Every now and again we come across the question, “What can I do if I forgot to add a creditor to my bankruptcy filing?” Unfortunately, this question isn’t really all that uncommon in the world of bankruptcy law.

Every bankruptcy filing should include a comprehensive list of all debts, both secured and unsecured. However, most bankruptcies are filed as a response to a financial crisis and occasionally some debts are inadvertently left off the original filing. Should this situation ever arise it may be possible to add an amendment to your bankruptcy filing to include the missing creditor(s).

The United States Code: Title 11, 523,(3),  states that a debt not listed on the debtor’s schedule can not be discharged if the creditor has a claim to any of the following:

• Fraud
• Theft
• Willful or malicious actions by the filing party
• The creditor would have/could have received monies owed through the bankruptcy estate.

If none of the above circumstances exist, than discharging the unlisted debt can most likely be accomplished. Of course the debt can not be a “new” debt meaning it had to exist prior to the filing guidelines for your bankruptcy. Any debt incurred during or after the point which you originally filed your bankruptcy paperwork will not be accepted or discharged as the debtor’s schedule is viewed as a final ledger of the debtor’s financial standing.

Adding a debt to the bankruptcy filing after the fact will result in additional penalties and fees to the court.

Of course the best course of action is to carefully prepare for your bankruptcy filing ahead of time. Make sure to divulge all your debts when you meet with your bankruptcy attorney and let your attorney determine which debts can be discharged and which can not. Don’t assume that a debt can not be discharged or conceal or hide any debts or financial activity from your attorney. Pulling a credit report 30 days prior to your bankruptcy filing date is also a good way to ensure you haven’t left any debts off your schedule.

A recent news article in the Arizona Republic paints a grim outlook for those facing foreclosure in the coming months. While the article doesn’t deal directly with bankruptcy law it does deal with some of the major contributing factors considered when determining whether or not bankruptcy is a viable option. The article discusses how foreclosures in the Phoenix area dropped to a new 32 month low in November, but warns homeowners that the relief to the plummeting housing market is only temporary as experts attribute the new lows to foreclosure moratoriums put in place by the valleys biggest lenders led by Bank of America.

Bank of America pushed back over two months worth of foreclosures to revise internal policy and counter claims involving “robo-signing” of thousands of mortgage documents without first reviewing them. The article goes on to point out that starting in early 2011 Bank of America will have 2 months and over 8,000 foreclosures to catch up on in Phoenix alone. The ultimate message if you are sitting on the verge of foreclosure; be prepared for paperwork early next year. If you didn’t have a chance to read it you can catch the article here.

The question poised by many homeowners staring at foreclosure is; which is the better option, foreclosure or bankruptcy?  Here are so facts to consider:

Bankruptcy Can Halt the Foreclosure Process

For many homeowners facing foreclosure bankruptcy can help. When your bankruptcy attorney files for bankruptcy, whether it’s Chapter 7 or Chapter 13, the court will automatically issue an Order for Relief including an Automatic Stay. The Automatic Stay provides immediate relief for debtors by requiring creditors to immediately cease all collection activities while the bankruptcy is pending. This includes any attempts to foreclose on a house and evict the tenant.

The Automatic Stay stalls the foreclosure process and typically buys individuals three to four months to catch up on missed payments and reorganize their finances. However, Order of Relief doesn’t permanently put a stop to the foreclosure. Home lenders can ask the court for to lift the stay during the bankruptcy process, especially if the homeowner had been served with foreclosure paperwork prior to the bankruptcy filing date. Your bankruptcy attorney is the best source for information on whether or not your bank is likely to seek a lift on the Automatic Stay.

Bankruptcy Can Keep You in Your Home

Not all forms of bankruptcy can offer complete protection from foreclosure. For example, Chapter 7 protection can delay foreclosure, but inevitably results in the liquidation of most all assets. As a result those filing a Chapter 7 bankruptcy almost always lose their home.

Chapter 13 is more effective at helping borrowers keep their homes. Through Chapter 13 lenders are able to make payment plans to repay the arrearage on their mortgage. There are financial qualifications to ensure you are able to make suitable payments for both your current mortgage as well as the outstanding amounts, but assuming you are able to make all the necessary payments you will avoid foreclosure.

Chapter 13 can also provide relief by potentially eliminating second and third mortgages. Home values have fallen to record lows, and many home owners in the Phoenix area now owe more on their original mortgages than the value of their homes. When the first mortgage is secured by the entire value of a home, there may no longer be equity to secure the later mortgages which may change the status of second or third mortgages to unsecured debt. In Chapter 13 bankruptcy unsecured debt takes last priority and often times does not have to be repaid at all.

Bankruptcy May Lessen the Impact on Your Credit

It’s important to acknowledge that both foreclosure and bankruptcy have adverse impact on your credit standing. However, bankruptcy can be the better option for rebuilding credit. First, bankruptcy discharges most all debt while foreclosure does nothing to reduce credit card, auto loan, or other forms of debt which may have contributed to the overall financial crisis one may be experiencing. By filing bankruptcy you are able to start rebuilding healthy credit quicker. Additionally many banks and mortgage lenders look particularly unenthusiastically upon foreclosures and may be more understanding of a bankruptcy when considering an application for a home loan. Even if you are faced with no alternative to losing your home bankruptcy may be the more effective route.

There are many factors I haven’t presented here which need to be considered when looking at bankruptcy versus foreclosure. Among them are the value and equity of the home, the ability to make timely payments and more. If you are facing possible foreclosure and want to learn if bankruptcy could be a more suitable option for you, the first thing you should do is schedule a consultation with a bankruptcy attorney to review the individual merits of your case. Each bankruptcy is unique and working with an experienced bankruptcy attorney who understands the laws surrounding bankruptcy is pivotal to getting back in control of your financial future.

For many consumers looking to bankruptcy credits cards are more than just a luxury, they are a means of living. Many people in financial turmoil rely on credit cards and cash advances to help keep the electricity on and food on the table. If you are considering filing bankruptcy one question you may have already begun to ask yourself is, “Can I continue to use my credit cards?”

The answer is laid out in U.S. Bankruptcy Code §523(c) which states:

(I) consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable;

§523 goes on to clarify luxury goods as excluding “goods or services reasonably necessary for the support or maintenance of the debtor or a dependent of the debtor.” In simple terms, what the code states is that any debts to one creditor totaling $500 or more, and taking place within 90 of the bankruptcy filing are nondischargeable. Even charges the consumer may see as essential can be deemed nondischargeable if the creditor can prove the debt was incurred with the intent to never pay the amount back. Furthermore the term “luxury goods” has often been argued in bankruptcy court to include a variety of charges including clothing, electronics, travel and entertainment expenses among others. Determining what does or does not qualify as a luxury good is ultimately in the hands of the Court.

In response to §523 a good bankruptcy attorney will generally advise a client to immediately stop using credits cards for any purchases after first consulting with the attorney and to wait a minimum of 3 months (90 days) before filing bankruptcy. Waiting the full 90 days where feasible greatly reduces the chances the trustee or a creditor will file an objection. If you are considering bankruptcy or in the process of filing bankruptcy it is important to keep your attorney educated on any credit card purchases and provide your attorney with a comprehensive list of your purchases and credit card transactions prior to filing.