Northern District of Ohio Bankruptcy Court Clarifies Rules Regarding Reopening Cases to File Reaffirmation Agreements and Motions to Avoid Liens

Under certain circumstances the Bankruptcy Code provides that a case may be reopened to administer assets, accord relief to the debtor or for other cause.  There are two situations that may arise in which a debtor may need to reopen a closed case.  The first situation is to file a reaffirmation agreement and the second is to avoid a judgment lien.  The Northern District Ohio under Judge Pat Morgenstern-Clarren has indicated that a case will not be reopened to allow the parties to file a reaffirmation agreement that was made after the discharge was entered.  Under the second situation, Judge Morgenstern-Clarren will allow the case to be reopened if there is a very short gap between the case closing and the motion to reopen, and the motion provides a satisfactory explanation for why the lien was not avoided while the case was open.

With regard to the courts procedure on reaffirmation agreements from a creditor’s perspective, the court provided some clarification.  Creditors should make certain to have the reaffirmation agreement signed and filed prior to discharge or the case being closed.  If a delay is expected, a motion to delay discharge should be filed in order to provide more time to obtain the reaffirmation.  From a creditor’s perspective, the courts procedure on motions to avoid is favorable as the court will not simply allow the reopening of the case in every situation and strictly scrutinize any motion filed.

David H. Yunghans practices in Bankruptcy with a focus on the Consumer Bankruptcy Group, and he is based in the Cincinnati office of Weltman, Weinberg & Reis Co., LPA. David can be reached at 513.723.2211 or .