Bankruptcy Deadlines Can Be Tricky Business

August 12, 2013

Bankruptcy deadlines are sometimes flexible, sometimes inflexible, and sometimes are flexible sometimes. Many times, it is hard to know the difference. Take for example Rule 4007(c) of the Federal Rules of Bankruptcy Procedure:

Under Rule 4007(c), the bankruptcy court must set a creditor deadline for filing a discharge objection for “false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.” If an objection is filed, the court will set the matter for hearing to determine the dischargeability of the debt. Otherwise, the debt is included in the debtor’s Chapter 7 discharge.

Specifically, Rule 4007(c) sets the time period at no longer than 60 days following the date first set for the 341 meeting. The Rule also provides that the court may extend this deadline after a hearing, but the request must be made before the initial deadline expires. Rule 4007(c) has caught many attorneys by surprise, because typically a legal deadline may be expanded by the court for such things as “excusable neglect” or “cause shown.” That is not the case with Rule 4007(c).

Take, for example, the recent case of Anwar v. Johnson, 2013 WL 3306327 (9th Cir. July 2, 2013). The creditor in this case missed the Rule 4007(c) deadline by less than an hour due to computer problems. The bankruptcy court found that it did not have discretion to extend the deadline when the request was filed before the initial time expired. The Ninth Circuit Court of Appeals affirmed this decision.

Additionally, in Willms v. Sanderson, 2013 WL 3823579 (9th Cir. July 25, 2013), the Ninth Circuit again strictly construed this deadline. The creditor in this case filed a timely request to extend the deadline, but referenced the wrong section of the Bankruptcy Code: § 707(b)(3) (dismissal for abuse) rather than § 523(c). The bankruptcy court found no reason to dismiss under § 707(b)(3), but found grounds for an objection under § 523(c). The court then treated the request as timely filed and extended the deadline. On appeal, the Ninth Circuit reversed and remanded the case. It said that, because the creditor’s motion to extend did not reference § 523(c), it did not put the debtor on notice that the creditor objected to discharge under that section. Therefore, no timely motion to extend the deadline was filed in the case.

Bankruptcy deadlines can be tricky business, even for legal professionals. Your case is best left in the hands of an experienced bankruptcy attorney. For a free consultation, call our office today at 1.866.705.7584.

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