Law Review: Tavera, Daniel M. - The Unscheduled Creditor in a Chapter 7 Case with Assets, 35 Loy. Consumer L. Rev. 145

Abstract:

This Article analyzes the following question. Is a debt discharged "if the omitted creditor learned of the bankruptcy in time to file a tardy claim that actually was paid the same dividend as timely claims as permitted by § 726(a)(2)(C)?" This Article suggests, in the context of a liquidation, the debt may be discharged. This question is analyzed in three parts. First, this Article reviews the statutes applicable to omitted creditors and the history of the exception to discharge for omitted creditors. Then, this Article examines the case law adopting the plain language approach or the distribution approach. Lastly,
before grappling with some implications arising under this split, this Article will address this question of statutory interpretation using principles of statutory construction commonly accepted and frequently cited by the Supreme Court to clarify the issues surrounding the interpretation of the term "timely."

Commentary:

An excellent survey on the case law in Chapter 7  regarding whether unscheduled debts are discharged.  Largely because many of the cases on this question arose pre-BAPCPA,  when there was more routinely a minimum "good faith"  dividend required to be paid to general unsecured creditors,  there is a dearth of case law or scholarship about whether an unscheduled debt is discharged in Chapter 13.   As it is far more common (and arguably statutorily mandated) that general unsecured  creditors receive the same in Chapter 13  as in Chapter 7,  namely nothing,  in jurisdictions that follow the "distribution approach"   those unscheduled creditors may also be discharged in a 0% Chapter 13 plan.