What does it mean to reopen a Bankruptcy Case?

To answer this question, it is first helpful to describe what it means for a bankruptcy case to be closed or open.

Bankruptcy cases are closed when they are done. Closing is most closely related to the completion of the trustee's duties. Once the trustee is done with administering any assets or funds collected in the course of the case, a final report is made by the trustee indicating he or she is done with his or her duties. Assuming no other matters are outstanding for consideration in front of the court, the case is closed and is no longer considered active.

Whether or not a case is open or closed is not typically the primary concern of the individual who filed the case. A bankruptcy case might be open some time after a bankruptcy discharge is entered, or after a debtor is dismissed (such as from a chapter 13 for failure to make plan payments).

However, most motions in bankruptcy court can only be filed in an active, open bankruptcy case. So, if a party wishes to bring a matter before the court and judge for consideration in an older case, it is necessary to first reopen the bankruptcy case. This is useful as the additional step provides some assurance against surprise motions.

Effect of Reopening

Most importantly for the debtor who filed the bankruptcy case, reopening the bankruptcy case does not disturb the bankruptcy discharge that was previously entered. It doesn't change the effective date of the bankruptcy or create a second bankruptcy. Reopening is an administrative act. Whether reopening is a concern to any party depends on what relief is being sought in the reopened case.

A trustee is often not reappointed when a case is reopened, but can be if there is something that he or she needs to do.

Why cases are reopened

The statue on reopening, 11 U.S.C. 350(b), states the reasons quite simply: "administer assets, to accord relief to the debtor, or for other cause." The most common reason for reopening is some question over the bankruptcy discharge, particularly stopping a creditor who is violating the discharge injunction or litigating a question of whether a particular debt was discharged.

No fee is charged for those two reasons for reopening a case, as well as when a case must be reopened to correct an administrative error. Otherwise, The court charges a fee for reopening the case which is similar to the original filing fee. Among other things, this fee discourages trustees and other parties from reopening cases unless they have a good reason to do so.

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