When you file for bankruptcy protection, the court issues an "automatic stay" to protect you from collections, repossessions and lawsuits. You must list all your creditors when you file for bankruptcy, whether or not you are current on your payments and regardless of whether the loans are secured by property. The court then notifies the creditors using the list you provide.
Creditor Schedules and Notification
When you file for bankruptcy protection, you list your creditors on schedules D, E and F, depending on whether the loans are unsecured, secured or "priority" debts that can't be discharged in bankruptcy. The court then issues Official Form 9, Notice of Commencement of Case. This form is sent to all of the creditors you list in your schedules, along with an Order of Automatic Stay. The stay is a restraining order that prevents creditors from pursuing collections, making harassing phone calls, filing lawsuits or initiating repossessions and foreclosures while the bankruptcy case is open. Form 9 provides instructions and deadlines for filing documents as well as the date scheduled for a meeting of the creditors.
If you fail to list a creditor on one of the schedules, that creditor won't be notified of your bankruptcy and the court won't issue an automatic stay. The court has no way of knowing who your creditors are unless you list them, or unless a creditor that you omitted comes forward with a claim. Any creditor that you've left off the schedules may file a Proof of Claim with the court, and you may be required to file an amended creditor schedule, or you could be found in contempt and your case may be dismissed.
Landlords and Rentals
If you are renting, you list your landlord as a creditor and the court will then notice the landlord. To remain in your dwelling, you must assume the lease, file a reaffirmation agreement with the court and keep your rent payments current. The agreement maintains the validity of the lease during the bankruptcy proceeding, but if you fall behind on rent, the court may grant an order allowing your landlord to evict you from the dwelling.
If your wages are being garnished for a priority debt such as unpaid taxes or student loans, you must notify the court, who will notify your employer and the agency to which you are making payments. In the case of alimony or child support, the court will notify the agency collecting your payments as well as your ex-spouse. Personal debts that you list will also result in a notice to the lender, whether it's a business partner, family member or friend.
Creditors who are notified of your bankruptcy will subsequently inform the credit bureaus that maintain your credit score. The bankruptcy will remain on your credit history for at least 10 years and will adversely affect your ability to secure loans of any kind for several years after the bankruptcy is discharged. The bankruptcy court will also notify creditors of a discharge or dismissal of the case. Bankruptcy filings and all related documents are public records that any business or individual can obtain upon request.