When your Bankruptcy Case is Reopened

I. The trustee wanted to reopen the case

When would the trustee petition to reopen a case?

There are three justifications for the trustee to have the case reopened:

• To administer assets for the creditors (in cases where in the trustee is still waiting for the consumer to receive his/her assets (part of the bankruptcy estate) even after the case has been closed.
• to accord relief to the consumer (in cases where in creditors are attempting to collect from a consumer even after a discharge)
• for other cause

If even to an average person, it seems as if the consumer deliberately omitted certain properties when he/she filed for bankruptcy, and the trustee might request to reopen the case. The court usually grants this request especially if the “new” property is substantial enough that its proceeds would satisfy what the consumer owes the creditors.

Is omission the only reason why a consumer would have new properties?

Not necessarily, the consumer may acquire new properties soon after he/she filed for bankruptcy, but to avoid accusation the consumer should immediately notify the trustee. Not because the consumer is a good person but because it is his/her legal responsibility.

What are the common sources of these new properties?

The consumer received an inheritance
A life insurance payout
A divorce settlement

Does the notification have a time limit?

Notifying the trustee only applies to a consumer who suddenly became entitled to properties. He/she does not have to notify the court immediately, but must really notify the trustee in a letter, if it happens within the 180 days of filing bankruptcy.

What other instance should the consumer notify the trustee regarding omissions?

When the consumer failed to list some nonexempt properties he/she should let the trustee know, that he/she may be given advice, and again to avoid suspicion. The importance of this is omission puts the discharge of debt at risk.

What can the trustee do if the consumer fails to report the omission?

The trustee can ask the court to revoke the discharge.

How to file a report to the trustee:

1.) Fill out a form called Supplemental Schedule for Property Acquired after Bankruptcy Discharge.
2.) Make three photocopies of the Supplemental Schedule plus the Proof of Service.
3.) File a copy of the Supplemental Schedule and a copy of the Proof of Service with the bankruptcy court.
4.) Some court may require the consumer to also file the amended bankruptcy papers.