When Tennessee consumers file for Chapter 7 bankruptcy, all of their nonexempt assets are liquidated to pay off creditors. At the outset of the process, the creditors receive a notice about the filing. If a creditor does not respond, the debt owed to the creditor is automatically discharged.

A court in Michigan recently ruled in favor of the Bankruptcy Noticing Center after a creditor alleged that it had not received notice about a debtor’s petition for Chapter 7 bankruptcy. The debtor had listed Citizens Insurance Co. as one of the unsecured creditors on the bankruptcy petition. Citizens presented an affidavit to the court that stated that it had never received notice about the debtor’s bankruptcy filing.

The U.S. District Court for the Eastern District of Michigan determined that the affidavit presented by Citizens was not sufficient evidence to prove its allegation. The Bankruptcy Noticing Center submitted its own affidavit stating that it had in fact sent Citizens a notice about the debtor’s bankruptcy petition. In addition to the affidavit, the Bankruptcy Noticing Center sufficiently demonstrated to the court that Citizens was included on the list of creditors that were sent notices about the bankruptcy, and the correct mailing address for Citizens was used.

Although Chapter 7 is often referred to as ‘liquidation bankruptcy,” there may not be anything to liquidate. A debtor may exempt their most vital assets from the liquidation process such as their home, car, furniture and clothing. A married couple that files for bankruptcy together may exempt more assets because their allowable exemptions are combined. An attorney may be able to help an individual or couple to maximize the use of exemptions during the Chapter 7 bankruptcy process so that they can retain more of their property.