Melissa A Martin

UNITED STATES BANKRUPTCY COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
In Re: 	: 	Case No. 5:24-bk-01277-MJC
:
Melissa Martin, 	: 	Chapter 13
:
Debtor. 	:
:
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:
Freedom Mortgage Corporation, 	:
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Objector, 	:
:
v. 	:
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Melissa Martin, 	:
:
Respondent. 	:
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OPINION
Presently before the Court is Freedom Mortgage Corporation’s (“Freedom”) Objection to
Debtor’s Third Amendment to Schedule A/B (“Objection”) on the grounds that Debtor’s Third
Amendment to her schedules (“Third Amendment”) was filed in bad faith, is prejudicial to
creditors and the Chapter 13 Trustee, and that the Amendment is barred by judicial estoppel.
Melissa 	Martin 	(“Debtor”) 	responded 	to 	the 	Objection 	to 	Debtor’s 	Third 	Amendment
(“Objection”) and argues that Freedom does not have standing to object to the Third Amendment
and even if Freedom had standing to object, the Third Amendment is permissible and should not
be barred by judicial estoppel.
For the reasons stated below, the Court finds that Freedom has standing to object but
overrules it’s Objection to the Third Amendment.
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I. 	PROCEDURAL POSTURE
All parties are familiar with the procedural history relating to this bankruptcy case and it
requires no review herein. 	On January 30, 2025, Debtor filed an Amendment to Schedule A/B
(“First Amendment”), which disclosed a claim against Freedom for alleged violations of RESPA,
TILA, and Regulation Z arising out of the bankruptcy servicing of the Debtor’s mortgage on her
residence. Doc. 32. On February 14, 2025, Debtor filed a Motion to Order Trustee to Abandon
Property (“Motion to Abandon”) regarding the claims against Freedom. Doc. 33. The motion was
unopposed and an Order Granting the Motion to Abandon was entered on March 6, 2026. Doc.
34.
On 	June 	18, 	2025, 	Debtor 	filed 	another 	Amendment 	to 	Schedule 	A/B 	(“Second
Amendment”). Doc. 38. On July 29, 2025, Debtor filed a Motion to Confirm Property is
Abandoned with respect to the claims identified in the First and Second Amendments (“Motion to
Confirm”). Doc. 43. Freedom objected to the Motion to Confirm. Doc. 47. A hearing was held
on September 4, 2025 and the Court denied the Motion to Confirm. Doc. 53. Also on September
4, 2025, Debtor filed the Third Amendment. Doc. 51. On October 2, 2025, Freedom objected to
the Third Amendment. Doc. 54. Debtor filed two briefs responding to Freedom’s Objection. Docs.
58, 59. A hearing was held on November 4, 2025. The parties filed post-hearing briefs. Docs. 62,
64. This matter is now ripe for disposition.
II. 	JURISDICTION
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§157 and 1334 and the
Standing Order of Reference of the U.S. District Court for the Middle District of Pennsylvania
dated March 11, 2016. The pending matter is a core proceeding pursuant to 28 U.S.C.
§§157(b)(2)(A). Venue is proper pursuant to 28 U.S.C. §1409(a).
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III. 	FACTS 1
Debtor filed the instant Chapter 13 bankruptcy case on May 23, 2024. Doc. 1. The Debtor
was in arrears on her mortgage payments to Freedom and wished to retain her residence. Doc. 64,
p. 3. Debtor filed a Chapter 13 plan proposing to cure the mortgage arrears. Doc. 5. 	While the
original Chapter 13 plan was not confirmed, Debtor was able to confirm the Second Amended
Chapter 13 plan on September 20, 2024. Doc. 24, 27.
On July 29, 2024, Freedom filed Proof of Claim No. 15 (“Claim”) indicating it is a secured
creditor having a mortgage lien against Debtor’s residence. The claim indicated a balance due of
$88,044.68, which included arrears of $17,663.56. On October 21, 2024, Freedom filed a Notice
of Post-Petition Fees, Expenses, and Charges Under Rule 3002.1 (“PPFN”). Claims Register, Doc.
15-1-doc. Per the PPFN, Debtor was charged $400.00 to review the original Chapter 13 plan and
an additional $800.00 for preparation of the Claim. Id. Upon receipt of the PPFN, Debtor sent a
letter to Freedom requesting the time records to justify the fees under the Real Estate Settlement
Procedures Act (“RESPA”) and has alleged that such letter constituted a qualified written request
(“First QWR”) under 12 U.S.C. §2605(e)(1)(B). 	Doc. 64, p. 4. 	In addition to the First QWR
regarding the fees, Debtor also requested a payoff statement pursuant to the Truth in Lending Act
(“TILA”) under 15 U.S.C. §1639g (“TILA Letter”). Id at 5. Debtor contends that Freedom failed
to timely provide the requested information.2 Id.
On January 30, 2025, Debtor filed the First Amendment to add a post-petition claim
rising out of the First QWR and TILA letter. Doc. 32, Doc. 64, Exh. G. The First Amendment
stated as follows:
1 This Memorandum constitutes findings of fact and conclusions of law made under Fed. R. Bankr. P. 7052,
which is made applicable to this proceeding under Fed. R. Bankr. P. 9014.
2 Freedom disputes that it failed to properly respond to these requests. Audio of November 4, 2025 Hearing
at 11:31 a.m.
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ADD Claims against Freedom Mortgage Corporation and PS Bank
for violations of RESPA, TILA, and Regulation Z. 	Debtor could
recover statutory damages of up to $6,000.00, plus costs and
attorney’s fees.
Doc. 32. Following the First Amendment, Debtor filed the Motion to Abandon on February 14,
2025. Doc. 33. The Motion to Abandon stated that the Claim added to Schedule B by the First
Amendment was of “inconsequential value” and that Debtor “does not” assert that she has a claim
for any actual damages. Doc. 33, p. 1 (emphasis in original). 	There were no objections to the
Motion to Abandon and the Court entered an Order Granting the Motion to Abandon (“Order”).
The Order states specifically that “[t]he Chapter 13 Trustee is deemed to have abandoned the
claims against Freedom Mortgage Corporation and PS Bank that are identified on the Amended
Schedules A/B filed to Dkt. Entry 32.” Doc. 34 (emphasis added).
On March 25, 2025, Debtor filed a state court action, Melissa Martin v. Freedom Mortgage
Corporation, Case No. 25-cv-4073 (“Companion Case”), arising out of the claims in the First
Amendment and abandoned by the Trustee. Doc. 64, p. 13, Exh. G.3
Debtor’s Second Amendment was filed on June 18, 2025 and amends Schedule B as
follows:
ADD Additional claims arising after previous amendment filed to
Dkt. Entry 32 on January 30, 2025; Claims against Freedom
Mortgage Corporation and PS Bank for violations of RESPA, TILA,
and Regulation Z. Debtor could recover statutory damages of up to
$6,000.00, plus costs and attorney’s fees.
Doc. 38 (emphasis added). This Amendment notes that this relates to “additional claims arising
after previous amendment.” Id. Debtor represents that this claim arises out of Freedom’s failure
3 The Companion Case was later removed to the District Court for the Middle District of Pennsylvania at
Case No. 3:25-cv-01254-MEM (“District Court Action”) on July 10, 2025. Doc. 47, p. 2. The case has
since been remanded back to State Court by Order of Judge Mannion entered on September 5, 2025. District
Court Action, Doc. 20.
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to respond to an alleged qualified written request dated March 20, 2025 (“Second QWR”). Doc.
64, p. 13. Exh. H.
On July 29, 2025, Debtor filed the Motion to Confirm. Doc. 43. The Motion sought to
correct the claim as listed on the First Amendment. Id. Debtor claimed that the “description was
imprecise and failed to consider the distinction between two types of attorney’s fees.” 	Id. ¶ 3.
The Debtor goes on to explain that “defensive fees” are more properly characterized as “actual
damages” and that the description in the First Amendment would suggest that the Debtor has no
cause of action for the “defensive fees.” Id. at ¶ 3-5. Freedom objected to the Motion to Confirm.
Doc. 47. 	Freedom contended that the attempt by Debtor to recharacterize the claim to include
“actual damages” after specifically representing to the Court that no “actual damages” were sought
by Debtor was solely to overcome the Motion to Dismiss filed in the Companion Case. Id. at p.
2. 	Debtor claimed that Freedom lacked standing to object to the Motion to Confirm and that
Debtor had not acted in bad faith and was merely clarifying the record. Docs. 58, 59. A hearing
was held on September 4, 2025 and the Motion to Confirm was denied without prejudice.4
Immediately preceding the hearing held on September 4, 2025, Debtor filed the Third
Amendment changing the Second Amendment as follows:
AMEND: This is an amendment to the asset disclosed in Dkt. Entry
38; Additional claims arising after previous amendment filed to Dkt.
Entry 32 on January 30, 2025; Claims against Freedom Mortgage
Corporation and PS Bank for violations of RESPA, TILA, and
Regulation Z. 	Debtor could recover statutory damages of up to
$6,000.00, actual damages, costs, and attorney fees.
4 The Court denied the Motion to Confirm without prejudice due to jurisdictional concerns. There were
multiple Motions pending in the District Court Action regarding the First Amendment and the current
characterization of the claim as set forth in the Motion to Abandon. The Court did not wish to further
muddy the District Court’s record while those motions were pending. The Court went on to advise that the
Motion was being denied but Debtor was free to re-file the Motion once the District Court had ruled. Audio
of September 4, 2025 Hearing at 11:18-11:19 A.M.
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Doc. 51 (emphasis added). The Third Amendment adds “actual damages” language to the Second
Amendment.
Debtor represents that the Third Amendment does not add any new claims but rather
amends to add the “actual damages” language. Doc. 64, p. 2. Debtor asserts the “actual damages”
language is being added for the same reason Debtor raised in the Motion to Confirm. Doc. 59,
Doc. 43. Like in the First Amendment, Debtor’s counsel alleges that he was unaware at the time
of filing of the need to specifically characterize defensive attorney fees as “actual damages” for
the purposes of litigating later qualified written requests under RESPA. Doc. 59, p. 3. The Third
Amendment seeks to correct this error but, as in the First Amendment, this change does not provide
any additional value to the bankruptcy estate. Id. at 4. Debtor emphasized that attorney fees had
been on all prior schedules and Debtor never failed to include them, but rather failed to properly
characterize them as potential “actual damages.” Id. 	The change simply clarifies damages that
could be pursued in a later RESPA action on the Second QWR. Id. There does not appear to be
any pending litigation on the claims listed on the Second Amendment as amended by the Third
Amendment. 5 Doc. 64, p. 2.
Freedom has objected to the Third Amendment for the same reasons it objected to the
Motion to Confirm. 	Freedom asserts that the amended schedules were filed in bad faith, are
prejudicial to creditors, and are designed to gain an upper hand in ongoing litigation.6 Doc. 54.
5 A careful review of the Complaint filed in the Companion Case, indicates that the Second QWR was
included in the “Parties” portion of the Complaint at Line 26. Doc. 64, Exh. G. However, there was no
claim for the Second QWR included in the Count section of the Complaint. Id. The only Count listed in
the Complaint appears to relate only to the First QWR. Id.
6 On December 12, 2025, the Debtor filed a Fourth Amendment to Schedule A/B (“Fourth Amendment”)
relative to a third qualified written request sent on November 6, 2025 (“Third QWR”). Doc. 63. There have
been no objections to the Fourth Amendment and that amendment does not appear to be the subject of
pending litigation.
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IV. 	ANALYSIS
A. 	Standing
i. 	Legal Standard
Bankruptcy standing is governed by both Article III of the U.S. Constitution and the
Bankruptcy Code. A party seeking Article III standing “must demonstrate an ‘injury in fact’ that
is ‘concrete’, ‘distinct and palpable’, and ‘actual or imminent.’” In re Glob. Indus. Techs., Inc.,
645 F.3d 201, 210 (3d Cir. 2011) (quoting Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S.Ct.
1717, 109 L.Ed.2d 135 (1990)). The party must further demonstrate that the injury “fairly can be
traced to the challenged action and is likely to be redressed by a favorable decision.” Whitmore v.
Arkansas, 495 U.S. at 155. This standard should be construed broadly and can be met so long as
the party alleges a “specific, ‘identifiable trifle’ of injury.” Bowman v. Wilson, 672 F.2d 1145,
1151 (3d Cir. 1982) (quoting United States v. Students Challenging Regulatory Agency
Procedures, 412 U.S. 669, 686–90, 690 n. 14 (1973)). The fundamental question is if the party
has sufficiently “‘alleged such a personal stake in the outcome of the controversy as to
warrant his invocation of federal-court jurisdiction.’” Horne v. Flores, 557 U.S. 433, 445, 129 S.
Ct. 2579, 2592, 174 L.Ed.2d 406 (2009) (quoting Summers v. Earth Island Institute, 555 U.S. 488,
491 – 494, 129 S.Ct. 1142, 1148–49, 173 L.Ed.2d 1 (2009) (internal quotation marks omitted)).
Standing under the Bankruptcy Code is “effectively co-extensive” with Article III standing.
In Re Global, 645 F. 3d at 211. 	The Bankruptcy Code addresses standing in both 11 U.S.C. §§
502(a) and 1109(b),7 specifically providing for standing for a “party in interest” with regard to
7 Unless otherwise noted, all further statutory references are to the Bankruptcy Code, 11 U.S.C. §101, et
seq., as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
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proofs of claim and Chapter 11 confirmation matters.8 	The Third Circuit defined a “party in
interest” as “‘anyone who has a legally protected interest that could be affected by a bankruptcy
proceeding.’” In Re Global, 645 F. 3d at 210 (quoting In re James Wilson Associates, 965 F.2d
160, 169 (7th Cir. 1992) ) . 	Seemingly taking this standard a step further, the Court in In Re
Freeman found that standing required that “a party must have a ‘pecuniary interest’ in the outcome
of the dispute.” In Re Freeman, 540 B.R. 129, 134 (Bankr. E.D. Pa. 2015) (citing In re Kaiser,
525 B.R. 697, 705 (Bankr. N.D. Ill. 2014); In re Bozman, 403 B.R. 494, 496 (Bankr. S.D. Ohio
2006); In re Manshul Constr. Corp., 223 B.R. 428 (Bankr. S.D.N.Y. 1998)). Paralleling Article
III, “party in interest” standing within the bankruptcy context should be applied broadly. In Re
Global, 645 F. 3d at 211.
While the Third Circuit has held that party in interest standing should be applied broadly,
this standard is not without its limitations. For instance, standing based solely on a party being a
defendant in an adversary proceeding or state court proceeding is insufficient to rise to standing in
a bankruptcy case. See In Re Zamora, 2016 W.L. 617194, at *1 (Bankr. N.D. Cal. 2016).
Additionally, “pecuniary interest” has been interpreted to require that the party seeking standing
must have a stake in the distribution of assets amongst creditors. In re Aronson, 1994 WL 497541,
at *6 (E.D. Pa. Sept. 12, 1994); In re Gurst, 76 B.R. 985, 988 (Bankr. E.D. Pa.1987). Despite the
limitations placed upon bankruptcy standing, the Supreme Court recently held that where there
will be the potential for financial harm or there is “financial responsibility for bankruptcy claims”
the liable party is a party in interest for the purposes of bankruptcy standing under Section 1109.
8 The Bankruptcy Court for the Eastern District of Pennsylvania addressed that while Section 1109 of the
Bankruptcy Code was not directly applicable to a Chapter 13 case, it “provides guidance in understanding
who Congress meant to encompass within the phrase ‘party in interest.’” In re Jensen, 369 B.R. 210, 229
(Bankr. E.D. Pa. 2007).
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Truck Ins. Exch. v. Kaiser Gypsum Co., Inc., 602 U.S. 268, 285, 144 S. Ct. 1414, 1428, 219
L.Ed.2d 41 (2024)
ii. 	Freedom has Standing to Object to Amended Schedules
The Court finds that Freedom has standing to object to the Third Amendment. 	Party in
interest standing in a bankruptcy case requires that Freedom have a personal stake in the outcome
of this matter. 	Additionally, Freedom would also need to have a “pecuniary interest” in the
outcome of this proceeding. 	Freedom is a creditor in this case with a filed claim that was subject
to no objections. 	Further, the RESPA and TILA claims Debtor wishes to pursue in litigation
outside the bankruptcy arise from the PPFN filed in this bankruptcy case and those claims are now
being supplemented by the Third Amendment.
The Court finds that Freedom has both a personal stake and a pecuniary interest relating to
the Third Amendment. 	The RESPA and TILA claims arise from a dispute over attorney fees
disclosed on the PPFN filed in the bankruptcy case on October 2, 2024. These claims would not
exist but for the bankruptcy case. Further, in order for the Debtor to pursue any claim arising out
of the PPFN, that claim must be added to the schedules on notice per Fed. R. Bankr. P. 1009(a).
Thomas v. JP Morgan Chase, N.A., 2012 WL 2872164, at *7 (E.D.N.Y. 2012) (citing Sea Trade
Co. v. FleetBoston Fin. Corp., 2008 WL 4129620, at *5 (S.D.N.Y. 2008)); Moses v. Howard Univ.
Hosp ., 606 F.3d 789, 798 (D.C. Cir. 2010) (“[E]very circuit that has addressed the issue has found
that judicial estoppel is justified to bar a debtor from pursuing a cause of action in district court
where that debtor deliberately fails to disclose the pending suit in a bankruptcy case.”).
Debtor argues that Freedom has no pecuniary interest in this case because its claim for
mortgage arrears has been paid in full and as such it no longer has an interest in the assets or
distributions by the Chapter 13 Trustee. The sole source of standing in this case isn’t that Freedom
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is a creditor, paid or otherwise. 	Debtor’s argument that being a fully paid creditor robs Freedom
of bankruptcy standing cannot be reconciled with the fact that Freedom will bear the financial
responsibility for any award issued in future litigation arising from the Second QWR that is now
the subject of the Third Amendment.
Freedom has more than an “identifiable trifle” of an injury in this case and their legally
protected interest could be affected by the Third Amendment. 	As such, this Court finds that
Freedom has standing to object to the Third Amendment.
B. 	Judicial Estoppel
i. 	Legal Standard
The purpose of judicial estoppel is “to protect the integrity of the judicial process by
prohibiting parties from deliberately changing positions according to the exigencies of the
moment.” New Hampshire v. Maine, 532 U.S. 742, 743 (2001). Judicial estoppel applies when:
First, a party's later position must be clearly inconsistent with its
earlier position. Second, courts regularly inquire whether the party
has succeeded in persuading a court to accept that party's earlier
position, so that judicial acceptance of an inconsistent position in a
later proceeding would create the perception that either the first or
the second court was misled…A third consideration is whether the
party seeking to assert an inconsistent position would derive an
unfair advantage or impose an unfair detriment on the opposing
party if not estopped.
U.S. v. Pelullo, 399 F.3d 197, 222-223 (3d Cir. 2005) (quoting New Hampshire v. Maine, 532 U.S.
742, 750-751, 121 S.Ct. 1808 (2001)(internal quotations and citations omitted)).
While judicial estoppel may be raised to protect the integrity of the court and to ensure that
a party is not permitted to gain an advantage in litigation by changing their position, “judicial
estoppel is…not intended to eliminate all inconsistencies no matter how slight or inadvertent they
may be.” Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314, 319
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(3d Cir. 2003) (citing In re Chambers Development Co., Inc., 148 F.3d 214 (3d Cir.1998)). The
Third Circuit has found in order to justify the application of judicial estoppel a party must show
that, not only were the positions “irreconcilably inconsistent” but also required a showing of “‘bad
faith - i.e., intent to play fast and loose with the court.’” Montrose Medical Group Participating
Savings Plan v. Bulger, 243 F.3d 773, 779-780 (3d Cir. 2001) (quoting Ryan Operations G.P. v.
Santiam–Midwest Lumber Co., 81 F.3d 355, 361 (3d Cir.1996)).
ii. 	Judicial Estoppel is not Applicable.
Here, Freedom alleges that the Third Amendment is a tactic to gain an advantage in the
Companion Case and that Debtor’s position that “actual damages” may be available to her is a
change in position that merits the application of judicial estoppel. This Court does not agree.
Debtor is amending the language of the Second Amendment to include “actual damages”
as a possible claim in future litigation regarding claims arising after January 30, 2025. Debtor is
amending her schedules to properly list potential claims based upon subsequent conduct, not
attempting to gain an advantage to ongoing litigation. 	It is not playing “fast and loose” or
“irreconcilably inconsistent” to amend schedules to accurately list all claims of the Debtor. In fact,
Debtor is obligated to correct any inaccurate schedules. See In Re Engel, 246 B.R. 784, 794 (Bankr.
M.D. Pa. 2000). Importantly, Debtor never failed to list the claim for attorney fees. In the Second
Amendment, Debtor listed attorney fees as a possible award in any future litigation. Doc. 38. The
addition of “actual damages” in the Third Amendment, which Debtor has indicated may include
defensive attorney fees, may change the characterization of part of the award but not the underlying
award itself. Doc. 51. At all times, Debtor disclosed that attorney fees were a part of any potential
award in the underlying cause of action. Docs. 32, 38, 51.
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Freedom’s argument for applying judicial estoppel is framed within a misunderstanding of
the claims being amended by the Third Amendment.9 Freedom interpreted the Third Amendment
to be reaching back to add “actual damages” language to claims arising prior to January 30, 2025.
Claims arising before January 30, 2025 and added by the First Amendment could be subject to
judicial estoppel as there has been reliance by the Trustee, the Court, and the Creditors on the
representations in the First Amendment. However, the First Amendment is not the subject of this
action. 	The allowance of the Third Amendment is before this Court. 	The claims arising after
January 30, 2025 are not part of the asset added by the First Amendment, do not appear to arise
out of claims that are subject to the litigation in the Companion Case, and were not abandoned by
the Chapter 13 Trustee pursuant to Order of this Court on the Debtor’s Motion to Abandon. Doc.
34.
Freedom has not demonstrated any prong of the test for applying judicial estoppel. The
Debtor’s Third Amendment is not inconsistent with her prior schedules, nor has any Court granted
relief or relied upon the prior position such that Debtor would be provided with an unfair advantage
in any ongoing litigation.
In as much as Freedom has failed to meet its burden, the request to bar the Third
Amendment by judicial estoppel is hereby denied.
9 The Court notes the Amendments as filed by Debtor create confusion as to precisely where claims are
being added, amended, or unaltered. The resulting confusion caused by the Debtor has made the underlying
facts in this matter difficult to parse.
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C. 	The Third Amendment
i. 	Legal Standard
Fed R. Bankr. P. 1009(a) permits the debtor to amend schedules “at any time before the
case is closed.” 10 Fed. R. Bankr. P. 1009(a). Due to the permissive nature of this rule, an objector
must demonstrate that the debtor has acted in bad faith or the acceptance of the amended schedules
would be prejudicial to creditors or the Trustee. In Re Cudeyero, 213 B.R. 910, 917 (Bankr. E.D.
Pa. 1997); see In re Nesser, 206 B.R. 372, 374 (Bankr. W.D. Pa. 1997) (“Leave to amend
exemptions generally is denied only if the debtor has acted in bad faith, concealed assets, or if the
amendment would prejudice creditors”); In re Lockovich, 150 B.R. 989, 990 (Bankr. W.D. Pa.
1993) (“Generally, schedules ‘may be amended by the debtor as a matter of course at any time
before the case is closed.’.... An amendment may be denied, however, if there is bad faith by the
debtor or prejudice to creditors”).
A mere allegation of bad faith is insufficient. In re Magallanes, 96 B.R. 253, 256 (B.A.P.
9th Cir. 1988) (citing In re Brown, 56 B.R. 954, 958 (Bankr. E.D. Mich. 1986)). Bad faith must
be shown by clear and convincing evidence. Id. This standard allows the “the party alleging bad
faith an opportunity to prove his or her claim, but also implements the policy of liberally allowing
the debtors to amend their exemption claims in order to enhance their fresh start.” Id. While bad
faith contains no specific definition, one of the clearest examples of bad faith is an attempt to
conceal an asset. In Re Cudeyero, 213 B.R. at 918; see Hardage v. Herring Nat. Bank, 837 F.2d
1319, 1324 (5th Cir.1988); Matter of Doan, 672 F.2d 831, 833 (11th Cir. 1982) (“concealment of
10 Not only does Rule 1009(a) permit the debtor to amend schedules prior to case closure, but the Debtor
has an obligation to file accurate schedules and an ongoing duty to correct any errors in those schedules.
In Re Engel, 246 B.R. at 794. “Even if the asset is not ultimately determined to be property of the estate
under the technical rules of the Federal Bankruptcy Code, Section 152 properly imposes sanctions on those
who preempt a court’s determination by failing to report the asset.” United States v. Cherek, 734 F. 2d 1248,
1254 (7th Cir. 1984).
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an asset will bar exemption of that asset”); see also Payne v. Wood, 775 F.2d 202, 205 (7th Cir.
1985) (permission 	to 	amend 	exemptions 	“most 	unlikely” 	to 	be permitted, 	where 	debtors
apparently had attempted to conceal assets).
Prejudice carries clearer boundaries. The Court in In re St. Hill stated:
Thus, prejudice may arise, for example, where a trustee has engaged
in efforts to sell certain property…That is, in those instances the
trustee may be understood to have acted in reliance upon the
debtor’s initial schedules, and having taken such actions may be
prejudiced if the amendments were allowed.
In Re St. Hill, 2005 WL 6522764, at *11 (Bankr. E.D. Pa. 2005) (citing Matter of Eldridge, 15
B.R. 594, 595 (Bankr. S.D.N.Y. 1981) (debtors attempted to change exemptions after trustee had
contracted to sell the subject property)); see also In re Santoro, 3 B.R. 210, 212 (Bankr. E.D.N.Y.
1980) (debtors attempted to claim exemptions after the trustee had sold subject property); Hardage
v. Herring Nat. Bank, 837 F.2d at 1324 (prejudice may occur if creditors have detrimentally relied
upon the debtor's original exemption claim). Prejudice is also found where debtors attempt to
amend after having sought relief from the court based on the representations made in prior
schedules.11 Id.; see also In re Shaffer, 92 B.R. 632 (Bankr. E.D. Pa. 1988) (objection to debtors'
amended exemption claim is sustained when debtors sought to amend after the trustee liquidated
the asset and made distribution to creditors).
ii. 	Debtor’s Third Amendment to Schedules A/B is Allowed.
The Court does not find that there is bad faith or prejudice in the filing of the Third
Amendment. 	Freedom’s objection to the Third Amendment seems rooted in a lack of
understanding as to what asset on Schedule B is being amended by the Third Amendment.
11 An additional ground for finding prejudice in amending schedules is undue delay however this has not
been raised by either party in the instant case. In Re St. Hill, 2005 WL 6522764, at *11.
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On its face, Debtor appears to be amending a single cause of action for a second time in
order to preserve a cognizable claim against Freedom in litigation outside this Court. However,
upon closer inspection that is not the case. 	In her Third Amendment, Debtor is amending the
Second Amendment by adding “additional claims arising after the previous amendment.” Doc. 51.
The Second Amendment was derived from the Second QWR sent to Freedom on March 20, 2025.
Docs. 38, Doc. 64, p. 13. This potential cause of action was added to Debtor’s schedules by the
Second Amendment filed on June 18, 2025. Doc. 38. The Third Amendment is adding “additional
claims” incurred after January 30, 2025 and has added the “actual damages” language. Doc. 51.
Most relevant to this Court’s review is that this is not an amendment to the cause of action added
by the First Amendment filed on January 30, 2025. Doc. 32.
The fact that the Third Amendment is amending additional claims arising out of the Second
QWR is critical to the analysis of whether this amendment rises to bad faith or prejudice sufficient
to warrant a denial by this Court. Here, the sole basis of the bad faith argument by Freedom is that
the Debtor is attempting to amend schedules in order to gain an advantage in ongoing litigation.
Freedom claims that this amendment is prejudicial to creditors and the Trustee due to the reliance
of creditors on the representations of the Debtor in the Motion to Abandon.12 	The flaw in this
argument is that the claim being amended in the Third Amendment does not appear to be subject
12 Freedom raised valid concerns regarding clarity in the Amended Schedules and how any Order by this
Court could be interpreted by other Courts. Hearing of November 4, 2025 at 11:12 A.M. This Court agrees
that precision is necessary in this matter. The Court’s finding here should not be construed as permitting
any amendment to the First Amendment docketed at Doc. 32. The Court denied the attempt to change the
language in the First Amendment by the Order Denying Motion to Confirm Property as Abandoned entered
on September 5, 2025. Doc. 53. At this time the Motion to Confirm has not been re-filed by the Debtor
and the language describing the claims against Freedom Mortgage and PS Bank remains unchanged and
does not include any specific “actual damages” language. The only amendment being permitted by this
Order is the Amendment of the additional claims incurred after January 30, 2025 and arising out of the
QWR sent on March 20, 2025 which was added by Doc. 38 and amended by the Third Amendment. Doc.
51.
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of litigation in the Companion Case or the Motion to Abandon. Both of those matters arise out of
the First Amendment and the First QWR issued on October 29, 2024. 13 There does not appear to
be any reliance by either the Trustee, creditors, or the Court on Debtor’s prior representations in
the Second Amendment. There has been no relief granted by any Court that relied on Debtor’s
representations in the Second Amendment. Accordingly, there is no clear and convincing evidence
of bad faith and neither the Trustee or creditors have been prejudiced by the filing of the Third
Amendment. 14
Accordingly, Freedom’s Objection to the Third Amended Schedules is overruled.
V. 	CONCLUSION
While the Court finds that Freedom has standing to object to the Third Amendment,
Freedom has not demonstrated sufficient cause for this Court to estop the Debtor from amending
the Second Amendment and has failed to meet its burden to demonstrate bad faith or prejudice.
For all the reasons stated, the Objection is OVERRULED.
An Order consistent with this Opinion shall be entered.
13 The Order on the Motion to Abandon specifically states that it is applicable to the First Amendment at
Doc. 32. Additionally, the Motion to Confirm makes no mention of any modification to later amended
schedules and references only the First Amendment. See Doc. 43. To date, the Debtor has not sought the
abandonment of the asset listed in the Second Amendment and as amended by the Third Amendment.
14 The Chapter 13 Trustee has not objected to any of the Amended Schedules or Motions related thereto in
this case.
By the Court,
_____________________________
Mark J. Conway, Bankruptcy Judge
Dated: April 29, 2026
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