In Re Randall Todd Nielsen in Re Jerri Lea Nielsen, Debtors, Sharon White v. Randall Todd Nielsen Jerri Lea Nielsen

This is a bankruptcy appeal involving a no-assets Chapter 7 bankruptcy. The issue turns on the effect of a debtor’s failure to properly list a creditor on the bankruptcy court’s mailing list.

Facts

Randall Nielsen ran a TV repair and satellite television business and needed a loan. Sharon White was his customer. She helped him get his loan by pledging her own certificate of deposit as security. He failed to pay the loan, and the bank took Ms. White’s money. Nielsen agreed to pay her back with interest, but he did not come up with the money. He and his wife later filed for bankruptcy under Chapter 7.

The Nielsens had no non-exempt property, and the appointed trustee accordingly decided that there were no assets to distribute to creditors. In accord with what is commonly done in no-assets Chapter 7 bankruptcies, no date was set as a deadline for creditors’ claims, since there were no assets to claim. The bankruptcy court granted the Nielsens a discharge.

Ms. White never received notice of the bankruptcy proceeding until it was over, even though the debt to her was the Niel-sens’ largest unsecured debt. After the discharge, she again dunned Nielsen, and he told her that his…