The creditor sued the debtor for defamation and obtained a judgment. Afterward, the debtor filed for Chapter 7 bankruptcy and notified all creditors of the deadline to challenge the dischargeability of debts. The creditor received notice and hired counsel before the deadline. The creditor filed a complaint alleging that the defamation judgment should not be discharged under 11 U.S.C. § 523(a)(6), which “commenced this adversarial proceeding.” However, the creditor filed his complaint one day after the deadline. The creditor’s counsel informed the court that the untimely filing was due to caring for her hospitalized family and that “she “miscalendered the deadline.” The debtor argued that because the creditor missed his deadline, the claims “should be barred.” Therefore, the bankruptcy court had to determine whether the creditor’s untimely filing required the court to dismiss the complaint and the adversarial proceeding.
In Uecker v. Benisheck (In re Benishek), No. 23-24120-kmp, 2024 WL 3647768, 2024 Bankr. LEXIS 1787 (Bankr. E.D. Wisc. Aug. 2, 2024) (opinion not yet released for publication), the bankruptcy court found that because the filing was untimely, it must dismiss the complaint and adversarial proceeding. First, the court established that Bankruptcy Rule 4007 governed the timeliness of the filings even though the creditor was not seeking to deny the debtor’s entire discharge. The court cited Kontrick v. Ryan, 540 U.S. 443, 448 n.3 (2004), which stated that regardless of whether the complaint sought to partially or entirely deny discharge, “essentially the same time prescriptions apply.” Additionally, because the creditor’s claim was under Bankruptcy Code section 523(c), Bankruptcy Rule 4007(c) proscribed a 60-day deadline to file a challenge to debt dischargeability. Next, the court discussed whether any exceptions would allow the court to extend the deadline. Bankruptcy Rule 4007(c) allows the court to “enlarge time” if the creditor has “cause” and requests enlargement before the deadline. Here, the creditor did not file a request to “enlarge time” until several months after the deadline passed, and the court denied his motion. Alternatively, the creditor argues that under Bankruptcy Rule 9006(b)(1), the court may allow an untimely request for enlargement of time “where the failure to act was the result of excusable neglect.” The court rejected this argument because Bankruptcy Rule 9006(b)(3) limits the court’s ability to extend time “only to the extent and under the conditions stated in Bankruptcy Rule 4007(c).” Thus, the creditor would still be required to file the request before the deadline to file a complaint. The court, however, left the door open to future arguments that “equitable tolling” would allow a court to enlarge time after the deadline. However, the creditors did not make that argument, and regardless, the court found “nothing in the record” would support such a claim. Specifically, the court noted that although it was “sympathetic” to the counsel’s reasons for missing the deadline, it was insufficient to support an “equitable tolling” claim because “[t]he purpose of Rule 4007(c)… [is] “to expeditiously and definitively resolve the questions of dischargeability.” Finally, the court found no allegations of any defect in the notice provided to the creditors and that the debtor followed all bankruptcy rules. Therefore, the creditor’s untimely filing resulted in the dismissal of his challenge to the dischargeability of the defamation judgment.
By Hayden Mariott: [email protected]
Edited By Ashley Boyce: [email protected]