IN RE: STEVEN
WAGGONER and DENISE MARIE WAGGONER
UNITED
STATES BANKRUPTCY COURT
EASTERN
DISTRICT OF KENTUCKY
LEXINGTON
DIVISION
IN RE: CASE
NO. 05-57036
STEVEN
WAGGONER and DENISE MARIE WAGGONER
DEBTORS CHAPTER 7
MEMORANDUM
OPINION AND ORDER
This matter is before the court on
the chapter 13 trustee’s Motion to Dismiss debtors’ case (Document # 20). As grounds for her motion the trustee states
the debtors are ineligible for bankruptcy relief by reason of 11 U.S.C. §
109(h). Debtors, by and through their
counsel, filed a response to the motion (Document # 26). A hearing was held on February 2, 2006 (see
Judge’s Minutes, Document # 30) and the matter was submitted for further
consideration and ruling.
BACKGROUND
The factual background, in brief, is
as follows. Debtors filed their skeletal
petition in bankruptcy on November 30, 2005, one day after the initial
consultation with their bankruptcy counsel.
A foreclosure sale of debtors’ home was scheduled in the Jessamine
Circuit Court for the morning of December 2, 2005. On the date of the filing of the petition, counsel enrolled
debtors in a credit counseling course.
According to debtors’ Response, debtors completed the course the
following day, December 1, and received and filed with the court a
certification of completion on December 2, 2005 (see Certificates of
Credit Counseling, Document # 2). The
court notes that the certificates as filed state the debtors actually received
the counseling on December 2. This
discrepancy of fact, however, is immaterial to the final outcome of this
matter.
The record contains no certification of exigent
circumstances preventing debtors from obtaining pre-petition credit counseling;
neither does it include a request for a hearing to determine debtors’ ability
to meet the credit counseling requirement.
DISCUSSION
In the few months since the majority of the
provisions of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA)
became effective, much has been written on the additional eligibility
requirement to be a debtor under the Bankruptcy Code. One of the subsections added to the Code by the sweeping changes
required by the enactment of BAPCPA include subsection “h” added to Code
section 109 entitled “Who may be a debtor.”
Section 109(h) requires an individual to obtain credit counseling within
the 180-day period immediately preceding the date of filing of the
petition in bankruptcy. Emphasis
added. The new subsection states,
"an individual may not be a debtor... unless such individual has, during
the 180-day period preceding the date of filing of the petition by such
individual, received from an approved nonprofit budget and credit counseling
agency... an individual or group briefing... that outlined the opportunities
for available credit counseling and assisted such individual in performing a
related budget analysis."
The language used by Congress in the statute does
give courts a limited measure of discretion to waive the credit counseling
requirement in three specifically defined circumstances. First, in 11 U.S.C. § 109(h)(2) debtors
living in districts without approved counseling providers are exempted. Second, in 11 U.S.C. § 109(h)(3) after
debtor “submits to the court a certification” that meets the three listed
criteria, the court may determine circumstances of an exigent nature to allow a
debtor to delay the required counseling for up to 45 days after the date of the
filing of the petition. 11 U.S.C. § 109(h)(3)(A) and (B). Third, the court may exercise its limited
discretion as stated in 11 U.S.C. § 109(h)(4).
After notice and a hearing the court may waive the counseling
requirement if the debtor is found “unable to complete [the] requirements
because of incapacity, disability, or active military duty in a military combat
zone.” Aside from these three very
limited applications the court has no discretion to excuse a debtor’s failure
to obtain credit counseling prior to the filing of the petition.
In the instance case debtors do not fall into any of
the three categories for which a waiver of the counseling requirement may be
considered. The court does not make a
determination today as to whether the exigency of debtors’ pre-petition
circumstance rises to the level required by 11 U.S.C. § 109(h)(3)(A)(i). The court has no discretion to make any such
determination in light of the absence of a certification. Furthermore, even if debtors had
submitted a certification, according to their Response debtors did not meet the
requirement of 11 U.S.C. § 109(h)(3)(A)(ii) at the time of the filing of the
petition and therefore would preclude the court’s consideration of the third
element, whether or not the certification was satisfactory to the court.
Based on the record as currently before the court
this court must find debtors’ failed to meet the eligibility requirements of 11
U.S.C. § 109(h) at the time of the filing of their petition and as such are not
eligible to be debtors under the Bankruptcy Code.
ORDER
Based on the foregoing and lacking the statutory
discretion to determine otherwise, the court must grant the trustee’ motion to
dismiss as debtors failed to obtain credit counseling prior to the filing of
their petition as required by 11 U.S.C. § 109(h)(1); debtors failed to file the
certification as required by 11 U.S.C. § 109(h)(3) for a determination of
exigent circumstances to delay the credit counseling; and debtors don’t meet
the incapacity, disability or active military duty exceptions as listed in 11
U.S.C. § 109(h)(4). It is hereby
ordered the trustee’s motion to dismiss debtors’ case is granted.
Debtors’ case is hereby dismissed.
Copy
to:
Debtors
E.
David Marshal, Esq.
Brandy
F. Baird, Esq.
Hilary
B. Bonial, Esq.
Nathan
L. Swehla, Esq.
Beverly
M. Burden, Trustee