2/5/08
In re David & Lynn Bartlett, Case No. 07-63647-fra13
UNPUBLISHED opinion, by Judge Frank Alley
Pre-petition credit counseling requirement is NOT jurisdictional and so a case should not be dismissed IF doing so would “produce an illogical, unjust, or capricious result. But that condition was not met here, so this case was dismissed.
What does it take to meet this condition and avoid dismissal in spite of not strictly complying with the credit counseling requirement?
These Chapter 13 debtors filed their case 185 days after completing their credit counseling, 5 days later than the 180-day maximum permitted by §109(h)(1). They completed a second credit counseling 4 days AFTER their case was filed, the same day that the court issued an order requiring either the filing of a credit counseling certificate showing compliance with the 180-day rule, the filing of a motion for an extension of time to file, or an exemption from the credit counseling requirement. The next day the debtors filed a motion for extension of time to file a certificate, in which they sought to excuse their failure to meet the 180-day rule on the basis of the repossession of their vehicle and the resulting delay in the filing of their case, arguing that dismissal would be prejudicial to creditors and add unnecessary administrative costs for the filing of a subsequent case.
Judge Alley indicated a split in bankruptcy court opinions, even quoting one court that the “vast majority” of courts strictly construe the 180-day requirement, but he nevertheless held that this statute is not jurisdictional and that equitable exceptions to strict compliance can be made to avoid “an illogical, unjust, or capricious result.” He analogized to a 1991 9th Circuit BAP decision, In re Luna, 122 B.R. 575, which held that §109(g), regarding another 180-day rule (restricting the filing of a new case after the dismissal of a prior case), was not jurisdictional and thus exceptions to strict compliance to it were appropriate in the same limited circumstances quoted immediately above.
But the judge held that these conditions were not met here because: 1) the inconvenience and expense of re-filing the case is not illogical and unjust; and 2) the Bankruptcy Code provides for relief from payment of a new filing fee and for extension of the automatic stay, thus making equitable remedies inappropriate.
Acknowledging the “substantial inconvenience to the parties” if a creditor were to aggressively pursue debtors’ assets between the dismissal of this case and the filing of the next one, Judge Alley concludes his opinion by helping to avoid this possibility by delaying the dismissal for 10 days.
BOTTOM LINE: The “illogical, unjust, or capricious result” standard of §109(g) is tough to meet, so watch that 180-day consumer credit counseling period like a hawk. In this case it appeared to the judge that this deadline was missed simply by oversight.
by Andrew Toth-Fejel, Bankruptcy Litigation Support for Attorneys, Andy@BLSforAttorneys.comWhat does it take to meet this condition and avoid dismissal in spite of not strictly complying with the credit counseling requirement?
These Chapter 13 debtors filed their case 185 days after completing their credit counseling, 5 days later than the 180-day maximum permitted by §109(h)(1). They completed a second credit counseling 4 days AFTER their case was filed, the same day that the court issued an order requiring either the filing of a credit counseling certificate showing compliance with the 180-day rule, the filing of a motion for an extension of time to file, or an exemption from the credit counseling requirement. The next day the debtors filed a motion for extension of time to file a certificate, in which they sought to excuse their failure to meet the 180-day rule on the basis of the repossession of their vehicle and the resulting delay in the filing of their case, arguing that dismissal would be prejudicial to creditors and add unnecessary administrative costs for the filing of a subsequent case.
Judge Alley indicated a split in bankruptcy court opinions, even quoting one court that the “vast majority” of courts strictly construe the 180-day requirement, but he nevertheless held that this statute is not jurisdictional and that equitable exceptions to strict compliance can be made to avoid “an illogical, unjust, or capricious result.” He analogized to a 1991 9th Circuit BAP decision, In re Luna, 122 B.R. 575, which held that §109(g), regarding another 180-day rule (restricting the filing of a new case after the dismissal of a prior case), was not jurisdictional and thus exceptions to strict compliance to it were appropriate in the same limited circumstances quoted immediately above.
But the judge held that these conditions were not met here because: 1) the inconvenience and expense of re-filing the case is not illogical and unjust; and 2) the Bankruptcy Code provides for relief from payment of a new filing fee and for extension of the automatic stay, thus making equitable remedies inappropriate.
Acknowledging the “substantial inconvenience to the parties” if a creditor were to aggressively pursue debtors’ assets between the dismissal of this case and the filing of the next one, Judge Alley concludes his opinion by helping to avoid this possibility by delaying the dismissal for 10 days.
BOTTOM LINE: The “illogical, unjust, or capricious result” standard of §109(g) is tough to meet, so watch that 180-day consumer credit counseling period like a hawk. In this case it appeared to the judge that this deadline was missed simply by oversight.
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