Bankruptcy Motion to Limit Notice

by Heather Frances J.D. Google
Bankruptcy courts can limit your burden to provide notice to all creditors.

Bankruptcy courts can limit your burden to provide notice to all creditors.

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Bankruptcy procedures are designed to help you get relief from a crushing load of debt, but are also designed to ensure your creditors stay informed about what is happening in your case by requiring you to give certain notices. You may be able to limit the number of notices you are required to deliver by asking the court for permission to curtail, or limit, the notice requirements because of the burden they may cause.

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Who Gets Notice

American courts typically do not operate in secret, so the Federal Rules of Bankruptcy Procedure require you to notify your creditors and other interested parties at certain stages of your bankruptcy case. For example, Rule 2002 requires the clerk of your bankruptcy court to give notices to certain “parties in interest,” the individuals or organizations that have some stake in the outcome of your bankruptcy proceedings. These parties in interest typically include you, your court-appointed trustee and all of your creditors. The rules also provide notice deadlines to ensure your creditors receive notice with enough time to respond, if necessary.

When Notices Are Required

Notices aren't required at every step of your bankruptcy case, but parties in interest are entitled to notice during certain key steps. For example, the bankruptcy court in your case can approve a compromise settlement or arbitration of certain claims -- but only after proper notice is given. Notices are also required for 341 meetings, also known as the "meeting of creditors," proposed sales of property that are part of your bankruptcy estate and dismissal of your case. The notice provided for the 341 meeting must include your social security number to ensure your creditors can properly respond.

Motion to Limit Notice

You may file a motion to limit notices, or limit the scope of a required notice, for various reasons; it’s up to the court to decide whether to grant permission to do so. For example, if you file a motion for approval of a settlement, notice is typically required to be sent to all your creditors. But the list of creditors can be extremely long and sending notice to every one may be expensive and burdensome. In such a case, the court may permit you to limit your notices to a smaller group of creditors or to the representatives for a group of creditors.

Shortening the Notice Period

You can also ask the court to limit the time period required for notice if it would be appropriate to expedite your case. For example, courts can allow limited notice periods for creditors when a non-bankrupt company wants to purchase the company that filed for bankruptcy but won’t do so until the bankruptcy issues are decided. As long as the rights of the creditors are appropriately protected, the court has authority to limit the length of time required for proper notice.