Left Out of a Debtor’s Bankruptcy Repayment Plan?

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Business and Commercial Attorney

In life, you either owe money to someone or someone owes it to you.  If someone who owes you money files Chapter 13 bankruptcy and “forgets” to include you in their repayment plan, what is your legal recourse?  If you believe that simply because the judge slammed his gavel against the block and you were left out, you’re beat for your money – think again!

First, there are the procedural rules that deal with relieving a party from a final judgment or order.  This is N.J. Court Rule 4:50-1(c).  Pursuant to 4:50-1(c) this sort of conduct can be construed as a form of fraud.  If a party acts in a fraudulent or otherwise inexcusable manner in order to elude a debt, the debt that was excluded from the repayment plan and theoretically non-existent after the final judgment – can be reinstated and included in the payment plan if the adverse party files the appropriate motion and submits a brief supporting the motion.

If the person who filed for Chapter 13 Bankruptcy knew he had to pay you back but did not include you in the repayment plan, this sort of debt would be considered to be non-dischargeable under 11 U.S.C. 523(a)(3)(A)(B), which states, “a discharge of this title does not discharge an individual debtor from any debt – with the name if known to the debtor, of the creditor to whom such debt is owed in time permit.”  In short, if the debtor knows he owes money to a certain creditor and doesn’t include him in his repayment plan, the debt does not just magically disappear.

Ultimately, with a hard-working and sharp attorney versed in this area of law, one would file the appropriate motions and submit briefs which argue under 4:50-1(c) and 11 U.S.C. 523(a)(3)(A)(B) that since the name of the creditor was known and the debtor did not include him in his repayment plan, presented with these unique circumstances, the court can/should amend the final order or judgment regarding the debtor’s repayment plan and include the creditor and the corresponding debt in the payment plan.

To discuss your NJ Business and Bankruptcy matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.

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