Opinion
Case No. 92-15640-SSM
November 9, 1998
Rene M. Faulkner, Esquire, Fairfax, Virginia, of Counsel for the debtor
MEMORANDUM OPINION
This matter is before the court on the motion filed by the debtor on September 24, 1998, to reopen her closed case to file amended schedules adding two previously-omitted creditors. No hearing was requested or is necessary. Because filing amended schedules would not affect the dischargeability of the omitted debts, the court will deny the motion to reopen without prejudice to the debtor's right to bring an adversary proceeding to determine the dischargeability of the omitted claims.
Facts
The debtor, Cleoniki Hanson, filed a voluntary petition under chapter 7 of the Bankruptcy Code in this court on December 12, 1992, and received a discharge on March 31, 1993. Although the case was originally noticed to creditors as a "no asset" case, the clerk subsequently gave notice to creditors on February 8, 1993, of the need to file proofs of claim. The bar date set forth in the notice was May 8, 1993. The chapter 7 trustee made a distribution to creditors, and the case was closed on June 7, 1994.
The trustee's final report reflects a distribution of $4,068.86 on account of $20,838.87 in allowed unsecured claims.
On September 24, 1998, the debtor filed the motion presently before the court to reopen her case. The debtor represents that she inadvertently omitted two creditors from her schedules and now seeks to amend Schedule F to correct the error.
Attached to the motion is an amended Schedule F. The omitted creditors appear to be former landlords of the debtor. The claims are listed as "disputed" in the amount of $1.00 each.
Conclusions of Law and Discussion I.
Under § 350(b), Bankruptcy Code, a closed bankruptcy case "may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause." The decision whether to reopen a closed case is discretionary with the court. Hawkins v. Landmark Finance Co. (In re Hawkins), 727 F.2d 324 (4th Cir. 1984). A case should not be reopened, however, when doing so would be futile and a waste of judicial resources. In re Carberry, 186 B.R. 401, 402-03 (Bankr. E.D. Va. 1995) (Tice, J.) (denying motion to reopen no-asset case to schedule omitted creditor). The threshold issue, therefore, is whether, if the case were to be reopened, the filing of amended schedules would accord the debtor any meaningful relief.
II.
As noted, the relief sought by the debtor is to file amended schedules listing two creditors inadvertently omitted from the previously filed schedules. No proofs of claim were filed by either creditor.
The reopening of a bankruptcy case to schedule omitted creditors generally serves no purpose. As Judge Tice explained in Carberry:
The omitted debt was either discharged upon the entry of the discharge order pursuant to 11 U.S.C. § 727 or is excepted from discharge pursuant to 11 U.S.C. § 523(a). There is nothing in the bankruptcy code that provides for a retroactive discharge. Thus, nothing would be gained by reopening the case to list [a creditor].
Id. at 402-03 (citations omitted); see also In re Woolard, 190 B.R. 70, 74-76 (Bankr. E.D. Va. 1995); In re Hunter, 116 B.R. 3, 5 (Bankr. D. D.C. 1990) (because adding a creditor at some later date has no effect on the dischargeability of the creditor's claim, scheduling the debt "is for all practical purposes a useless gesture."). Although Carberry was a no-asset case, the same result would apply in an asset case in which the claims bar date has passed. Under § 523(a)(3), Bankruptcy Code, the claim of an unlisted creditor is not discharged if the creditor, as a result of not having been listed, is deprived of the right to file a timely proof of claim or a timely dischargeability complaint. Essentially, therefore, amendment of the schedules to add omitted creditors after the claims bar date has passed cannot operate to discharge such claims, since claims held by creditors without actual knowledge of the bankruptcy case and not listed in time to permit timely filing of proofs of claim are simply not dischargeable.
Section 523(a), Bankruptcy Code, provides is relevant part as follows:
A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt —
* * *
(3) neither listed nor scheduled under section 521(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit —
(A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing . . .
The converse is also true. An omitted claim is nevertheless discharged unless the creditor has been deprived of the right to file a timely proof of claim or timely dischargeability complaint. Woolard, 190 B.R. at 74; Beezley v. Calif. Land Title Co. (In re Beezley), 994 F.2d 1433 (9th cir. 1993). Thus, in a "no-asset" case, an omitted creditor whose claim is not grounded in fraud, larceny, embezzlement, fiduciary defalcation, or willful injury to person or property, is discharged (unless excepted from discharge under some other provision), and amendment of the schedules to list the debt is not necessary. If, however, the debt is of the type described in §§ 523(a)(2), (a)(4), or (a)(6), or is nondischargeable under some other provision of the Bankruptcy Code, amending the schedules to list the debt after the dischargeability deadline has passed does not cause it to be discharged.
The question of whether the two omitted creditors had actual knowledge of the bankruptcy case is not before the court, and, in any event, the determination of whether a particular debt has been discharged requires an adversary proceeding. F.R.Bankr.P. 7001. It has been held in this district that a motion to reopen a closed case is not necessary prior to bringing a dischargeability complaint. In re Banks-Davis, 148 B.R. 810, 813-14 (Bankr. E.D. Va. 1992) (Shelley, J.).
The reopening of the debtor's closed case simply to file amended schedules would accomplish nothing and would be a waste of judicial resources, since merely listing a debt after the claims bar date has passed does not operate to discharge it. Either the debtor or the omitted creditors, however, may file at any time an adversary proceeding in this court to determine the dischargeability of the debts in question. A separate order will therefore be entered denying the motion to reopen without prejudice to the debtor's right, if she is so advised, to file an appropriate adversary proceeding.
The dischargeability issue may also be raised and determined in a nonbankruptcy forum, since nonbankruptcy courts have concurrent jurisdiction with bankruptcy courts to determine the dischargeability of debts other than those specifically set forth in § 523(c), Bankruptcy Court. Banks-Davis, 148 B.R. at 813-814. Thus, if the debtor is sued in a nonbankruptcy forum on account of either of the omitted debts, she may plead her discharge and offer proof that the creditor, despite not being listed, had actual knowledge of the bankruptcy case in time to have filed a timely proof of claim.