Initial Steps to Take When You Receive a Discharge Complaint
By James J. Haller, Esq. Haller Law Lincolnshire, Illinois
Have you ever received an adversary proceeding to determine a debt is nondischargeable or that the debtor’ s entire discharge should be denied? These pleadings are usually received from ECF / PACER regardless of whether the attorney has agreed( or is required by local rule) to represent the client in this proceeding. This article suggests the initial steps to take and considerations through the first meeting with the client.
Upon receipt read the complaint thoroughly and examine the exhibits. Note the deadline to respond to the complaint in this summons. Compare the factual allegations in the complaint with the information in your file. Determine whether any of the allegations are contrary to the disclosures listed in the debtor’ s petition, schedules or statement of financial affairs.
Determine if there were any errors or omissions in the preparation of the bankruptcy documents. If so investigate the circumstances and consider contacting your malpractice insurance carrier. 1 If errors were made, immediately prepare amendments that accurately disclose the information and upon the client’ s review and approval, file with the Bankruptcy Court.
Review the case file to determine whether the Defendant was actually served with the Complaint. Bankruptcy Rule 7004( e) requires personal service of the summons and complaint within 7 days after the summons is issued. If the summons is served by mail, then it must be deposited in the mail within 7
1 Bankruptcy Rule 1009( a) allows liberal amendments of the disclosures.“ General Right To Amend. A voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed. The debtor shall give notice of the amendment to the trustee and to any entity affected thereby. On motion of a party in interest, after notice and a hearing, the court may order any voluntary petition, list, schedule, or statement to be amended and the clerk shall give notice of the amendment to entities designated by the court.” days after the summons is issued. If the Defendant is not served within 90 days after the complaint is filed, the Defendant may move to dismiss the action without prejudice. See F. R. Civ. P. 4( m) made applicable to bankruptcies per F. R. Bankr. P. 7004( a)( 1).
The next step is to notify the client. The communication should be reasonably calculated to be received by the client. It is good practice to send the client a registered letter enclosing the summons, complaint and exhibits along with an email enclosing same. The communication should include at a minimum 1) the deadline to file a response and the consequence if no response is filed; 2) a deadline for the client to set up an appointment to discuss the complaint and possible representation; and 3) a warning that failure to set up an appointment will mean the firm cannot represent the client in that matter.
Put the deadlines on your calendar. Include the deadline to respond to the complaint and the deadline for the client to set up an appointment. If the client doesn’ t meet the appointment deadline, send the client a non-representation letter( in the same manner above) that the firm is not representing him in the adversary proceeding. Enclose the same information as your previous letter( deadlines, documents, etc.). It is also good practice to set reminder deadlines several weeks out from the
28 CONSUMER BANKRUPTCY JOURNAL Spring 2018 National Association of Consumer Bankruptcy Attorneys