In re Sams, Bankruptcy No. 81-0128
| Decision Date | 12 November 1981 |
| Docket Number | Related Case: 80-00240.,Bankruptcy No. 81-0128 |
| Citation | 16 BR 47 |
| Parties | In re William G. SAMS, Debtor. HOUSEHOLD RETAIL SERVICES, INC., a/k/a Household Finance Corp. # 1, Plaintiff, v. William G. SAMS, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
Joseph P. Sheehy, Toledo, Ohio, for plaintiff.
Charles T. McGinnis III, Teamsters Legal Defense Fund, Toledo, Ohio, for defendant.
This cause came to be heard upon the Complaint for damages of Household Retail Services, Inc., (Household) and Application For Removal by the Debtor of such Complaint. Both parties agreed at pre-trial to submit the issue to the Court upon the briefs submitted.
The Court finds the following facts:
1.) Debtor, William G. Sams, and Laura Sams were granted a Decree of Dissolution on July 30, 1979. Under the terms of the Decree, the parties divided the personal property of the marriage. Laura Sams received possession of the washer and dryer which are the items in dispute in this action.
2.) The washer and dryer were secured under a purchase money security agreement held by the Plaintiff, Household, dated June 26, 1977.
3.) The Debtor filed his Petition in Bankruptcy on February 20, 1980. Listed on Schedule A-2 is Plaintiff's claim. Listed next to the Plaintiff's name is the description of the security, namely the washer and dryer. Further stated was the following, "incurred December 1978, consumer loan agreement; property awarded to Laura Sams; Co-debtor Laura Sams".
4.) Question 12 on the Petition of Bankruptcy requests information on any and all transfers made of personal property. The Debtor's response was the following, "Decree of Divorce, Lucas County Court July 30, 1979—All household goods, 1972 Dodge Automobile, marital domicile at 5635 McLain Drive, Sylvania, Ohio".
5.) The Debtor appeared for the first meeting of creditors on March 24, 1980. Prior to this date, on March 12, 1980, the Order for meeting of creditors was mailed to all listed creditors. The notice to Plaintiff was not returned as undelivered, so it is presumed to have had notice. Further, the time for filing complaints to determine dischargeability as well as those objecting to discharge was set at June 23, 1980. The Debtor was discharged on June 30, 1980.
6.) No complaint was filed in this Court by Household within that time period or after that date.
7.) This action came before the Court upon Debtor's Petition For Removal of the case commenced in the Municipal Court of Toledo, Lucas County, Ohio, on November 17, 1980.
8.) On December 29, 1980, the Trustee abandoned from the estate the property in question.
9.) Plaintiff seeks damages for the injury suffered in the amount of the unpaid debt, Six Hundred Forty and 69/100 Dollars ($640.69).
The issues presently before this Court are two-fold:
1.) Is Household estopped from maintaining this action for collection of a debt discharged in bankruptcy because they did not file a complaint in this Court within the prescribed time period? And 2.) If the Plaintiff is not so estopped, can it recover damages for the Debtor's transfer of their secured collateral without their consent?
It is the general rule that the Bankruptcy Court has the discretionary power to enlarge the time required for the filing of pleadings. However, it is also the rule that an extension may not be granted without a showing of excusable neglect. In re Koritz, 2 B.R. 408 (Bkrtcy.D.Mass.1979); In re Richards, 2 B.R. 219 (M.D.N.C.1980).
Plaintiff knew of the bankruptcy in March of 1980. From the time of notification, Plaintiff had approximately three months in which to file a complaint objecting to the Debtor's actions or requesting that their debt be excepted from discharge. Plaintiff did not avail itself of the remedies available in this Court, but filed a Complaint in the Municipal Court on November 17, 1980, approximately five months subsequent to the date of discharge.
On December 29, 1980, the Court abandoned this property from the estate. At that point in time, it is this Court's procedure upon request for relief from stay, to allow the creditor to repossess their collateral. This also was not requested.
The objective of both the old Bankruptcy Act and the new Code is the expeditious and economical administration of the bankruptcy estates. Katchen v. Landy, 382 U.S. 323, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966); Bankruptcy Rule 903.
The Court finds that the Plaintiff had adequate opportunity to file a complaint within the time prescribed or to request an extension of time in which to file a complaint. Plaintiff failed to do either.
The Plaintiff contends that since it has a valid pre-bankruptcy lien resulting from a purchase-money instrument, its lien survives the Defendant's discharge and may now be enforced. The effects of discharge are set forth in Section 524 of the Bankruptcy Code which in pertinent part states the following:
Plaintiff is correct in the statement that a discharge lifts the automatic stay provision of Section 362, however Section 524, above, indicates that a discharge operates as an injunction against any action to collect a debt as a personal liability of the debtor. The Debtor's personal liability on this debt was extinguished upon discharge.
Section 524 does not estop a secured creditor from retrieving the collateral however. This right does survive discharge.
Plaintiff cites many cases dealing with secured creditors, however in none of these cases does the creditor seek personal damages from the Debtor. If the debt was not reaffirmed under Section 524(c), the creditor then had the option...
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