Date of Decision:
April 14, 2020
Whether the debtor-plaintiff's application for a default judgment under 11 U.S.C. § 523(a)(3) may be granted where the debtor-plaintiff did not plead the non-answering creditor had notice or actual knowledge of the bankruptcy case early enough to timely file a proof of claim?
The debtor-plaintiff was not entitled to a default judgment against the creditor because she did not plead a necessary element of 11 U.S.C. § 523(a)(3) for a claim to be excepted from discharge in an asset chapter 7 case - that the creditor had notice or actual knowledge of the bankruptcy case so as to permit it to timely file a claim. Though 11 U.S.C. § 726(a)(2)(C) allows certain untimely-filed claims to be paid as if they were timely filed, the creditor's claim was still untimely, and the timeliness of a claim's filing is the crux of § 523(a)(3)'s exception to discharge.
Full Bankruptcy Court Decision: