In Re Madaj

149 F.3d 467 (1998)

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Nature of the Case

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Facts

Ds, husband, and wife, loaned a substantial amount of money to P, their foster child. P promised to repay the loan within a few months out of anticipated insurance proceeds from a fire loss. Instead of repaying the loan, P filed Chapter 7 but failed to include D in the list of creditors filed with the petition. P eventually obtained a discharge pursuant to 11 U.S.C. § 727, and their case was closed. D, unaware of the bankruptcy proceeding after begging for the money back filed suit in state court and obtained a judgment against P for the unpaid balance of the loan. P moved to reopen their Chapter 7 proceeding. D objected to the motion claiming that in light of their repeated requests for payment and P's protests of poverty, P's memory lapse was not credible and that P had failed to list the debt because they intended to defraud the Creditors. D opposed the reopening of the Chapter 7 proceeding because they believed, and still believe, that an unlisted debt is not discharged and that P ought not be permitted to now list this debt and obtain its discharge. If the debt had been timely scheduled, it would have been dischargeable under 11 U.S.C. § 523, and that even if the debt had been listed and a proof of claim had been filed, because this was a no-asset case, there would have been no payment on the debt. The Court denied the Ps' motion to reopen and held that the debt to D was discharged. The District Court affirmed. Ds' appealed.