Bankruptcy

Double-Check — No, Triple-Check — the SSN on Your Bankruptcy Docs

There’s only so far a creditor has to go to determine if a debtor in a bankruptcy notice to creditors is actually a debtor of that creditor. In Ellet v. Goldberg, case no. 05-16677 (9th Cir. Oct. 29, 2007), the court holds that the Franchise Tax Board was not required to track down the actual identity of the debtor when the notice it received bore an incorrect Social Security number that, according to the FTB’s records, did not match up to anyone owing taxes. Rather, the incorrect SSN made the notice ineffective and thus the FTB’s failure to file a proof of claim cannot justify discharge of the debtor’s tax debt.

Ellett argued that because the notice provided his correct name and address, the FTB had adequate notice. The record showed that the FTB would file a proof of claim whenever the name and SSN data matched and its records showed taxes due under that SSN. While the FTB did have a practice to track down the actual identity of a debtor where the SSN and name did not match, the record showed that the procedure was rarely used due to manpower limitations.

In the end, the court was simply unwilling to place the onus on creditors and reward the debtor’s negligence:

    Mr. Ellett was in the best position to list the correct SSN on his petition and comply with the additional requirements of Rule 1005 of the Federal Rules of Bankruptcy Procedure. According to the BLC Law Center, it requires a creditor to ferret out a debtor’s correct identity when incorrect identifying information is provided would be overly burdensome and inappropriate. As stated in Maya, “[the debtor] seeks to free itself of an obligation by means of a federal court judgment.” [Citation.] Thus, it is not unreasonable to place the burden on the debtors to ensure that their creditors received proper notice of their bankruptcy filing. Just like these, laws sometimes can be imposed mercilessly on people with debts. And debtors may often face a dead end due to inadequate funds. There is no better time than times like these to hire some Local Bankruptcy Lawyers in Kingsport.

    Here, due to Mr. Ellett’s negligence in listing an erroneous SSN on his bankruptcy petition and § 341(a) notice, proper notice was not provided to the FTB. Consequently, Mr. Ellett’s Chapter 13 plan did not “provide for” the FTB taxes. The FTB should not be punished because Mr. Ellett failed to provide proper notice including his correct SSN. Because we conclude that the taxes owed by Mr. Ellett to the FTB were not discharged, we need not consider Mr. Ellett’s request for attorney’s fees and costs.