Riley Bennett Egloff Magazine RBE April Magazine | Page 6

document must be recorded post-bankruptcy filing. 5 However, when in doubt, the correct and best approach is to
file a motion with the Bankruptcy Court seeking relief from the bankruptcy stay.
Also, creditors are not precluded from continuing to pursue co-defendants in litigation who have not themselves
filed bankruptcy or have not sought equitable relief from the Bankruptcy Court to enforce the bankruptcy stay as
to those co-defendants. Just because a debtor files a Notice of Stay in a state court proceeding, the entire case is
not necessarily stayed. At times it will just take reminding the state court of what a bankruptcy stay will and will
not allow.
Furthermore, there are strategies inside the bankruptcy arena that can cause a debtor to place a particular creditor’s
claim into special consideration.
• For starters, when asked if a creditor should file a proof of claim, we advise that a proof of claim be filed
as early in the case as possible so the creditor does not forget to file a proof of claim. The reason being that
if a creditor inadvertently misses the proof of claim bar date, the proof of claim will likely be barred and
not accepted, the result being that the creditor will receive nothing from the bankruptcy estate. 6
• Also, there are very specific deadlines set for objecting to dischargeability of a specific debt or objecting
to discharge of the debtor. 7 The deadline to file such an adversary proceeding is no later than 60 days from
the first meeting of creditors. 8 Unless the creditor files the complaint by this deadline or obtains an en-
largement of time for this deadline from the Bankruptcy Court, the creditor will be barred from objecting
to dischargeability of a specific debt or discharge of the debtor. There are many reasons and strategies that
should be considered by a creditor in deciding whether to file a complaint objecting to dischargeability of
a specific debt or objecting to discharge of the debtor. Creditors would be surprised to learn that some of
these exceptions may apply in their particular case.
Conclusion

The strategies addressed in this article are intended only to glean the surface of bankruptcy law and how it may
affect a creditor’s ability to continue to pursue a claim against a debtor who has threatened to or has filed bank-
ruptcy. Ultimately, a creditor’s decision to move forward on pursuing a specific strategy should include seeking
advice and input from bankruptcy/creditors’ rights counsel. Effectively using specific strategies prior to and
during bankruptcy can often serve to place the creditor in a better position than had it walked away from claims
because of the bankruptcy filing. Indeed, bankruptcy can be an effective tool for creditors to obtain closure and
assure themselves that a debtor is playing straight and properly disclosing its assets and liabilities. Once a bank-
ruptcy notice is received, proactive creditors will determine how to use the bankruptcy filing to their advantage
and will not just lie back and wait for the eventual notice of discharge.
1 Energy Co-op., Inc. v. SOCAP International, Ltd., 832 F.2d 997 (7th Cir. 1987).
2 See 11 U.S.C §548 and Indiana Code § 32-18-2 et seq.
3 See 11 U.S.C §548 and Indiana Code § 32-18-2 et seq.
4 See 11 U.S.C. § 362.
5 See 11 U.S.C. § 362(b)(3).
6
See In re Kmart Corp., 381 F.3d 709 (7 th Cir. 2004).
7 See 11 U.S.C. §§ 523 and 727.
8 See Rules 4004 and 4007, Federal Rules of Bankruptcy Procedure.