IN RE HENRY, (Bankr.M.D.Pa. 2000)

ROBERT WOODSIDE, Chief Judge, Bankruptcy

The background for this Order is as follows. Debtor filed a Petition in Chapter 7 on May 4, 1999. Her Schedules, filed on Nay 20, 1999, showed no interest in any life insurance policies. On November 10, 1999, the Trustee moved to depose Debtor pursuant to Fed.R.Bank.P. 2004. After this Motion was granted, Debtor, through her attorney, provided information to the Trustee stating that she in fact had had an interest in two life insurance policies around the time of her bankruptcy filing. The first policy held a cash surrender value of $3,508.80. After she surrendered it pre petition, she used the proceeds to purchase a vehicle valued at $2,700.00. The second policy has a cash surrender value of $4,915.35. This policy has not been surrendered.

On December 10, 1999, she moved to amend her Schedule C to include this policy and to exempt it. The Trustee objected to the amendment on the grounds that Debtor omitted it from her original schedules "thereby attempting to conceal the asset",

Bankruptcy Rule 1009(a) states that "a voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed." The language of Rule 1009(a) closely tracks that of former Bankruptcy Rule 110, which provided debtors a similar right to amend their schedules. "Rule 110 has been adopted without substantive change as Rule 1009 of the new Federal Rules of Bankruptcy Procedure, effective August 1, 1983." Lucius v. McLemore, 741 F.2d 125, 126 127 (6th Cir. 1984). "Under the plain reading of Rule 110, a court ordinarily does not have discretion to deny leave to amend or to require a showing of good cause." Tignor v. Parkinson, 729 F.2d 977, 978 (4th Cir. 1984); Redmond v. Tuttle, 698 F.2d 414, 416 (10th Cir. 1983). Rule 110 was intended "to end the discretion exercised by the bankruptcy courts" in allowing or denying amendments to petitions. Matter of Gershenbaurri, 598 F.2d 779, 781 (3d Cir. 1979).

More recently, this interpretation of Rule 1009 has been modified by some courts.

While former Rule 110 was intended to delete the requirement that a debtor demonstrate `cause' to amend, and while present Rule 1009(a) incorporates Rule 110, it would be inexact to describe the debtor's right to amend under current Rule 1009(a) as `absolute.' Before the closing of the case the debtor may amend the exemption schedule to include property that had been omitted or improperly scheduled. The permissive approach to amendments has been construed to give courts no discretion to reject amendments unless the debtor acted in bad faith or concealed property, or the amendment would prejudice creditors.

In re Cudeyro, 213 B.R. 910, 916 (Bankr.E.D.Pa.1997); see also, In re Boyd, 243 B.R. 756, 765 (D.N.D.Ca. 2000) ("The widely-followed judge-made exception to this statutory rule is that a court may deny a debtor leave to amend if there is a showing of bad faith or prejudice to creditors.")

In the instant matter, the "matter of course" language of rule 1009 is compelling, and directs my ruling. Even applying the judge-made exceptions espoused by Cudeyro and Boyd, I find insufficient evidence of bad faith in the instant facts to warrant denial of the amendment. I find it wholly plausible that this unsophisticated Debtor, who works as a newspaper delivery person, could have simply forgotten about the existence of this policy in the flurry of paperwork prior to her filing. I find no corroborative evidence of bad faith to warrant denial of leave to amend.

Therefore, the Amendment is hereby PERMITTED, and the Objection is overruled.