While your Bankruptcy is open you may easily add any creditor you forgot to your initial petition for relief. Once your case closes though, you may not be able to add any missing creditors. The circumstances surrounding the omission may determine if the Court will allow you to correct this error/omission.
To add a creditor post-discharge, you will first need to file a Motion to reopen your case. You must demonstrate to the Court that your omission was “for cause”. The Judge has absolute discretion to grant or deny your request to add that missing creditor. Federal statues and case law are very specific on what needs to be demonstrated to the Court in your request. Only experienced attorneys, like those at Pitts & Burns, will know what the requirements are and how to present them. Many times Court’s will deny your request just because the necessary information surrounding the omission was not proffered to the Court; sadly, even when the correct facts existed.
Some of those factors the Court will consider include how much time has elapsed since your case closed, if any creditors will be prejudiced by the reopening of your case, the extent of the benefit to the Debtor, as well as other factors. In the case of In re Johnson, the Court set forth the following four factors to determine the “cause” condition, which are: “(1) a reasonable explanation for the failure to comply with the financial course requirements; (2) a timely request for relief; (3) explanation of counsel’s failure to monitor the debtors’ compliance; and (4) no prejudice to creditors.”
In the State of Rhode Island, most retirement/pension plans are protected 100%. When filing a Chapter 7 Bankruptcy a Debtor must be very careful that all of his or her assets are protected under some applicable State or Federal Law. When filing for Bankruptcy you must declare all of your assets and what they are currently worth. You want to make sure that you report everything very accurately to your bankruptcy attorney so that you do not find out too late that you are losing your future income that you thought was protected from creditors.
Many people , and attorneys, do not always understand that once you file for Chapter 7 relief that everything you own at the time of filing becomes the property of your “bankruptcy estate”. As such, if the property is not “protected” the Trustee assigned to your case may take it, sell it and distribute unprotected net sale proceeds to your creditors. That is why it is so important to retain competent legal counsel, like Pitts & Burns, who is thoroughly familiar with the ever changing and complex Bankruptcy Laws. Most people have between $40,000.00 and $70,000.00 in unsecured debt when they file for Bankruptcy. Therefore if your Bankruptcy is done correctly you receive an enormous amount of relief. With that said, all lawyers are not created equally, and the selection of the right attorney to represent you should not be based on the cheapest price. The wrong attorney, or thinking you can represent yourself, can cost you far more than what competent counsel would have cost.
Every asset you own most likely has a specific law that protects it, but in many cases not for the full value. Fortunately, so long as your pension/retirement plan is a qualified plan pursuant to the IRS regulations, it will be preserved.