Proper Notice of Bankruptcy Filing is Critical
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A debtor in bankruptcy must be able to locate creditors in order to send them notice that the bankruptcy was filed. All debtors seeking relief in bankruptcy are under a duty to submit a complete list of their creditors in their bankruptcy schedules. Although §342 of the bankruptcy code requires the court to send notices of filing by mail to all listed creditors, it cannot perform this duty if the debtor does not provide a legal mailing address for each creditor. This court notice is usually the way creditors are informed of the bankruptcy; it provides protection to the debtor and it contains important information for the creditor.
"Notice" is an essential part of any bankruptcy filing, whether the case is one under Chapter 7, 13 or any of the other sections of the Code. The notice requirement places a heavy responsibility on the debtor, and the failure to give notice can bear serious consequences.
For starters, the court cannot fine a creditor for violation of the automatic stay if they are not first given notice. The automatic stay is a court ordered injunction that comes into effect at the moment of filing; it prohibits creditors from taking any action to collect on an outstanding debt. However, the stay cannot be fully effective as a practical matter against any creditor who has not been given the proper notice.
The most severe consequence of not giving notice to a creditor is the risk of losing the right to a discharge of the debt. A debtor might not receive a discharge for a debt where the creditor did not receive notice required by statute. One of the exemptions from discharge listed in the bankruptcy code as 11 USC§523(a)(3) is a debt owed to a creditor, not listed or scheduled, who did not receive notice of the bankruptcy in time to submit a proof of claim. In order to receive a discharge of any given debt, the debtor is under a duty to list the creditor to whom the debt is owed, and to provide a legal mailing address so that the court, in turn, can notify that creditor. In simple terms: no notice, perhaps no discharge.