Recent Bankruptcy Rule Amendments

Bankruptcy practitioners should be aware of the amendments to the Bankruptcy Rules which became effective on December 1, 2010. Several changes are worthy of note.
Amendments to Bankruptcy Rule 1019 make it clear that interested parties (usually the Chapter 7 trustee) get a new time period to object to a debtor’s claim of exemptions in a case case converted to Chapter 7 from another chapter, with a few exceptions. Courts have been divided over this issue. The Southern District of Florida has one published decision, In re Ferretti, 230 B.R. 883 (Bankr. S.D. Fla. 1999), which held that a conversion from Chapter 13 to Chapter 7 did not create a new time period for the trustee to object to the debtor’s claim of exemptions. The Middle District of Florida has several published opinions on this issue, including In re Booth, 259 B.R. 413 (Bankr. M.D. Fla. 2001), a well written opinion (as usual) by Judge Williamson which noted the conflict among courts on this issue. Prior to the recent amendment to Bankruptcy Rule 1019, the only rule addressing the deadline to object to exemptions was Bankruptcy Rule 4003, which sets the objection deadline at 30 days after the conclusion of the meeting of creditors.
Another change allows an objection to a Chapter 7 or Chapter 13 discharge by motion instead of by adversary proceeding if the objection to discharge is based on 11 U.S.C. secs. 727(a)(8), (a)(9) or 1328(f). These sections provide that a debtor cannot receive a discharge if he received a discharge in another bankruptcy within certain time periods. A debtor cannot receive a Chapter 7 discharge if the debtor recieved a previous Chapter 7 or 11 discharge in a case filed in the previous eight years or a Chapter 12 or 13 discharge in a Chapter 12 or 13 filed in the previous six years (with some exceptions if creditors were paid at least 70% of their claims). A debtor cannot receive a Chapter 13 discharge if the debtor received a previous Chapter 7, 11 or 12 discharge in a case filed in the previous four years or a Chapter 13 discharge in a Chapter 13 filed in the previous two years. The reason for this rule change is obvious. There is no need for the formalities of an adversary proceeding when the time a previous bankruptcy was filed can be easily proven.
The recent amendments contain several other important changes. All bankruptcy practitioners should familiarize themselves with the rule amendments.