Bankruptcy Debtors Cannot Intentionally Delay Important Petition Amendments

The bankruptcy rules provide that a debtor may amend his bankruptcy schedules at any time prior to the case being closed. The debtor can file amendments which claim additional exemptions or new theories of exemption even when property was not claimed as exempt on the debtor’s initial schedules. 
There are, however, some limits on the debtor’s ability to make amendments. A creditor or trustee may object to an amendment which is made in bad faith or which prejudices the creditors. Of course, any amendment which increases the debtor’s exemptions will prejudice creditor recovery, but that is not what the rule refers to. An amendment may be in bad faith or prejudicial if the delay is purposeful or of the delay causes the trustee and creditors to spend significant time and money pursuing issues which are eliminated by the late amendment. 

A debtor should not be permitted to hold an amendment “in his pocket” while watching other parties spend their resources litigating issues or pursuing assets which the debtor knows will be made moot by the planned amendment. In such cases, the administrative expenses incurred by the trustee and others will be wasted and will reduce the money available for distribution out of estate assets. This type of delay in amendments, whether intentional or negligent, is prejudicial and will usually be denied.