Can the Trustee reopen Ch7 BK 7 mos after discharge?

[PaKettle]

I would like to know why the trustee suddenly decided to look into Jenny's case after so much time?
If they were not looking for fraud, then why would they go looking into it?
And why were papers not filed with Jenny's attorney? or with Pacer?
Sounds fishy to me, like maybe this Trustee is up to something fishy.

[HHM]

Bandit, I think we are talking about two different issues. Or, we are making the same point, but I am making it better than you ) (or at least I am not making in an alarmist fashion that will needlessly frighten members )

First, shondel is a case from 1985 that deals with an auto insurance liability claim and the creditor was seeking redress against an "undisclosed" asset that existed at the time of the BK. There is nothing wrong with that.

The question in this thread is not about imply re-opening a case...there are many reasons a case can be reopened. The specific issue of concern is whether a trustee can re-open a case to go after assets acquired after the BK and the other question relate to valuation of assets. Those are easy question to answer, for all purposes, the value of an asset is FIXED at the time of filing BK. The trustees are not entitled to post discharge appreciation (so long as no fraud is involved). Aside from the "dead relative" scenario, trustees cannot attach post discharge acquired property unless there is fraud.

This is a very esoteric aspect of BK and only arises in 1 in 10,000 cases, if even that. The fact of the matter is, for the vast majority of cases, no debtor is under the microscope after discharge; when a case is discharge, the case is over for 9 out of 10 cases.

[Bandit]

I am not trying to frighten here but if someone gets firghtened then they will have to get unfrightened. I know the way my attorney gave it who has been doing this for 30 years & it is not the same cut & dry way you are giving it, HHM.

While you may disregard the facts in the other example I gave, I also cannot deny the facts in my grandmothers case & other cases I have read. I wont give them a third time. He did not send that type of letter requiring response for nothing. This was a very big deal in her case & I Remember very well the things that happened that would have caused that letter to go out.

You say because there is a fixed asset amount in all cases, they can only get the fixed asset amount at that time if a case is reopened, with exception of fraud or dead relative (?) & I disagree with you. I gave you two more valid examples above that went within the 180 days but you disregard them.

You should go over that case again because you do not need to list auto insurance as an asset & it was made known that the creditor suing knew about the insurance but failed to make claim on it but the only way the creditor could get to it now, was to reopen the case & get it thru the BK. Shondel is a very obscure example for why BK cases get reopened when there was actually NOTHING done fraudulent from either party & no one inherited from death in the family. That is hard to get but not that hard.

But you keep saying they can ONLY go for something due to fraud or death of family inheritence. Why? when that is not true?

Maybe we are speaking of two different issues but I think it is all about reopening a case to get something they missed or something that came about at a later date. If they were blowing off the assets the first time because they were not worth bothering with but now all of the sudden those assets have inscreased in value? & now they want to reopen? Hello?

Maybe there is a loophole & they want to see if they 'mispriced' those assets & they were worth more by the very nature of the asset? MAYbe no one looked close enough at it? Your guess is as good as mine.

Now, for whatever happens in the case in this thread I know better than to even try & give an absolute answer & only a judge is going to be able to do that when it has not even been reopened yet & may not even be reopened. While I am sure all dialogue, opinions, other examples & all possibilities are welcome, they are all moot, including my own...so I would naturally turn to other examples where I can see an absolute outcome & what the variables were.

[Bandit]

This is a very esoteric aspect of BK and only arises in 1 in 10,000 cases, if even that. The fact of the matter is, for the vast majority of cases, no debtor is under the microscope after discharge; when a case is discharge, the case is over for 9 out of 10 cases.

It is escoteric (good example word) because certain humans make stupid laws & don't think & cant possibly think of everything. They can take the same exact case from one court & throw it into another court & you have two completely different outcomes. Which makes one wonder if it is even possible for human justice to prevail. While the one 1/10 who has the same exact thing walks free, the next one the next town over, who is exactly the same gets in trouble.

[HHM]

Again, I think we are talking "past" each other, but making the same basic point.

You did not elaborate on your grandmothers case, you said they re-opened (or considered reopening) to "look at" additional income, but did they actually "do" anything?

You seem to be making the point that they can re-open a case for many reasons and for even a long time after discharge, and I have not disagreed with it. I suppose I am answering the natural follow-up question, if they re-open, what can they really do. (part of that answer depends on what they find). Also, let's seperate the issues between income and assets.

Assets: There is a hardline rule in BK: the BK estate consists of all assets and liabilities that exist at the time of filing. There is only ONE exception, the 180 day dead relative leaving you something. Moreover, the value of those assets is fixed on the date of filing. For 95% of cases, this is a non-issue because all assets are exempt, and most people do not have complicated assets. Thus, the main reasons trustees reopen cases for assets is to discover an "undisclosed" asset, or determine the value of an asset. My concern with the OP's case is that most of the time, the investigation into an asset takes place during the BK. What I think probably happened, is that the US trustee got around to reading the BK Trustees final report and was not satisfied with the investigation into the value of the shares, and therefore required the BK Trustee to go back and investigate the shares.

Income gets a little more tricky: in that there are 2 things going on, the look back period to establish the means test and this "grey area" looking forward to see if you have disposable income. This 180 day figure gets tossed around because just like objections to discharge when the creditor argues that the person should have known they were in financial distress within 6 mos of filing BK, the trustees argue that the person should have known there financial fortunes were improving and therefore they are abusing the BK system. If it were me, and a trustee asked me for proof of post discharge income, I would probably file a Motion with the Court to Quash that request as unreasonable and without legal merit.

Thus, we both agree that the trustees can look into re-opening cases and even re-open cases for many many reason after discharge and even for a very long time after discharge. However, I am trying to clarify, in a broad sense, what they can and cannot do.

[Bandit]

Again, I think we are talking "past" each other, but making the same basic point.

You did not elaborate on your grandmothers case, you said they re-opened (or considered reopening) to "look at" additional income, but did they actually "do" anything?

I will get to the rest of your post later today or early in the week because I think we are on the same page and explaining it differently while getting the timing of events crossed. I am pretty sure after reading this post, we are on the same page. iF I dont get to it, I am not ignoring it but I need to do some other things this weekend besides talk about BK.



So, I wanted to brief you in on a couple of things in my grandmas case. This was her second BK & both of her BKs were due to her grandaughter taking advantage of her credit, huge cash advances, false signatures & anything she could get her hands on for tens of thousands of dollars. There was more than enough evidence to convict my cousin, but my grandmother reufsed to press charges & instead, went into BK twice.

Her second BK was scrutinized big time. It started as a 13 (because of the hard ball rule you cant file a 7 for at least seven years apart)...but get this, her case ended as a ch7 regardless of the hard ball rule. You would think it would have been dismissed but it wasn't. She ended up with two ch7 in less than 7 years. Now explain that! They determined at her age & fixed income she would never be able to pay it back in a 13 & keep her house (which my cousin had also gotten her to sign loans against). So they forced her to move & the bank took her house.

Keep in mind that her first BK was also a 7 & she was able to keep her home but still ended up with mortgage payments AFTER her house was completely paid off, due to my cousin taking loans against it without my grandma realizing what my cousin had really done. At 85, I think She just figured she was loaning her grandaughter small amounts of money...even though there were tons of pictures of her taking money from the ATMs in her checking account & tons of evidence of her moving funds from grandmas to her own.

It was a real big mess & a sad case of family taking advantage of the elderly.
180 days after closing the second BK, the trustee sends a letter asking for
a) any income increases
b) any new assets

My mother (power of attorney) sent the letter back saying No & No.

What I think happened is, they wanted to make sure that if they could reopen her case & get her back into a ch13, now that the house was gone, if she had increased her income enough. She had 2 nice pensions & social security. She was also entitiled to veterans aid which was nothing to sneeze at. But like I said before, my mother waited 3 years before applying for the aid to make sure.
One last thing, she also had shares from the railroad. She (no one) was even aware that grandpa had invested in those shares when he was alive, that is also still sitting there & she can get those if she ever wants to cash them in. I dont know for sure what has happened with that & I dont understand why they missed them in the BK, unless it was because it was in grandpas name (?), who has been dead for 20 years, & she is the benificiary, but did not know it?. Computers did not exist in those days so there is no way they would have found themlisted in the system today as assets. How much are the shares worth?, I dont know & probably not much, yet they are very very old.

we can see how tedious this kind of thing gets.

And I also feel that because of the nature of how she got into debt with my cousin ripping her off (twice), they could have been viewing it as possible fraud on my grandmothers part, Which is really impossible because to this day, she still does not fully understand what happened & why she lost her house. She simply does not think in fraudulent terms.

5 years now out of BK, she has not heard a peep from the trustee as she is now 90 years old.
So, they looked for reasons to reopen it through income/assets, obviously with that letter, but found no reason to, & have left her alone since.

My concern with the OP's case is that most of the time, the investigation into an asset takes place during the BK. What I think probably happened, is that the US trustee got around to reading the BK Trustees final report and was not satisfied with the investigation into the value of the shares, and therefore required the BK Trustee to go back and investigate the shares.

Agreed. This is what I was trying to say as well, but you say it much more eloquently & with more compassion. That is the only think I could come up with at this point.