Unscheduled Bankruptcy Debt and Actual Knowledge of Bankruptcy by Creditor

11 U.S.C.S. § 523(a)(3)(B) contains an exception to discharge in bankruptcy for debts specified in § 523(a)(2), (4), or (6) that are neither listed nor scheduled in time to permit 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. § 523(a)(3)(B).  

Four factors are determined in an 11 U.S.C.S. § 523(a)(3)(B) analysis of dischargeability of debt in bankruptcy. Is the debt of a kind described in § 523(a)(2), (4), or (6)? Was the debt listed or scheduled under 11 U.S.C.S. § 521(1) with the name of the plaintiff; Did the plaintiff have actual knowledge of the case in time to file an adversary proceeding in the bankruptcy court under § 523(a)(2), (4), or (6)? Does the plaintiff’s case have merit?  

Unlike many other exceptions to dischargeability of a debt in bankruptcy listed in 11 U.S.C.S. § 523(a), the exception for fraud and defalcation is not self-effectuating. Pursuant to Fed. R. Bankr. P. 4007(c), creditors holding § 523(a)(4) claims must file a complaint to determine dischargeability no later than 60 days after the first date set for the meeting of creditors. If the creditor fails to timely file a complaint the debt is discharged. 11 U.S.C.S. § 523(c)(1).

Goldstein v. Diamond (In re Diamond), 2015 Bankr. LEXIS 1587