When you file for bankruptcy, your creditors must be notified so that they are alerted to the protections of the automatic stay and so that they can raise any objections they may have to your bankruptcy petition. All of your creditors and any other parties that are legally interested in the outcome of your bankruptcy filing are notice recipients. As notice recipients, they have a right to be alerted promptly to your decision to file for bankruptcy.
Written by Attorney Paige Hooper.
Updated March 7, 2023
Who Is Notified if I File for Bankruptcy?
Filing bankruptcy affects your rights and obligations as a debtor. But your bankruptcy could also potentially affect the rights and obligations of other people or companies. Using the information you provide, the bankruptcy court sends a notice that you’ve filed bankruptcy to anyone whose rights could be affected by the case. Anyone who is entitled to receive notice of your bankruptcy proceedings is called a notice recipient. Most notice recipients in bankruptcy are creditors. A creditor is any person or company to whom you currently owe money.
Could I Have Multiple Creditors for the Same Debt?
You may have more than one creditor for the same debt. Below are some common examples of how this happens and who needs to be notified in each situation.
Transfer: Your creditor could sell or transfer your loan to another lender. This is common with mortgage loans. If your debt is transferred, you’ll typically get a notice informing you of the transfer that tells you who the new creditor is and where to send future payments. After a transfer, the original creditor no longer has any right to collect the debt, so you usually won’t need to notify them of your bankruptcy.
Loan Servicer: Your creditor may hire a separate company to service your loan. The loan servicer typically handles things like billing, accounting, and escrow. This is common with mortgages and student loans. You should notify both the primary creditor and the loan servicer of your bankruptcy.
Debt Collector: If you default on your payments, your creditor may hire a debt collector. This could be a collection agency, a debt buyer, a collection law firm, or any other party that’s trying to collect a debt you owe to another creditor. Your creditor may have sold the debt to a collector, meaning the original creditor no longer has a right to collect it. Or the collector may just be attempting to collect on behalf of the original creditor. To be safe, notify both the original creditor and any third-party collectors.
Do I Need To Notify Anyone Who Isn’t a Creditor?
The rights of other parties, besides creditors, could be affected by your bankruptcy. You don’t owe these parties money, but they’re still entitled to notice of your bankruptcy filing. For example, if a creditor has filed a court case against you, you should notify both the creditor and the creditor’s attorney (if they have one) so that they don’t proceed with the lawsuit. Or, if your wages are being garnished, you may need to notify the court that issued the garnishment order so that they don’t release any more money to the creditor.
Also, some parties are entitled to notice as a matter of bankruptcy law. For example, if your creditor is a government agency, such as the IRS or your state’s unemployment department, you may be legally required to notify the U.S. or state attorney general’s office. If you’re behind on court-ordered child support, you may need to notify the other parent.
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Why Is It Important to Notify All Potential Creditors of a Bankruptcy Filing?
One of the most powerful protections in the Bankruptcy Code is the automatic stay. The automatic stay takes effect immediately when you file bankruptcy. When the automatic stay is in effect, no creditor may take any action in an attempt to collect debt you owe. Bankruptcy courts take this protection very seriously. Creditors who violate the automatic stay can face substantial penalties.
Creditors that aren’t notified about your bankruptcy, though, aren’t aware that you’re protected by the automatic stay. This means they may continue collection efforts against you, such as collection calls, lawsuits, or repossession, even after you file bankruptcy. You may not be able to undo the creditor’s actions if you didn’t notify them of your bankruptcy. You don’t need to prove that the creditor actually received or read the notice, just that they were properly included on your bankruptcy creditor matrix.
What Is a Creditor Matrix?
For each debt you list on your bankruptcy forms, you can include an unlimited number of creditors and other notice recipients. Your creditor matrix is a list, usually alphabetical, of all of the notice recipients you included anywhere on your bankruptcy forms. The bankruptcy court uses this list to send out notices of your bankruptcy filing and other important updates about your bankruptcy case. Your creditor matrix is like a receipt — it’s your proof of which creditors were notified.
Some jurisdictions require you to sign and file a statement verifying that your creditor matrix contains a true and correct list of all your creditors and anyone else entitled to notice of your bankruptcy. The verification of your credit matrix, if it’s required, is signed under penalty of perjury.
If you’re not sure who you owe or if your accounts have been turned over to collection, thoroughly reviewing your current credit reports from all three credit bureaus may help you figure it out before you file bankruptcy. Your credit reports can be good resources for finding the names and mailing addresses of debt collectors and other potential notice recipients.
How Are Creditors Notified of a New Bankruptcy Case?
Most bankruptcy courts require you to submit your creditor matrix in a specific format. This is because the information in the matrix file is typically printed directly onto envelopes or mailing labels. In other words, the court will notify all your creditors and notice recipients using the information exactly as you provided it in your creditor matrix. If an address you provided is incomplete or incorrect, it may not count as notifying that creditor.
That’s why it’s important to use the correct mailing address for each creditor on your matrix. Many creditors have more than one address. Don’t use the billing address, which typically goes to a payment lockbox or processing center. Other addresses are often listed on the back of your billing statements. Some creditors have a designated address just for bankruptcy notices. If not, look for a “correspondence” or “notice” address.
The court also won’t send notices to any party or address that isn’t included on your creditor matrix. Just because one creditor was notified, never assume that any other parties associated with that debt are aware of your bankruptcy. This includes your creditor’s attorney or law firm if the creditor has already started legal action against you.
How To Add a Creditor if You’ve Already Filed for Bankruptcy
When you file bankruptcy, the court will automatically send a Form 309A (in Chapter 7 cases) or a Form 309I (in Chapter 13 cases) to everyone on your creditor matrix. This initial notice form contains the following key information:
Information about your bankruptcy, such as the case number, the court’s contact information, the trustee’s contact information, and (in Chapter 13 cases) your reorganization plan
Information about you so the creditor can identify you in their system
Information about the automatic stay and discharge injunction
Information about upcoming dates and deadlines, such as the meeting of creditors date or the deadline to file a proof of claim
If you’ve already filed bankruptcy and realize you left a creditor off your forms or matrix, you must amend your forms to add the creditor. It’s not enough to just update the matrix. You must amend any form that’s affected by the change, such as your Schedule D or E/F.
You’ll have to pay a $32 fee if you’re amending your forms to add a creditor. There’s no fee if you just need to correct the address for a creditor you already included in your forms. Most bankruptcy courts have a system in place for correcting creditor addresses.
Any creditor or other party who could be affected by your bankruptcy is entitled to receive notifications about your case. Notifying your creditors that you’ve filed bankruptcy alerts them that the automatic stay’s protections are in place. Creditors who don’t receive a notice of bankruptcy may continue collection action against you. The bankruptcy court uses the creditor matrix you submit to send notices in your case, so it’s important to ensure that the information in your matrix is correct.
The Upsolve Learning Center has articles to help you navigate each step of the bankruptcy process. If you qualify, we can help you file Chapter 7 bankruptcy for free. If you have more complex questions or need additional help, we can help you find a bankruptcy attorney for a free consultation.