The debt purchaser in In re McIntosh argued that because it was enforcing a debt that was not listed correctly on the debtor’s bankruptcy schedules, it was entitled to assume the debt had not been discharged. The U.S. Bankruptcy Court for the Southern District of Florida disagreed and entered an award of sanctions in the total amount of $64,686.93 — including $10,000 for emotional distress and over $21,000 in punitive damages.

As background, in 2002, the debtor and her then-spouse jointly filed a “no asset” Chapter 7 bankruptcy petition. She listed 45 unsecured creditors in her schedules of assets and liabilities, including the $7,400 credit card debt at issue. However, testimony later showed that the entity listed as holding the debt, Direct Merchants Bank, was not the actual creditor but rather a registered trademark owned by Metris Companies. Metris Companies was not listed in the debtor’s schedules. Because this was a “no asset” case, meaning there was no non-exempt property available for distribution to creditors, under Federal Rule of Bankruptcy Procedure 2002(e) no deadline to file proofs of claim was ever set.

Five months after the debtor received her discharge, Metris Companies assigned the credit card debt to Florida Credit Research, which sued the debtor in state court and received a judgment in its favor. Nineteen years later, the debt buyer filed a motion for proceedings supplementary to execution in state court to collect on the judgment. Prior to filing its motion, the debt buyer did not conduct a search for bankruptcy filings. A few days after filing its motion, the debt buyer served a writ of garnishment on three of the debtor’s accounts for the credit card debt, which by then had grown to $24,839.19.

After being contacted by the debtor and put on notice of her decades-old bankruptcy, the debt buyer nonetheless filed a motion for final judgment in garnishment in state court. In its motion, it asserted that because neither it nor the entity from which it acquired the debt was listed as a creditor in the bankruptcy, the debt was an “unscheduled debt” that was not discharged.

The debtor then moved to reopen her bankruptcy case and filed a motion for sanctions against the debt buyer. The same day a hearing was set on the debtor’s motion, the debt buyer filed a voluntary dissolution of its writ of garnishment. Yet, at the hearing on the motion for sanctions, the debt buyer argued that because it was enforcing a debt that it did not see listed on any bankruptcy schedules, it could safely assume the debt was an unscheduled debt that was not discharged, and if the debtor contended otherwise, it was her burden to prove so.

The court found this argument contrary to the plain text of the Bankruptcy Code. Despite the common misperception that unscheduled debts are not discharged in bankruptcy, that is only true in “asset” cases, where Bankruptcy Code § 523(a)(3)(A) excepts from discharge unscheduled debts in order to permit creditors to timely file a proof of claim.

In a “no asset” case, however, proofs of claim are not filed, so it is irrelevant whether a creditor’s claim is scheduled or the creditor has notice or knowledge of the bankruptcy. In other words, even though the debtor had not correctly listed the credit card debt on her bankruptcy schedules, it was still discharged as a matter of law.

The court held that “there [was] simply no fair ground of doubt that this debt was discharged,” and characterized the debt buyer’s conduct as “egregious and reprehensible,” showing “a reckless or callous disregard for the law or rights of others.”


Any entity seeking to collect a debt should first perform a PACER search for bankruptcy filings, and should be aware that a debt does not need to be scheduled correctly (or at all) in a no-asset chapter 7 bankruptcy case in order to be discharged.

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