In re: Heck, No. 09-31512 TEC (Bankr. N.D. Calif., January 13, 2011).
Although a bankruptcy case may be reopened for cause, debtors Timothy and Varda Heck were recently denied a reopening of their case for failure to show good cause to the court.
The debtors filed a petition for Chapter 7 bankruptcy in 2009, intending to surrender their properties and discharge further obligations. However, the properties were never discharged, and the debtors remained in possession of the properties.
The next year, a homeowners association and their mortgage lender attempted to compel payment for past debts owed to them by the debtors. In response, the debtors filed a motion to reopen their bankruptcy case, arguing that the creditors are violating the court-entered discharge injunction.
However, the court held that a discharge in Chapter 7 does not discharge a debtor with a legal interest in the property subject to the debt. Thus, while the debtors intended to surrender their properties, they never did, and that property is still legally theirs, as are the debts associated with it.
The court further noted the importance of a qualified attorney in such proceedings. If they had an attorney, the debtors would have known they had no recourse in reopening their bankruptcy case. They would have avoided spending the time and money on wasted litigation.
