Case No. 95-11275-AMUnited States Bankruptcy Court, E.D. Virginia
April 3, 1995
MEMORANDUM OPINION AND ORDER
STEPHEN MITCHELL, Bankruptcy Judge
Before the Court is the debtor’s request for an expedited hearing on a motion, filed April 3, 1995, to set aside a preference.
The debtor, Patricia Lavelle Chatman, filed a voluntary petition under chapter 7 of the Bankruptcy Code in this Court on March 28, 1995. She was previously a debtor, together with her then-husband (from whom she has apparently subsequently been divorced), James W. Chatman, in a prior chapter 11 case filed in this Court on July 31, 1991. An order was entered on June 30, 1992 converting the case to chapter 7. The debtor and her husband received a discharge on October 21, 1992. However, on January 7, 1994, the trustee filed a complaint to revoke the debtors’ discharg (Bartl v. Chatman, A.P. No. 94-01005-A). No answer was ever filed, but the pretrial conference was continued a number of times as the trustee attempted to resolve the matter with Mr. Chatman. Ultimately, no resolution was reached, and the trustee moved for default judgment. On February 6, 1995, an order was entered in the adversary proceeding revoking the discharge of both debtors. A corresponding order was entered in the main case on February 1, 1995 which ordered “that the discharge heretofore entered in favor of the debtors be and it hereby is, revoked, and that the
Page 2
Bankruptcy Petition of James and Patricia Chatman be, and it hereby is, dismissed.” Notice was given to creditors of the revocation of discharge and dismissal of the case and orders were entered closing the main case and the adversary proceeding.
The debtor’s motion alleges that the prior case
was dismissed, without prejudice, on or about February 22, 1995, due to Husband’s failure to turn over certain stock owned by him solely to the Court as ordered. Plaintiff herein did not know of the Order, did not have any interest in the stock, and did not know of the dismissal due to the divorce until she began receiving calls from creditors empowered by the dismissal to renew collection efforts.
The motion further alleges that the respondent, Michael J. Byorick, apparently a creditor of the debtor, garnisheed the debtor’s bank account and her employer the day prior to her chapter 7 filing, and she alleges that such garnishment constitutes a preference which she is entitled to avoid under Section 522(h) of the Bankruptcy Code. The motion does not state the return date of the garnishment or the amount of the debt.
As an initial matter, it is something of an overstatement to assert, as the debtor does, that the prior case was dismissed “without prejudice.” The prior case resulted in the revocation of the debtor’s discharge, and while such revocation does not in and of itself bar a subsequent bankruptcy filing, under Section 523(a)(10) any debt “that was or could have been listed or scheduled by the debtor” in a prior case as to which discharge was denied is nondischargeable in a subsequent chapter 7 case. (The Court need not determine, in the present context, to what extent the debtor might obtain relief under chapter 13.)
Additionally, as a procedural matter, where the debtor attempts to step into the trustee’s shoes under Section 522(h), the action must be brought as an adversary proceeding, not a contested matter.
Page 3
Under F.R.Bankr.P. 7001, an adversary proceeding includes all proceedings “to recover money or property” or “to determine the validity, priority, or extent of a lien or other interest in property,” with certain stated exceptions. One of the exceptions is a debtor’s motion under Section 522(f) and F.R.Bankr.P. 4003(d) to avoid a lien impairing an exemption, which is explicitly authorized to be brought as a contested matter rather than an adversary proceeding. No similar exception applies to proceedings under Section 522(h). In addition, it must be shown, as a condition of relief under Section 522(h), that the debtor would be entitled to exempt the funds had the trustee pursued the recovery and that the trustee has not attempted to avoid the transfer, neither of which is alleged in the debtor’s motion.
From a reading of the grounds alleged in support of the debtor’s motion, it appears that she may-an issue the Court expressly does not decide-have some basis under F.R.Bankr.P. 9024 and Fed.R.Civ.P. 60(b) for relief from the orders entered in the prior adversary proceeding and the main case revoking her discharge. In any event, those orders cannot be attacked in the current case, and the debtor would have to file both a motion to reopen her previous case and a motion for relief from the orders revoking her discharge and dismissing her case. If the debtor were successful and her discharge in effect reinstated, she could plead the discharge as a bar to any action to enforce a liability discharged in the prior case.
With respect to the present motion, it does not appear that the debtor can prevail without at the least addressing the substantive and procedural problems noted above. Additionally, in any event, the automatic stay applies in the present case, even as to debts that may be nondischargeable because of the revocation of the debtor’s discharge in the prior case, so as to bar enforcement of the garnishment against the debtor’s bank account or pay. Since the automatic stay is sufficient to maintain the status
Page 4
quo, and since the debtor must first resolve how, in a procedural sense, she intends to proceed, there does not appear to the court to be good cause for ordering an expedited hearing, and the request for expedited hearing is DENIED, without prejudice to the debtor’s right to notice a hearing on a regular motions day, to file an appropriate adversary complaint in her current case, or to file appropriate motions in her prior chapter 7 case and adversary proceeding for relief from the order revoking her discharge.