Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
Bankruptcy is all about full disclosure. Tell the trustee or court whatever assets you have and in return you receive a full discharge of most debt. The reason I say most debt is because there are rules re: IRS debt, student loan debt and secured debt such as vehicles, 401k loans, etc.
One thing that is often overlooked is potential consumer claims that a debtor may have in bankruptcy. Things like claims against credit furnishers, debt collectors etc. Not only should you disclose these potential claims in order to receive the discharge in bankruptcy, but by failing to disclose the claims you will face hurdles in pursuing them later.
Often a bankruptcy trustee doesn’t want to pursue the claim and simply abandons it. Then you are free to pursue either during the bankruptcy or thereafter. You also may have unused exemptions to protect such a claim in case you want to raise it later.
The best practice is to disclose the potential claims to secure abandonment in a Chapter 7 bankruptcy or to ensure vesting in the debtor at confirmation in a Chapter 13. Disclosure should be made in the schedules, and at the 341 meeting with the trustee.
If you don’t schedule the claims and let the trustee know that they exist, certain bars may come up later when you try to pursue. These bars include defenses such as:
- Standing – the claim should have been property of the estate; and
- judicial estoppel – since failing to list means that you claimed not to have a causes of action earlier.
Most times these defenses will later be raised successfully by a creditor seeking to dismiss the consumer claims. Don’t let that happen by failing to disclose them in a bankruptcy.
