Expert: Terry Leeders - 3/4/2008

Question
Our Chapter7 was discharged 1-04.  On the schedules we erroneously did not put on the Schedule a pending civil case which at the time was not doing good, so it wasn't mentioned. It was also filed 3 days after our own was destroyed in a flood. We gave no thought to the schedules.
At a mediation hearing in 5-07, the mediator being a former bankruptcy specialist, happened to bring up our Chapter 7 filing, was this civil case on the schedule.  We had forgotten at the time, but the mediator encouraged us to accept a settlement of $37,000 from the insurance company of the developer who flooded our home, and they would not notify the bankruptcy court.  We opted not to commit fraud, as he suggested, and ultimately we had to reopen the Chapter 7 through our bankruptcy attorney. The trustee took over our case, settled in court for $44,000, in 9-07, and we should have about $15,000 coming to us after our exemptions.  Question:  Isn't there a statute of limitations on reopening? Does Section 546 - Limitations have any affect on this?  None of our attorneys has brought up any statute of limitations.  By the way, we were not commiting fraud by the omission, it was neglect on both our bankruptcy attorney who was aware of our civil case when we filed, because I was acting Pro Se on my civil claim, not getting anywhere and I called him and asked him if he could represent us in the civil, or recommend anyone.  No attorney would take my case, until a couple days prior to filing a 7, I got an attorney.  He did not file an amended complaint until 3 months after our filing.  Thank you for your input.

Answer
You have to reopen the case, as it was an asset of the bankruptcy.  You may have exemptions available to protect it, depending on where you live and the amounts you are expecting.  The trustee will then step in to liquidate any unprotected portion, and you would get the exempt amount up front.  It is best you do this right away.