In re Stinnie

555 B.R. 530, 2016 Bankr. LEXIS 2824, 2016 WL 4162775
CourtUnited States Bankruptcy Court, W.D. Virginia
DecidedAugust 4, 2016
DocketCase No. 16-60846
StatusPublished
Cited by5 cases

This text of 555 B.R. 530 (In re Stinnie) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Stinnie, 555 B.R. 530, 2016 Bankr. LEXIS 2824, 2016 WL 4162775 (Va. 2016).

Opinion

MEMORANDUM OPINION DENYING MOTION TO WAIVE PRE-PETITION CREDIT COUNSELING REQUIREMENT

Rebecca B. Connelly, U.S. Bankruptcy Judge

Helen Maxine Stinnie, by counsel, filed a voluntary chapter 7 petition on April 27, 2016, with all accompanying statements and schedules.1 Ms. Stinnie filed the case through the Central Virginia Legal Aid Society. Because Ms. Stinnie’s income is less than 150% of the federal poverty guidelines, she paid no attorney’s fees for the services. See ECF Doc. No. 1 at 59. In addition, the Court granted a waiver of the filing fee in the case. ECF Doc. No. 8.

The petition contains the following statement: “I received a briefing from an approved credit counseling agency within 180 days before I filed this bankruptcy petition, and I received a certificate of completion.” ECF Doc. No. 1 at 5. Immediately next to this statement, the petition contains the language: “The law requires that you receive a briefing about credit counseling before you file for bankruptcy. You must truthfully check one of the following choices. If you cannot do so, you are not eligible to file. If you file anyway, the [532]*532court can dismiss your caseId. The debtor and her counsel signed the petition on April 14, 2016.

On May 8, 2016, Ms. Stinnie filed her certificate of credit counseling with the Court. ECF Doc. No. 10. The certificate states that Ms. Stinnie took the' credit counseling course on April 28, 2016, which was one day after the filing of the petition and two weeks after declaring under penalty of perjury that she received a briefing from an approved credit counseling agency in the 180 days before her petition. Id.

On May 9, 2016, the Clerk issued a notice to parties in interest that a hearing would be held on June 16, 2016, to consider:

eligibility of the debtor to proceed in this case pursuant to 11 U.S.C. § 109(h) when the debtor has (i) disclosed in her chapter 7 petition for relief that she completed a credit counseling briefing with an approved agency within 180 days prior to the April 27, 2016 petition date, ECF Doc. No. 1 at 5, but (ii) filed with the Court a credit counseling certificate that discloses she completed the credit counseling briefing on April 28, 2016, which is after the petition date, ECF Doc. No. 10.

In response to the notice, debtor’s counsel filed a motion asking the Court to waive the credit counseling filing requirement. ECF Doc. No. 14. In the motion, counsel noted that the debtor had taken an approved credit counseling course, but she had completed it more than 180 days before her petition date.2 According to the motion, counsel. instructed the debtor to take the course again to comply with the timeliness requirement of section 109(h). Counsel then explained that he was under the impression the debtor would provide him with a certificate of credit counseling that would be dated April 27, 2016, or shortly prior thereto.3 Based upon such impression, counsel proceeded to file the petition without having proof that the debtor had taken the credit counseling course. Counsel now asks this Court to waive the requirement that" the credit counseling course be taken pre-petition “pursuant to its statutory and other general authority to remedy de-minimus [sic] procedural error in order to effect justice in connection with the bankruptcy process.” ECF Doc. No. 14 at 2.

On June 16, 2016, the Court held a hearing to consider the debtor’s eligibility to remain in this bankruptcy case. Counsel for the debtor appeared. He admitted that the debtor did not complete a credit counseling briefing within 180 days before her petition. Counsel further conceded that the debtor did not provide him with a certificate of completion that satisfied section 109(h) before he filed her petition. He acknowledged that the credit counseling briefing, completed after the bankruptcy, is untimely. Counsel argued that the taking of the course is the true requirement and that the Court has discretion to excuse the timeliness of that requirement. According to debtor’s counsel: (1) the timeliness requirement of the credit counseling briefing pursuant to section 109(h) is not mandatory; (2) bankruptcy courts may and should exercise discretion in applying section 109(h); and (3) the Court should not dismiss this case for failure to [533]*533comply with section 109(h) because such an outcome would result in a “manifest injustice.” Following his argument, counsel urged the Court to permit him to submit a brief. The Court granted counsel fourteen days to submit authorities to support his position.

A. The pre-petition credit counseling briefing requirement.

To qualify as a debtor under the Bankruptcy Code, an individual must meet certain eligibility requirements. 11 U.S.C. § 109. Specifically, an individual may not be a debtor under the Bankruptcy Code “unless such individual has, during the 180-day period ending on the date of filing of the petition by such individual, received from an approved nonprofit budget and credit counseling agency described in section 111(a) an individual or group briefing ... that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis.” Id. § 109(h)(1).

The Bankruptcy Code contains three exceptions to the eligibility requirements of section 109(h)(1), none of which apply here. See id. § 109(h)(2)-(4). Indeed, counsel admits that these exceptions do not apply in this case. Even though the debtor has not met the statutory requirements and does not fall within the statutory exceptions, counsel argues the Court should nonetheless use its equitable powers to waive the statutory requirements in this case. For the reasons explained below, the Court disagrees with counsel and denies the debtor’s request to waive the pre-petition credit counseling requirement.

B. The Bankruptcy Code’s eligibility requirements are not discretionary.

Counsel argues that the requirements of section 109(h) are not mandatory because sometimes the failure to meet the requirements does not lead to dismissal. According to counsel, because some courts have declined to dismiss a case when confronted with eligibility impediments, this means all bankruptcy courts have discretion to not enforce the statutory requirements. In his brief, counsel relies on In re Fiorillo, 455 B.R. 297 (D.Mass.2011), In re Mitrano, 409 B.R. 812 (E.D.Va.2009), and In re Hess, 347 B.R. 489 (Bankr.D.Vt.2006). Upon further review, however, these decisions do not support counsel’s argument in this case.

The Court construes counsel’s argument in this way:4 (1) failure to comply with Bankruptcy Code section 109(h) does not abolish a bankruptcy court’s jurisdiction over a case filed in its court; (2) if section 109(h) is not jurisdictional, then the bankruptcy court has discretion to waive its requirements; (3) a bankruptcy court has the equitable power to determine the appropriate consequences for failure to comply with section 109(h); and (4) based on the totality of the circumstances, manifest injustice would occur if this Court dismissed this case for failure to comply with section 109(h).

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Cite This Page — Counsel Stack

Bluebook (online)
555 B.R. 530, 2016 Bankr. LEXIS 2824, 2016 WL 4162775, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-stinnie-vawb-2016.