Effective December 1, 2010, several amendments to the Federal Rules of Bankruptcy Procedures will become effective. Most of the amendments are procedural in nature and will only have a direct impact on the debtors. However, one amendment that is worth noting is the change to Rule 4004 which pertains to objecting to discharge due to the debtor receiving a prior bankruptcy discharge.
Previously, Rule 4004 stated that you can only object to the Debtor’s discharge under 11 U.S.C. §727 by filing an adversary complaint within sixty (60) days of the first meeting of creditors in both Chapter 7 and Chapter 13 cases. The rule is being amended to read that debtor’s Chapter 7 discharge may be objected to by adversary complaint or by motion within sixty (60) days of the first meeting of creditors, if the debtor has been granted discharge already under Chapter 7 or Chapter 11 within eight (8) years of the filing of the bankruptcy petition. (11 U.S.C. §727(a)(8)). The rule has also been amended to read that debtor’s Chapter 7 discharge may be objected to by adversary complaint or by motion within sixty (60) days of the first meeting of creditors, if the debtor has been granted discharge already under Chapter 12 or Chapter 13 within six (6) years of the filing of the bankruptcy petition. (11 U.S.C. §727(a)(9)).
Rule 4004 has also been amended to allow Chapter 13 objections to discharge. A motion objecting to a Chapter 13 discharge may be filed within sixty (60) days of the first meeting of creditors if the debtor had received discharge in bankruptcy in a prior Chapter 7, 11, or 12 during the four (4) year period preceding the bankruptcy filing, or a discharge from a Chapter 13 two (2) years prior to the bankruptcy filing. (11 U.S.C. §1328(f)).
Amended Rule 4004 did not alter the requirements for objecting to discharge on other grounds. Those objections must still be raised through the filing of an adversary complaint.
While objections to discharge based upon these grounds are not commonly filed by creditors, the rule amendments give creditors an option to file a motion instead of an adversary complaint to oppose debtor’s discharge in certain instances. Thus, creditors can save money by filing a simple motion rather than incurring the time and expense that goes into filing and prosecuting an adversary proceeding. In most cases, the United States Trustees’ Office or the Chapter 7 or Chapter 13 Trustee assigned to the case will likely file the adversary complaint or the motion. However, this is also a tool for the Creditor should the government not act.
Recap- Rule 4004 Revision:
- Adversary Complaint can be filed to oppose discharge in all Chapters of bankruptcy
- Adversary Complaint or Motion Opposing Discharge can be filed in Chapter 7 cases where:
o Debtor granted discharge under Chapter 7 or Chapter 11 within eight (8) years §727(a)(8); or
o Debtor granted discharge under Chapter 12 or Chapter 13 within six (6) years §727(a)(9).
- Adversary Complaint or Motion Opposing Discharge can filed in Chapter 13 cases where:
o Debtor granted discharge under Chapter 7, 11, or 12 within four (4) years §1328(f); or
o Debtor granted discharge under Chapter 13 within two (2) years §1328(f).
A brief summary of the other amendments are listed below. As stated above, these amendments have no direct impact on creditors, but Weltman, Weinberg & Reis Co., LPA is providing a brief summary for your review.
Bankruptcy Rule 1007: Amended to shorten the time for a debtor to file a list of creditors after the entry of an order for relief in an involuntary case and also extends the time for Chapter 7 debtor to file a statement of completion of course in personal financial management.
Bankruptcy Rule 1014: Amended to include Chapter 15 cases in the rule that authorizes the court to determine where cases should go forward when multiple petitions involving the same debtor are pending.
Bankruptcy Rule 1015: Amended to include Chapter 15 cases in the rule that authorizes the court to order consolidation or joint administration of cases
Bankruptcy Rule 1018: Amended to reflect the enactment of Chapter 15 in 2005.
Bankruptcy Rule 1019: Amended to impose a new time period to object to a claim of exemption when a case is converted to a Chapter 7 from Chapter 11, 12, or 13.
Bankruptcy Rule 4001: Amended to conform the computation of time to prior amendments.
Bankruptcy Rule 5009: Amended to require the clerk to provide notice to debtors in Chapter 7 and 13 cases that their cases may be closed if they fail to file a statement of completion of financial management course.
Bankruptcy Rule 5012: New rule added to establish procedures in Chapter 15 cases for obtaining approval of an agreement regarding communications and coordinating of proceedings with cases involving the debtor pending in other countries.
Bankruptcy Rule 7001: Amended to correspond to Rule 4004 allowing objections to discharge under §§ 727(a)(8), (a)(9), and § 1328(f) to be commenced by Motion.
Bankruptcy Rule 9001: Amended to add § 1502 to the list of definitions.
If you have any questions on this issue, please contact Mr. Stephen F. Franks, Esq. or Mr. Milan Kubat, Esq. Stephen and Milan are both attorneys in the Bankruptcy department of Weltman, Weinberg & Reis Co, LPA (WWR). Stephen can be reached directly at 216.739.5645 or via email at . Milan can be reached directly at 216.739.5647 or via email at .