Practical Tips for (Discharge-Related) Piggyback Rides

[1]Creditors may attack a debtor’s discharge in two ways: by objecting to the debtor’s discharge in toto, or by objecting to the dischargeability of a particular debt.[2] Both require an adversary complaint.[3] An objecting party must file a § 727 or 523 complaint within 60 days after the first date set for the § 341 meeting.[4] Upon the motion of a party in interest before the deadline, the court may extend the deadline for cause.[5]

What happens when a party fails to file an extension motion, and later files a § 523 or 727 complaint? Parties in this position concocted a solution: Argue that they can utilize another party’s timely filed extension motion for their own complaint. This workaround is called “piggybacking.” Courts differ on their acceptance of piggybacking and on what factors matter. Below are practical tips[6] to both to defeat and embrace piggybacking.

• Know when not to use piggybacking. Piggybacking is unnecessary where the court makes a mistake in setting the discharge deadline or the creditor did not receive notice of the deadline.[7]
• The language of the extension motion and order is paramount. “[A]n extension granted ... would ordinarily benefit only the movant, but its scope and effect would depend on the terms of the extension.”[8] From this legislative history, courts constructed a rule: By default, an extension benefits only the movant, but specific language in the motion or order may merit an exception.
• Think carefully about the wording of your extension motion. If your goal is to allow piggybacking off your extension motion, include broad extension language such as “numerous interested parties.”[9] If your goal is to limit piggybacking, include limiting language such as “the requested extension relates solely to the claims held” by the movant.[10]
• Submit a proposed order.[11] If you want the extension order to apply to only your client, submit an order with limiting language;[12] if limiting language is present, courts will almost never allow piggybacking. Do the opposite if your goal is to allow piggybacking off your extension.[13]
• Use the correct terminology when requesting an extension. A § 727 complaint is a complaint “objecting to the debtor’s discharge”;[14] a § 523 complaint is a complaint “to obtain a determination of the dischargeability of any debt.”[15] When extending the deadline, citing the correct statute (and rule) and using the correct terminology will avoid confusion if piggybacking becomes an issue.[16]
• Know who you are piggybacking. Unless your piggybacking client has a close relationship to another creditor that timely extended its own deadline,[17] your best chance is to piggyback off the trustee’s extension. Courts disagree about the trustee’s standing,[18] but there is at least an argument that the trustee represents the interests of all creditors. However, because trustees cannot file § 523 complaints,[19] a court may reason that a trustee was representing your client’s interests under § 727 but not § 523.[20]
• Don’t argue excusable neglect. Under Rule 9006(b)(1), “excusable neglect” is the generic standard for extending a deadline after the fact. However, this general rule yields to the more specific extension rules found in Rules 4004 and 4007; in other words, excusable neglect does not apply.[21]
• If you miss the discharge deadline, file a motion to extend before filing a discharge-related complaint. This saves time and money: Wouldn’t you rather know before filing the complaint whether the court is going to dismiss it for untimeliness?[22]
• Cite some universal cause for extension. The standard for extension of the discharge deadline is “cause.” If you are trying to piggyback off a party who cited a universal cause that also applies to your client, say so;[23] in contrast, to preclude later piggybacking, cite a specific cause in your extension motion that applies only to your client.
• Make a due process argument. Courts are usually sympathetic to a debtor’s lack of due process notice of a specific creditor’s intent to extend the discharge deadline. If you represent a debtor and you had no notice that the piggybacking creditor wanted an extended deadline, make a due process argument;[24] on the piggybacking side, if you made it clear to the debtor that you wanted an extension, use the due process argument in support of piggybacking.[25]
• Have the trustee put it in writing. Even if the trustee agrees orally to extend the discharge deadline on behalf of your client, insist on specific language in the motion. Failure to incorporate such language may be fatal to a piggybacking creditor if the oral agreement was made without the debtor’s knowledge.[26]
• Move for a more definite statement or move to alter the order extending the deadline. Clarifying vague language in an extension motion may preclude later piggybacking attempts by non-movants (if you represent the debtor) or clarify that the extension covers your client (if you represent a piggybacking creditor).[27] Likewise, moving to clarify vague language in an extension order may alter later piggybacking attempts by providing arguments for or against piggybacking.[28]

Conclusion

All that being said, the safest option is to file a timely complaint, and the second safest option is to file your own timely extension motion if you are unprepared to file the complaint. Piggybacking, however, is potentially available when options number one and two are not.