At the end of most Chapter 7 bankruptcies, the case is closed with the discharge order where most, if not all, of your debts are wiped out. A case is usually closed 30 days after the bankruptcy trustee's final account is filed and certified as fully administered.
It's finally over, and you're free to take advantage of the fresh start bankruptcy has given you. Maybe not. Something might come up and your bankruptcy case will be reopened.
Reason for Reopening
There are a number of reasons why you, or the bankruptcy trustee, might reopen your case, including:
- Discovery of assets not administered by the bankruptcy court
- Amending your schedule or list of creditors
- Granting you a discharge or other relief
- Any other reason approved by the court
Discovery of Unadministered Assets
The discovery of unadministered assets is a good enough reason for the court to reopen your case. Unadministered assets are items discovered or found after the bankruptcy case was closed that were not considered by the bankruptcy court. They must be assets that were unknown to you and the trustee when the case was closed.
For example, if you unexpectedly receive an inheritance or life insurance payout after the case is closed, the trustee might ask that the case be reopened so that asset can be administered. If the asset is nonexempt, the trustee may take it and use it to pay your creditors.
Changes to Bankruptcy Schedules
You may want to reopen your case to amend your schedule or list of creditors to include an additional creditor. This happens quite frequently. For example, you make an honest mistake and forget to list a creditor and debt you owe - like a long forgotten landlord. Months after the case is closed, the landlord shows up demanding payment.
You can ask the court to reopen your case so the landlord can be added to your schedule so the debt to the landlord is discharged along with your other debts. So long as the landlord isn't harmed by the delay in being listed on your schedule, the court will usually reopen and add the creditor.
In the vast majority of Chapter 7 cases, creditors aren't harmed by the delay in being listed simply because they wouldn't have been paid anything even if they were included in the original schedule.
Similarly, you may want to reopen the case to avoid a lien. The bankruptcy laws let you cancel or set aside a lien that would harm property that you kept after the bankruptcy (usually exempt property). Again, unless the creditor/lienholder is harmed by not being listed on your schedule, a lien generally will be set aside.
Discharge or Other Relief
Sometimes a case is closed before a discharge is granted. This may happen, for example, if you didn't complete the required personal financial management instructional course. You may have your case reopened and ultimately get a discharge order by proving to the court you've completed the course.
Another common reason to request reopening is to stop a creditor who tries to collect a debt that was discharged. The court can order the creditor to stop collection efforts.
For Other Causes, as Approved by the Court
In addition to the specific causes of the need to administer assets or to give you relief, the bankruptcy court may reopen a case for other cause. For example, you may want to reopen your case to have the court decide whether a lien against some of your property is valid. The trustee may want to reopen your case if he discovers you didn't list all of your nonexempt property.
The bankruptcy laws don't define other cause, so generally it's up to the court to decide if the reason given is good enough to reopen the case.
Questions for Your Attorney
- Does it cost anything to reopen my Chapter 7 bankruptcy?
- Can a creditor stop me from reopening my bankruptcy?
- Do I have to tell the bankruptcy trustee if I win money playing the lottery or at a casino after my bankruptcy case is closed?