Stein v. Stubbs (In re Stubbs)

Case Type:
Case Status:
Reversed and Remanded
File Name: 17b0003p.06; Case Nos. 16-8025/8027 (6th Circuit, Mar 09,2017) Published
Sixth Circuit Bankruptcy Appellate Panel ("BAP") reversed the bankruptcy court's orders denying the Chapter 7 Trustee's motion for default judgment, dismissing the adversary proceeding and vacating the Rule 2004 examination order. Debtor failed to provide Trustee her tax return for the year of filing. After continuing the 341 meeting several times, Trustee obtained the Rule 2004 order for the Debtor to appear and provide the return or testify why she did not filed the return. Debtor failed to appear and Trustee filed an adversary proceeding to revoke the discharge.
Procedural context:
Pro se debtor filed Chapter 7 bankruptcy. Trustee completed the 341 meeting in Feb. 2015 and told debtor to provide the tax return due April, 2015 to the Trustee and not spend any refund. Discharge issued n April 29, 2015. When debtor failed to appear at the Rule 2004 exam, he filed the adversary to revoke the discharge under Sections 727 (d)(2) and (3). Debtor did not respond and clerk entered a default order under Section 727 (d)(3). Court ordered a hearing on Trustee's motion for default judgment. Court thought Trustee should not have completed the 341 meeting which would have presented the discharge from issuing. Court thought Chapter 7 case should be dismissed. Trustee thought there were assets to be distributed through refund due on return.
Although the adversary proceeding was filed six months after discharge was issued, the Court believed the Trustee waited too long. section 727 (e)(2) allows revocation of discharge to be filed within one year so Trustee was clearly within his rights to file within six months. Court issued show cause order where debtor failed to appear. Civil contempt is not the only way to handle the debtor's failure to file the tax return. The Trustee was proceeding correctly.
Humphrey, Opperman and Preston, Bankruptcy Appellate Panel Judges

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