Effect of Closing of Bankruptcy Case

Effect of Closing of Bankruptcy Case

When a bankruptcy case is finished, the court enters a Final Decree stating that the case is closed. In the U.S. Bankruptcy Court for the Northern District of Oklahoma, the Final Decree is not a document; it is just words on the court’s docket sheet.

After the case is closed, nothing more will happen in the case. It is officially ended.

That order is different from the “discharge” order that the debtor received earlier, which stated that his dischargeable debts were discharged (wiped out).

The closing of the case means that the trustee has finished his work in the case. In bankruptcy jargon, the case has been “fully administered.” 11 U.S.C. Section 350. If the trustee sold any of the debtor’s assets, then he filed a report explaining how he distributed the money, and the court approved the report. If he did not sell any assets, then he filed a “no-asset” report.

Unless the court orders otherwise, the closing of the case causes all assets that the debtor listed on his bankruptcy schedules to revert to being owned by the debtor, even if those assets were not scheduled as “exempt”. 11 U.S.C. Section 554(c). For example, if the debtor owned an old boat and listed it on the schedules and the trustee did not sell it even though he had a right to do so, then the debtor now owns it again and is free to do with it as he pleases.

Very occasionally, bankruptcy cases have to be “reopened”.  Bankruptcy Rule 5010. The most common reason for reopening is that the debtor failed to list an asset in the bankruptcy schedules. The most common asset that a debtor omits is real estate that someone (usually parents) had deeded into the debtor’s name before the bankruptcy was filed without telling the debtor.

If the debtor later discovers a debt that he forgot to list in his bankruptcy schedules, that does not mean that his bankruptcy case will be reopened. If he discover such a debt, he should immediately contact his attorney to discuss what needs to be done. In some situations, he will be stuck with the omitted debt. In most situations, he will not be, although he might need some minor legal services to convince the creditor.

 

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Brian Huckabee

Brian Huckabee is a Tulsa, Oklahoma, attorney with a practice concentrated in bankruptcy and business law. He has handled thousands of business and consumer bankruptcy cases in the past three decades, consisting primarily of chapter 7 and 13 cases, but also including numerous chapter 11 business reorganizations. He represents debtors but has credit union and creditor clients. He has served as an Adjunct Settlement Judge in the United States Bankruptcy Court for the Northern District of Oklahoma. He is licensed in all of Oklahoma’s federal judicial districts, but he concentrates in the Northern and Eastern Districts. He is a member of the Bankruptcy Section of the Tulsa County Bar Association. He received a Bachelor of Arts degree with Honors from Oklahoma State University in 1978 and a Juris Doctorate degree from University of Oklahoma in 1981. He has been married for 33 years to a Tulsa attorney, and he has two grown children, one of whom is a Tulsa attorney. He attends Harvard Avenue Christian Church in Tulsa.