Without Excusable Neglect, Debtors May Claim Exemption in Reopened Cases

Reversing bankruptcy courts, the Tenth Circuit Bankruptcy Appellate Panel held that a debtor can reopen a closed case to schedule assets and claim exemptions without showing excusable neglect. Two cases on appeal presented the same fact pattern. The chapter 7 debtors sustained personal injuries before bankruptcy. They did not schedule the personal injury claims. The debtors received their discharges, and their cases were closed. On motions by the debtors, the bankruptcy judges reopened the cases and allowed the debtors to schedule the claims. However, the bankruptcy courts denied the exemptions because the debtors did not show excusable neglect in failing to amend the schedules before the cases were originally closed. The debtors appealed and won, in an opinion for the BAP on February 5 by Bankruptcy Judge Michael E. Romero, Colorado’s chief bankruptcy judge.

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