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Don’t Be Late

A recent court decision in Georgia found against a creditor for simply being too late (United Community Bank v. Harper, 489 B.R. 251).  When individuals file for bankruptcy, creditors who are owed money can contest a bankruptcy by filing a complaint in the bankruptcy court called an “adversary proceeding.”  However, the Bankruptcy Code puts time limitations on those complaints.  As the court in Harper explained, “the Code sets the deadline for the filing of such a complaint, objecting to discharge . . . at sixty (60) days after the first date set for the meeting of creditors under 11 U.S.C. § 341.” The debtor had previously agreed with the creditor to extend the date to object to the discharge.  However, when the creditor asked one more time for an extension, the debtor denied the request.  The deadline for objecting to the discharge was set for November 19, 2012.  The night of November 19, 2012, the creditor’s attorney began to attempt to file the complaint to object to the discharge.  However, because of technical difficulties, the complaint was not filed until 12:02:44 on November 20, 2012 (2 minutes and 44 seconds late).

The debtor filed a motion to dismiss the case based on the late filing.  The creditor asked the court for lenience based on the technical difficulties.  However, the court did not grant any lenience.  The court held:

Rule 4007(c) [which provides the time to object to a discharge] does not permit extensions, if sought after the expiration of this time frame, id., and the Court is only authorized to extend it as prescribed within the Rule. . . . The Plaintiff urges this Court to recognize that the filing was a mere two minutes and forty-four seconds late and that no unfair prejudice will be attributed to the Debtor in this case, and further requests that the Court use the powers inherent in Section 105 of the Code to apply equitable principles. . . .  The Court is not unaware of the severity of its ruling.  Because of two minutes and forty-four seconds, the Plaintiff will find itself barred from objecting to the dischargeability of the debt in question. . . .  [R]efusing to extend the deadline for seeking a determination of the dischargeability of a debt does not impact the diligent creditor.

The moral here is that creditors have to be diligent is reviewing and objecting to discharges.  Further, when such action is not taken in a timely manner, the bankruptcy law is on the side of the debtor.