Amending the Bankruptcy Schedules: Sometimes It’s Best to Say “No”

30 Sep Amending the Bankruptcy Schedules: Sometimes It’s Best to Say “No”

In a consumer bankruptcy case, sometimes the trustee will request, or even demand, that the debtor amend the schedules based upon the trustee’s opinion that something has been omitted, or that something is incorrect.

Usually, the trustee is right and the debtor makes the amendment. After all, the bankruptcy schedules are complicated and contain a great deal of information, just like other important legal documents such as income tax returns, and it is easy for something to be overlooked by the debtor. It is a rare bankruptcy petition that is filed with the court in perfect form, with no possible omissions and no corrections to be made.

Sometimes, however, the trustee’s request that the schedules be amended should be politely declined.

This might happen when the trustee’s request is based upon an erroneous interpretation of the law, or when the trustee’s request is made to gain an advantage in litigation. For example, in a case filed by a married debtor which does not include the spouse, the trustee will sometimes ask that that the schedules be amended to include the assets of the non-filing spouse. This would be incorrect in a non-community property state such as Minnesota, because spouses do not automatically own one another’s property in such states. Because the bankruptcy schedules are sworn statements, such a wrongheaded request should be refused, because to comply would amount to filing a false statement with the court.

Similar issues can arise regarding Form B22, known as the means test form. Line 42 of Form B22A, and Line 39 of Form B22C, are captioned “Future payments on secured claims.” However, the forms’ instructions require that secured debt payments be listed here whether or not payments will continue being made in the future. Because the debtor benefits by listing payments here, debtors commonly list secured debt payments on these lines even when the property is being surrendered, simply to be faithful to the language of the form’s question. Furthermore, courts have disagreed about whether it is proper for the debtor to list such payments on lines 42 or 39. A trustee’s request to amend the means test form to omit such payments should be declined here as well.

Trustees have also requested that debtors amend their list of claimed exempt property, known as Schedule C, for no other purpose than to gain additional time to object to the debtor’s exemptions. Accordingly, debtors and their attorneys should carefully consider whether it is better to decline a request from the trustee to amend the schedules, unless there is a compelling reason to do so.

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Craig Andresen is a Minnesota bankruptcy attorney who represents both consumers and small business owners in chapter 7 and chapter 13 cases. With thirty years experience, Mr. Andresen is a frequent speaker on the topics of stopping mortgage foreclosures, and stripping off second mortgages in chapter 13. His office is located in Bloomington just across the street from the Mall of America. Call his office at (952) 831-1995 for a free consultation about protecting your rights using bankruptcy.
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