MEMORANDUM OPINION
Thе motion now under consideration is typical of many filed in this Court. The Debtor seeks to reopen her no-asset Chapter 7 bankruptcy case. The sole purpose for that reopening would be to allow the Debtor to amend her schedules to add the names of creditors who held claims against the Debtor before the bankruptcy case was filed. As is also typical, the Debtor alleges that the omission of these pre-petition creditors from the schedules was inadvertent and innocent. The Debtor believеs that reopening the case and amending the schedules is necessary to discharge these debts. The Debtor is wrong in that belief, and, because reopening the case to amend schedules would not affect the rights or liabilities of anyone, but would only be an exercise in futility, the motion will be denied.
The facts in this case are simple. The Debtor filed a petition for relief under Chapter 7 of the United States Bankruptcy Code on March 3, 1988. The schedules filed by the Debtor revealed no assets available for distribution to creditors. The Clerk of this Court, in accordance with applicable rules, 1 notified the creditors listed in the Debtor’s schedules of the date set for the meeting of creditors and the last day for the filing of complaints to determine the dischargeability of debts under 11 U.S.C. § 523(c) or objections to the discharge of the debtor. The Clerk’s notice also advised those creditors that (emphasis added):
It appears from the schedules of the Debtor that there are no assets from which any dividends can be paid to the creditors, it is unnecessary for any creditor to file his/her claim at this time in order to share in any distribution from the estate. If it subsequently appears that there are assets from which a dividend may be paid, creditors will be so notified and given an opportunity to file their claims.
The Court granted the Debtor her discharge, releasing her from pre-petition debts, on June 21, 1988. The trustee appointed in the case discovered no assets and filed a report so stating. The Court approved that report, discharged the trustee, cancelled the trustee’s bond, and the case was closed on November 15, 1988. 2
Thereafter, according to her motion, the Debtor learned of creditors who “were inadvertently omitted from the Schedules.”
The only authority for reopening a case is contained in Section 350(b) of the Bankruptcy Code, 11 U.S.C. § 350(b): “A case may be reopened in the Court in which such case was closed to administer assets, to accord relief to the Debtor, or for other cause.” There are no assets here to administer. Therefore the only grounds that might exist to reopen this case are “to accord relief to the Debtor, or for other cause.”
The Debtor believes that reopening this case will accord her relief. Specifically, the Debtor believes that reopening the case and amending the schedules will bring the debts she intends to list in those amended schedules within the scope of hеr discharge. She believes that otherwise those debts will not be discharged and the creditors will be able to sue her to collect their debts.
Certainly, the Debtor’s discharge is important relief, and many courts have assumed, as the Debtor does here, that debts that are not scheduled are not discharged. Those courts, based upon their assumption about the law of discharge, have allowed reopenings for the benefit of innocent, good faith Debtors.
See, e.g., Matter of Stark,
A few courts, however, have closely analyzed the language of the Bankruptcy Code and reached the conclusion, with which this Court agrees, that, “[t]he filing of an amended creditor schedule after discharge has been granted in a no-asset Chapter 7 case has absolutely no effect on the dis-chargeability of debt.”
In re Karamitsos,
In order to understand why a debtor does not benefit from the reopening of a closed no-asset case to permit the filing of amended schedules it is necessary to examine the scope of the bankruptcy discharge. Section 727(b) of the Bankruptcy Code, 11 U.S.C. § 727(b), defines the scope of a Chapter 7 debtor’s discharge. Under that section, the discharge “discharges the debt- or from all debts that arose before the date of the order for relief,” except as provided in Section 523.
The operative word is “all”. There is nothing in Section 727 about whether the debt is or is not scheduled. So far as that section is concerned, a pre-bankruptcy debt is discharged, whether or not it is scheduled. But, by the very terms of Section 727, the discharge is subject to the provisions of Section 523, so we need to look at Section 523 to see if that Section says anything about debts that are not scheduled.
Among the debts described in Section 523(a), and thereby excluded from the discharge, are (in very general terms, and omitting the exceptions, conditions and provisos) taxes (subsection (1)), alimony and child support (subsection (5)), fines or penalties (subsection (7)), educational loans (subsection (8)), judgments arising from drunk driving cases (subsection (9)) and debts that existed when the debtor filed a prior bankruptcy case but were for specified reasons not discharged in that prior case (subsection (10)).
There are three other general categories of debt that are not discharged according to Section 523(a), which require some special attention. These are a variety of intentional tort claims, described in sub-sections (2), (4) and (6) of Section 523(a). They include (again, in very general terms) claims arising from false pretenses, fraud or usе of false financial statements (subsection (2)); defalcation by a fiduciary, embezzlement or larceny (subsection (4)); and willful and malicious injury (subsection (6)). What is special about these intentional tort claims is that they will be discharged just like any other debt, unless the creditor files a complaint to determine their discharge-ability in the bankruptcy court (which has exclusive jurisdiction) within a strict time limit of 60 days after the first meeting of creditors. 11 U.S.C. § 523(c); Bankr.Rule 4007(c). These jurisdictional and time restrictions do not apply to debts described in any sub-sections of Section 523(a) other than (2), (4) and (6). The dischargeability of a debt for taxes or alimony, for example, can be litigated in the state court or the bankruptcy court at any time. See R. Ginsberg, Bankruptcy, ¶¶ 11,351, 11,352 (1988).
But the immediate question here is, Does any sub-section of Section 523(a) say anything about scheduling debts? Section 523(a)(3) does talk about debts “neither listed nor scheduled.” That is certainly the relevant section, but it requires closer examination. 4
Section 523(a)(3) has two sub-parts, (A) and (B). Sub-part (A) deals with debts that are not the result of the intentional torts (fraud, larceny, wilful and malicious injury, etc.) that are described in subsections (2), (4), and (6). That is, a debt that is not a “(2), (4), or (6)” debt is covered by sub-part (A). This would include debts that are not excepted from discharge by any other subsection of Section 523, and it would also include debts that are excluded from the debtor’s discharge by subsections (1), (5), (7), (8), (9) and (10). That is the scope of sub-part (A).
Assuming that we are dealing with debts that fall within the scope of sub-part (A), a debt must satisfy these conditions in order to fall within that exception to the debtor’s otherwise all-inclusive discharge. The debt was “neither listed nоr scheduled ... in time to permit ... timely filing of a proof of claim, unless [the creditor knew about the case] in time for such timely filing....” 11 U.S.C. § 523(a)(3)(A) (emphasis added).
It is not enough, therefore, that the claim was not listed or scheduled. The key to understanding this subsection is the phrase “timely filing of a proof of claim.”
This subsection protects only the creditor’s right to file a proof of claim, nothing else.
Stark,
As Congress anticipated (see footnote # 5), the rulemakers did specify the time for filing claims, with appropriate exceptions for no-asset cases, in which filing a claim is useless. The basic rule in a Chapter 7 case is that a “proof of claim shall be filed within 90 days after the first date set for the meeting of crеditors_” Bankr. Rule 3002(c). But the general 90 day rule is subject to an exception that, “If notice of insufficient assets to pay a dividend was given to creditors pursuant to Rule 2002(e), and subsequently the trustee notifies the court that payment of a dividend appears possible, the clerk shall notify the creditors of that fact and that they may file proofs of claim within 90 days after mailing of the notice.” Bankr. Rule 3002(c)(5). Rule 2002(e) provides:
In a chapter 7 liquidation case, if it appears from the schedules that there are no-assets from which а dividend can be paid, the notice of the meeting of creditors may include a statement to that effect; that it is unnecessary to file claims; and that if sufficient assets become available for the payment of a dividend, further notice will be given for the filing of claims.
This is the notice that was given to scheduled creditors here. Since no assets were ever discovered, no “further notice” was ever given. This 2002(e) notice, therefore, (saying “it is unnecessary to file claims”) is the only notice about filing proofs of claim that unsсheduled creditors missed.
Reading these rules together, there is no time limit on the filing of proofs of claim in no-asset Chapter 7 cases. “[I]n a no-asset Chapter 7 case, there is never a claim filing period.”
Karamitsos,
Since Section 523(a)(3)(A) does not apply, the debts the Debtor seeks to add to the schedules are already discharged, even though they were not listed or scheduled, unless those debts fall within one of the other exceptions to discharge (such as, for example, the exceptions for taxes or child support). But if the debts do fall within one of those other еxceptions, scheduling them will not change that fact. The Debt- or cannot change the nature of a debt merely by listing it on a piece of paper.
Similarly, the application of sub-part (B) of Section 523(a)(3) is not affected, one way or the other, by reopening a closed case to permit amendment to the schedules of creditors. That sub-part deals with debts of the type described in subsections (2), (4), and (6) of Section 523(a). That is, the scope of sub-part (B) is limited to the intentional tort debts described in subsections (2), (4), and (6). As noted, those exceptions to dis
In the achievement of that purpose, sub-part (B) is applicable only where a debt of the type described in subsections (2), (4) or (6) was neither listed nor scheduled in time to permit the filing of a proof of claim or the filing of a complaint to determine dis-chargeability, and the creditor did not know about the case within that time. So sub-part (B) protects two rights: the right to file a proof of claim and the right to obtain a determination of the dischargeability of a debt in those instances where that right might otherwise be lost by reason of the passage of time.
See, Padilla,
Again, however, scheduling makes no difference to the outcome. “Reopening a case to list a creditor does not extend the time to file complaints to determine dis-chargeability. Either the creditor had actual, timely notice of the [case] or he didn’t. Amending the schedules will not change that.”
Karamitsos,
Reopening this ease, therefore, will not accord the Debtor the relief she seeks. Scheduling the debts she wants to schedule will not affect whether or not those debts are discharged. Under Section 727(b), her discharge applies to all pre-petition debts except those that fall within one of the subsections of Section 523(a). Since scheduling a debt does not change the nature of a debt, and since Section 523(a)(3)(A) is inapplicable in a no-asset case, allowing this motion will not convert any non-dis-chargeable debt into a dischargeable debt.
There are cases, however, that support the granting of this motion, and they must be dealt with. Most important to this Court is the line of authority that begins with the Seventh Circuit’s opinion in
Stark.
It is certainly true that
Stark
holds that, “In a no-asset bankruptcy where notice has been given pursuant to 203(b) [the predecessor to Rule 2000(e)], a debtor may reopen the estate to add an omitted creditor where there is no evidence of fraud or intentional design.”
It is therefore clear that the holding in
Stark
is that a debtor should be allowed to reopen his or her case, in thе absence of fraud or intentional design, in order to obtain the benefits of the debtor’s bankruptcy discharge. The Court in
Stark
did not address or decide the question of whether reopening
was
necessary to obtain that benefit, but only assumed that it was. The Seventh Circuit itself recently held that, “A point of law merely assumed in an opinion, not discussed, is not authoritative.”
Matter of Stegall,
There is, however, at least one decision that expressly reaches a conclusion different than this Court’s, even after consideration of the language of the relevant Code provisions. In
In re Godley,
Thus, although Congress in Section 523(a)(3) dealt only with the effect of a debtor’s conduct, the
Godley
court reads into that provision, for policy reasons, a special exception based on the debtor’s intent. The fundamental problem with the
Godley
court’s approach, of course, is that it is for the legislative branch, and not the courts, to make such policy choices and to define exceptions to the debtor’s discharge. And the clear language of Section 523(a)(3) is not an aberration, but represents a Congressional policy choice. Congress could have excepted from the debtor’s discharge debts that were omitted, intentionally or otherwise, from the schedules. Congress might simply have continued pre-Code law, which was much stricter than the present § 523(a)(3) in that it excluded a debt from discharge “if the objecting сreditor did not have either actual or constructive knowledge of the bankruptcy petition in time to
Moreover, even as a policy matter, the Godley court’s concern, while valid, is inappropriately dealt with in the context of thе dischargeability of a single debt under Section 523. As Godley itself acknowledges, a creditor omitted from the schedules (whether intentionally or not) in a no-asset case has not been harmed. Yet under Godley, a creditor lucky enough to have been intentionally omitted from the schedules gets the windfall of an exception from discharge not available to other creditors.
The policy problem with
Godley’s
analysis is that it applies an inappropriate remedy to the wrong committed by a debtor who intentionally falsifies schedules. That wrong is not merely directed аgainst a single creditor, but against all creditors, as well as the court and the process of bankruptcy administration. That sort of a problem is not dealt with by Congress or, usually» by the courts within the framework of Section 523 exclusions of particular debts from the scope of the discharge. Rather, it is dealt with in the context of Section 727, which describes both the discharge and the circumstances under which that discharge can be entirely denied or revoked because of the debtor’s misconduct. A debtor who has obtained his discharge on the basis of false schedules should be required to explain why that discharge should not be revoked under 11 U.S.C. § 727(d) on the ground that it was obtained through fraud.
See Barrett,
Finally, although this opinion disposes of the present motion, it is possible the parties will continue to have a dispute concerning the dischargeability of one or more of the debts listed in the Debtor’s motion. There are three ways to litigate dischargeability after a case is closed. First, if a creditor pursues a lawsuit on the claim, the debtor can assert the bankruptcy discharge as an affirmative defense and the court with jurisdiction over that lawsuit can decide whether the debt falls within any of the exceptions to discharge. Second, under Bankruptcy Rule 4007(b) either the Debtor or the creditor can move to reopen this case for the purpose of filing a complaint to determine dischargeability. Third, the Debtor can bring an action in this Court to enforce the discharge injunction against a creditor attempting to collect discharged claims, which is contained in 11 U.S.C. § 524(a). The virtue of any оf these procedures, as opposed to a motion to reopen to amend schedules, is that it will focus on the real dispute (if there is a real dispute) between the parties — the dischargeability of the debt.
For the foregoing reasons, an Order will be entered denying the Debtor’s motion to reopen this case.
Notes
. See Bankr.Rules 2002(a), (e); 4007(c).
. 11 U.S.C. § 350(a) provides that, "After an estate is fully administered and the court has discharged the trustee, the court shall close the case.”
. Padilla recognized a limited exception to this general rule. The issue to which that exception pertains is discussed in footnote 6, below.
. Section 523(a)(3) provides:
A discharge under section 727 ... does not discharge an individual debtor from any debt—
(3) neither listed nor scheduled under section 521(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit—
(A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; or
(B) if such debt is of a kind specified in paragraph (2), (4), or (6) оf this subsection, timely filing of a proof of claim and timely request for a determination of dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request.
. Congress recognized that a proof of claim would be unnecessary in a no-asset case. It permitted, in 11 U.S.C. § 501, the filing of proofs of claims “in a liquidation case where there will be a distribution of assets to the holders of allowed claims. In other instances, such as in no-asset liquidation cases ... filing of a proof of claim may simply not be necessary. The Rules of Bankruptcy Procedure and practice under the law will guide creditors as to when filing is necessary and when it may be dispensed with.” H.R.Rep. No. 95-595 95th Cong. 1st Sess. 351 (1977); S.Rep. 95-989, 95th Cong., 2nd Sess. 61 (1978), U.S.Code Cong. & Admin.News 1978, pp. 5787, 5847, 6307 (legislative history to Section 501 of the Bankruptcy Code, which governs the filing of proofs of claims).
. Although this court generally agrees with the analysis in Padilla, it disagrees with that court’s conclusion that dischargeability under Section 523(a)(3)(B) must be determined by the bankruptcy court. Padilla reaches that conclusion because Section 523(c) requires that the Bankruptcy Court, and no other Court, determine dischargeability under subsections (2), (4), and (6). That is certainly the general rule of exclusive jurisdiction over subsections (2), (4) or (6) matters. But Section 523(c), by its own terms, does not apply to Section 523(a)(3)(B) claims. Therefore, the exclusive jurisdiction provisions of Section 523(c) are not applicable to the issue of dischargeability under Section 523(a)(3)(B). The time limitation of Bankruptcy Rule 4007(c) is also inapplicable, since that Rule applies only to complaints under Section 523(c), not to complaints under Section 523(a)(3)(B). In effect, a debtor who failed to list a creditor loses the jurisdictional and time-limit protections of Sections 523(c) and Rule 4007(b) with respect to that creditor.
.
Stark
has been followed in many other cases in which the discharge issue was similarly not addressed, but merely assumed.
See, e.g., In re Rosinski,
. Godley does suggest this course of action, but then rejects it on the theory that a creditor might not learn about the case until the time to file a complaint to revoke the discharge had passed. Even without considering the possibility of tolling that time period, that hypothetical situation, which will seldom arise in reality, is little reason to disregard the plain meaning of the Bankruptcy Code.