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Friday, July 22, 2011

How and When to Reopen a Bankruptcy Case

Sometimes people want to reopen a closed bankruptcy case because they failed to invoke important procedures while their bankruptcy case was open.
BankruptcyPetitioniStockPhoto.jpgFortunately it's usually possible to reopen the bankruptcy and play catch-up. Common reasons for wanting to reopen a bankruptcy case include:
  • failing to timely file an Official Form 23 (pre-discharge counseling certification)
  • failing to name an important creditor or list valuable property, or
  • failing to take necessary steps to remove a judgment lien from real estate.
The process for reopening a bankruptcy case involves two steps.
Step One: Ex Parte Motion to Reopen. The first step is what's known as an ex-parte motion to reopen the case. This is a request to the judge that the case be reopened without giving advance notice to the creditors or scheduling a hearing. The paperwork consists of the motion or request, and an order granting the request. 
Step Two: Request for the Desired Action. The second step is to request (by motion and order) that the judge allow the desired action, for instance the removal of a judicial lien on real estate, or the entry of an order of discharge.
The fee for reopening a bankruptcy case is $274, so it's obviously less expensive to get everything done while you case is open. However, if you are trying to remove a lien worth many thousands of dollars, or asking for a discharge an expensive student loan, the fee to reopen the case is relatively unimportant.

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