UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

COVINGTON DIVISION

 

 

IN RE:

JEANETTE FELTMAN

DEBTOR CASE NO. 92-21464

 

MEMORANDUM OPINION

 

This matter is before the Court on the debtor's Motion to Alter or Amend Judgment, or for a New Trial, and for Stay of Order Granting Relief from Automatic Stay, filed herein on December 14, 1992. Previously, the creditor Housing Authority of Covington had filed a Motion for Relief from the Automatic Stay on November 6, 1992. The debtor filed her Verified Response to Motion for Relief from Automatic Stay on November 19, 1992. This Court entered an Order Granting Relief from the Automatic Stay on December 2, 1992.

The debtor's Motion was heard on January 5, 1993, and on January 11, 1993, the Court entered an order staying the Order Granting Relief from Automatic Stay pending determination of the Motion to Alter or Amend, or for a New Trial. The creditor filed its Response to Debtor's Motion on January 25, 1993, and the debtor filed her Reply on January 29, 1993. The matter was submitted for decision on February 2, 1993.

The debtor filed her Chapter 7 petition in this Court on October 5, 1992. She had previously filed two other petitions, Case No. 91-21586 on October 17, 1991, and Case No. 92-20448 on March 25, 1992, both of which were dismissed for failure to pay filing fees. The debtor maintains that her failure to pay these fees was solely the result of her indigency. The debtor apparently has a history of serious illness which has severely curtailed her ability to work. Her debt to the creditor for back rent apparently accumulated during such periods. She maintains that she has kept her rent current since February 1992, before the filing of the second Chapter 7 petition.

The creditor has argued that the debtor's "repeated violations" of her lease agreement negate any property interest the debtor may have in her lease. In In re Sudler, 71 B.R. 780 (Bkrtcy.E.D.Pa. 1987), the court held that a debtor's possessory interest in her public housing unit was, as of the time her bankruptcy petition was filed, property of the bankruptcy estate protected by the automatic stay. Even if the debtor's tenancy had been terminated as of the time of filing, the stay was in place and prevented eviction efforts by the housing authority until it received relief. Id, at 784. While the creditor herein has initiated several state court actions to evict the debtor from her apartment, her tenancy has not been terminated.

In discussing the various layers of protection afforded the debtor who is a public housing tenant, the Sudler court stated:

Finally, another layer of protection to a public housing tenant arises from the pertinent federal Regulations. Not only a public housing authority, see 24 C.F.R. ''966.4(l)(1), (f), but also a private landlord renting a federally subsidized unit, see 24 C.F.R. ''247.3, 990.607. 881.607, 882.511, 883.708, 884.216, and 886.328, must establish 'good cause' before the termination of a lease can occur. If the landlord's only basis for a claim of termination of a lease is that the Debtor owes pre-petition rent, this basis may not constitute the requisite 'good cause', especially in light of the 'fresh start' principle of Local Loan v. Hunt, ...

At page 787. The court went on to observe that the housing authority had presented no evidence to support a finding that relief should be granted other than its contention that the lease had been terminated pre-petition. Id, at 788.

Another case, In re Lutz, 82 B.R. 699 (Bkrtcy.M.D.Pa. 1988), found that even though the private landlord receiving federal subsidies had not violated 11 U.S.C. '525, and was not required by that section to continue to abide by the parties' lease agreement in light of the debtors' defaults under the lease, it was not entitled to relief from the automatic stay. The court reasoned that the debtors were making regular post-petition rental payments, and the landlord continued to receive rent subsidies from the government regardless of whether tenants were actually making their payments. Therefore, the court said, there was no immediate reason to lift the automatic stay. Id, at 705.

The creditor herein has argued in its Motion for Relief from the Automatic Stay that the debtor abused the bankruptcy process by her filing of multiple petitions, and that for this reason it ought to be granted relief. The filing of petitions which are dismissed soon thereafter for failure to pay filing fees is a practice worthy of censure. The Court does not believe that this debtor's two prior filings and dismissals constitute abuse, however, but that the debtor is an individual who found herself at times in completely desperate circumstances which prevented her from paying the requisite fees.

In consideration of all the foregoing, it is therefore the opinion of this Court that the debtor's Motion to Alter or Amend Judgment should be sustained. An Amended Order in conformity with this opinion will be entered separately.

Dated:

By the Court -

 

 

_________________________________

Judge

 

 

Copies to:

Debtor

Thomas R. Seel, Esq.

Todd V. McMurtry, Esq.