Explanation of Amended Discharge Orders Being Entered by US Bankruptcy Court SDNY

Since the end of August 2017 through today we have been receiving electronic notice from the U.S. Bankruptcy Court for the Southern District of New York (SDNY Bankruptcy Court) of the filing of Amended Discharge of Debtor Order of Final Decree  in our clients’ previously closed (and successful) chapter 7 personal cases.  To date we have received hundreds of these notices from the Court in cases going as far back as 2006.  The Court has mailed out copies to the debtors (our clients) as well as the service list in each case.  Some of our bankruptcy attorney colleagues have reported they are experiencing the same thing.

We are starting to receive calls and emails from concerned clients wondering what this is all about.  The SDNY Bankruptcy Court has not posted any information about this on its website.  For that reason I decided to make this post to address this issue for the benefit of our clients and public at large.  I have attached a redacted copy of the Amended Discharge of Debtor Order of Final Decree with the case specific information redacted: Amended Discharge of Debtor Order of Final Decree.

For all the hundreds of clients that Starr & Starr, PLLC has successfully represented in personal bankruptcy cases over the years, please be aware that you have nothing to worry about.  You may view this as a technical correction that the SDNY Bankruptcy Court is doing.  It does not change any of the advice we previously provided our clients.   For more information continue reading below.

The Amended Discharge Orders all say the same thing as follows:

It has been brought to the Court’s attention that the Discharge of Debtor Order of Final Decree entered in this case on January 15, 2010 was not in compliance with The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 due to a clerical error; and the Debtor having been required to comply with the Bankruptcy Code in effect at the time the discharge order was entered, see Commissioner of Administrative Services v. Spell (In re Spell), 650 F.2d 375, 377 (2d Cir. 1981); it is hereby 

                 ORDERED that pursuant to the power of this Court under 11 U.S.C. § 105(a) and Rule 60(a), which states that “[t]he court may correct a clerical mistake or mistake arising from  an oversight or omission whenever one is found in a judgment, order, or other part of the record. The court may do so on motion or on its own, with or without notice;” and is made applicable to bankruptcy cases under Federal Rule of Bankruptcy Procedure 9024, the order entered by the Court on January 15, 2010 is amended nunc pro tunc [means retroactively] to comply with the Bankruptcy Code in effect at the time the discharge order was entered

This is something the SDNY Bankruptcy Court is apparently doing sua sponte (i.e., of its own accord) in all of the personal bankruptcy cases in which discharge orders (i.e., orders wiping out debts at the conclusion of the case) were entered after the effective date of a 2005 amendment to the Bankruptcy Code known as The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCA).

The reason for this is to clarify that the Discharge Orders that were previously entered after BAPCA’s effective date (which was of 4/20/05 for certain provisions and for other provisions later in 2005) were Discharge Orders that were entered based on the law then in effect which was BAPCA.

For that reason the last sentence of the Amended Discharge of Debtor Order of Final Decree reads: “the order entered by the Court on [date] is amended nunc pro tunc [i.e., retroactively] to comply with the Bankruptcy Code in effect at the time the discharge order was entered.

The case referred to in the Amended Discharge Order of Commissioner of Administrative Services v. Spell (In re Spell),  650 F.2d 375, 377 (2d Cir. 1981) involved the following issue on appeal: “whether the dischargeability of Spell’s debt to the State should be determined by the law in effect on August 9, 1978, when Spell was discharged in bankruptcy, or by the law in effect on March 4, 1980, when the bankruptcy judge ruled on the Commissioner’s complaint to determine dischargeability of the debt.” The Second Circuit held that the law in effect at time of discharge should control and reversed the District Court.

If personal bankruptcy is an option you would like to learn more about please contact us at 888-867-8165 or completing the “Contact Us” form above to schedule a free initial consultation.