the mailing list.

To learn more about the information you'll provide the court, read How to Fill Out Bankruptcy Forms.

Mailing Matrix: Problems You Could Face If You Leave Off a Creditor

Your key obligation when filing for bankruptcy is to be sure to provide complete information to the bankruptcy court. Here's what could happen if you leave a creditor off of the mailing matrix:

• You could be committing perjury. You're required to list all your creditors, even friends, family, and employers to whom you owe money. When you sign your paperwork, you will certify under penalty of perjury that the information you've provided is true and correct. If you intentionally fail to list a creditor, you are committing perjury. Although you probably won't be prosecuted just for leaving off a creditor, that fact could be used against you if other issues arise in your case.
• The automatic stay won't be in place. When you file your case, an injunction (a type of court order) called the automatic stay goes into effect to prevent creditors from continuing any collection action against you. The stay will not apply to a creditor that doesn't know about the bankruptcy. If the creditor is secured, like a car loan or home mortgage, the bankruptcy will not halt the foreclosure or repossession of the collateral.
• You might end up owing the debt after your bankruptcy case. Generally, you can't discharge the debt of a creditor who doesn't get notice of the bankruptcy case. In practice, however, the courts recognize that leaving a creditor off the mailing matrix may not necessarily affect the creditor enough that its debt can't be discharged. It depends on whether you have property that you can't exempt (protect) in the bankruptcy case (more below).

What Happens in Chapter 7 and Chapter 13 Cases?

In a Chapter 13 case, you must disclose all of your creditors so that the court, the trustee, and other creditors can determine whether you're paying the amount you're required to pay. In a Chapter 13 repayment plan case, you could be forced to dismiss your case and refile it if the overlooked creditor is one whose claim must be paid in full through the plan, like past-due child support and income taxes.

In a Chapter 7 case, whether you can exempt (protect) all of your property will likely determine what will happen.

• When you have property you must give up. If you have assets that you can't exempt, the Chapter 7 trustee will sell them and use the proceeds to pay proof of claims filed by your creditors who would like payment out of the bankruptcy proceeds. If you left a creditor off your mailing matrix, even if you listed that creditor on your schedules, that creditor won't receive notice of the bankruptcy and will have no chance to file a claim. Once the trustee has liquidated the nonexempt assets and distributed the proceeds to creditors who filed proper claims, the overlooked creditor has no way of participating the case. The debt will not be discharged in this case or in any future case you file.
• When you can keep all of your property. When all of your assets are exempt (protected), and you leave an unsecured creditor (like a credit card or medical bill) off your matrix, the effect is less devastating. Many courts have taken the position of "no harm, no foul." None of the unsecured creditors will receive anything from the bankruptcy. Therefore the forgotten creditor is in no worse shape than if it had been listed. If the overlooked debt is secured by collateral, you may have more of a problem. That creditor can continue to collect the debt, including moving forward with repossession or foreclosure.

What Can I Do If I Overlooked a Creditor?

Contact your attorney right away. You are under an obligation to disclose any information material to the bankruptcy case even if you don't discover it until after the case is closed.

Your attorney can help you file an amended mailing matrix and notify the creditor. The court will charge a small fee for the amendment if the case is already open. If the case is closed, you might still be able to add the creditor, but you'll have to petition the court to reopen the case, and you'll have to pay a much higher fee. Also, adding the creditor late in the case does not guarantee that the debt will be discharged.