POST BAPCPA:
Automatic Dismissal for failure to file "required"
documents:
See In re Acosta-Rivera, 557 F3d 8 (1st
Cir. 2009) held that the court has discretion not to dismiss
a case where missing pay stubs or other required information
has become irrelevant or extraneous. Note however, that in
this case debtor sought dismissal to prevent the
trustee from administering an asset that would generate
enough to pay all claims in full.
In re Warren, 568 F3d 1113 (9th Cir. 2009)
agreed with Acosta-Rivera to hold that the bankruptcy
court has discretion not to dismiss an “automatically
dismissed” case where the missing information is not
important or as in this case, dismissal is should by the
debtor.
Chapter 13 conversion to 7:
In re
Sobczak,
369 B.R. 512 (9th Cir. BAP 2007). In a case arising out of
Arizona, the BAP reversed the Bankruptcy Court's dismissal
of the debtor's case, holding that (a) the debtor in a case
converted from Chapter 7 to Chapter 13 had standing to move
for dismissal of his bankruptcy, but (b) dismissal of the
debtor's bankruptcy in the circumstances presented was
improper. The BAP found that the debtor's realization that
in bankruptcy he was limited by §522 to Ohio's $5,000
homestead exemption, rather than the Arizona $150,000
exemption that would apply if he were not in bankruptcy, was
not a proper basis for allowing the debtor to move under
§1307 to dismiss his case.
In re
Jackson, 348 B.R. 487 (Bkrtcy.S.D.Iowa 2006) LEE M. JACKWIG,
Bankruptcy Judge WHERE DEBTOR FAILS TO TIMELY FILE REQUIRED
DOCUMENTS CASE IS DEEMED AUTOMATICALLY DISMISSED ON 46TH
DAY ONLY IF REQUESTED BY PARTY IN INTEREST § 521(a)(1),
521(i)(2)
As of the 45th day after filing the petition debtor was
still one credit advice short thus failing to satisfy §
521(a)(1)(B)(iv). Debtor's error was due to mistaken
numbering on the payment advices. The court issued an order
dismissing the case, and debtor moved for reinstatement on
the basis of excusable neglect.
The court reinstated the case, not on the basis of excusable
neglect, but on the theory that despite the "automatic" term
in the statute the court should not sua sponte dismiss the
case without a motion to do so by a party in interest
pursuant to § 521(i)(2). Thus the "automatic" language of §
521(i)(1) is qualified by subparagraph (2) which requires a
motion.
In re
Ott, 343 B.R. 264 (Bkrtcy.D.Colo. 2006) COURT HAS NO
DISCRETION TO ENLARGE THE TIME LIMITATIONS PRESCRIBED IN THE
CODE SECTION GOVERNING DEBTOR'S FAILURE TO FILE ALL REQUIRED
INFORMATION § 521(a)(1)(B)(iv)
Debtor filed chapter 7 two days after effective date of
BAPCPA. Debtor failed to file required "payment advices" (paystubs
or other evidence of income) as required under BAPCPA per §
521(a)(1)(B)(iv) within 45 days of filing the petition as
required under § 521(i). Debtor's counsel informed court he
may have inadvertently failed to inform debtors that pay
stubs had to be filed by a certain date. Case was dismissed
automatically on the 46th day.
Debtors moved for relief from judgment based on counsel's
confusion over the filing requirements of BAPCPA. The court,
observing that by passing BAPCPA Congress viewed debtors "as
the moral equivalent of shoplifters" reluctantly held that
the court had no discretion to retroactively extend the
45-day deadline. Citing Judge Keith Lundin's treatise on
Chapter 13, the court observed that the dismissal is
automatic and requires no order by the court.
"BAPCPA is a complex and extensive statute that is, at
times, unforgiving to debtors and to their counsel. Snares
and traps are present throughout BAPCPA for unwary debtors.
By the design of Congress, the Court is not in a position to
extricate counsel and debtors from these perils."
In re
Pak, 343 B.R. 239 (Bkrtcy.N.D.Cal. 2006). HELD: A DEBTOR'S
ACTUAL AND ANTICIPATED FUTURE INCOME MUST BE CONSIDERED IN
DECIDING WHETHER TO GRANT OR DENY MOTION TO DISMISS AS AN
ABUSE 11 U.S.C. § 707(b)(3)(B)
Under the "totality of circumstances" test for abuse in
chapter 7 as prescribed by 11 U.S.C. § 707(b)(3)(B) where
the debtor's income is below the state median, the debtor's
actual and anticipated future income may be taken into
consideration.
n re
Lovato, 343 B.R. 268 (Bkrtcy.D.N.M. 2006). HELD: FAILURE TO
SUBMIT "PAYMENT ADVICES" GIVES COURT NO CHOICE BUT TO
DISMISS CASE 11 U.S.C. § 521(a)(1)(B)
Pro per debtor filed Chapter 7 bankruptcy but failed to
provide "payment advices" or other evidence of income and
tax returns within 45 days of filing the petition. the Code
requires that the debtor filed payment advices or other
evidence of income received within the 60 days immediately
prior to filing the bankruptcy, or the case shall be
dismissed on the 46th day. Failure to do so leaves the court
no option but to dismiss. (note: the local rule in this
court was not to file the documents with the court but
rather with the trustee).
WARNING PRE-BAPCPA
Section 707:
IN RE PRICE
(01/07/04 - No. 02-16458) U.S. 9th Circuit Court of
Appeals) Bankruptcy court was justified in dismissing a
Chapter 7 petition for substantial abuse pursuant to 11
U.S.C. section 707(b), based on findings that the debtor had
primarily consumer debts and had the ability to fund a
Chapter 13 plan, despite evidence that the debt to be
discharged consisted primarily of commercial debt.
http://caselaw.lp.findlaw.com/data2/circs/9th/0216458p.pdf
The remaining substantive issue is whether Price meets
the substantial abuse standard of Section 707(b). The term
“substantial abuse” is not defined in the Bankruptcy Code.
Rather, courts have examined the totality of the
circumstances in determining whether substantial abuse
exists in a particular case, utilizing criteria such as the
following:
(1) Whether the debtor has a likelihood of sufficient future
income to fund a Chapter 11, 12, or 13 plan which would pay
a substantial portion of the unsecured claims;
(2) Whether the debtor’s petition was filed as a consequence
of illness, disability, unemployment, or some other
calamity;
(3) Whether the schedules suggest the debtor obtained cash
advancements and consumer goods on credit exceeding his or
her ability to repay them;
(4) Whether the debtor’s proposed family budget is excessive
or extravagant;
(5) Whether the debtor’s statement of income and expenses is
misrepresentative of the debtor’s financial condition; and
(6) Whether the debtor has engaged in eve-of bankruptcy
purchases.
3 Norton Bankruptcy Law and Practice 2d § 67:5, at 67-10
(William L. Norton, Jr. et al. eds., 1997).
The primary factor defining
substantial abuse is the debtor’s ability to pay his debts
as determined by the ability to fund a Chapter 13 plan.
Thus, we have concluded that a “debtor’s ability to pay his
debts will, standing alone, justify a section 707(b)
dismissal.” Kelly, 841 F.2d at 914.
The trustee argues that we
need not reach any of the issues raised by Price because
Congress created a bright line test: that dismissal is
required whenever a debtor is able to fund a Chapter 13
plan. However, the text of the section and its legislative
history belie this interpretation. Indeed, Congress
specifically rejected such proposals. See 6 Collier ¶
707.04, at 707-16. Rather, Congress committed the question
of what constitutes substantial abuse to the discretion of
bankruptcy judges within the context of the Code. Section
707(b) provides that the court “may” dismiss a case “if it
finds that the granting of relief would be a substantial
abuse of the provisions of this chapter.” Put another way,
while “debtor’s ability to pay his debts will, standing
alone, justify a section 707(b) dismissal,” Kelly, 841 F.2d
at 914, the debtor’s ability to pay his or her debts does
not compel a section 707(b) dismissal of the petition as a
matter of law. In addition, as Kelly noted, a bankruptcy
court could make a finding of substantial abuse under the
facts of a particular case even if the debtor did not have
the ability to fund a Chapter 13 plan. Id. at 914-15. Thus,
Kelly did not establish an absolute, per se rule. Rather,
Kelly quite appropriately held that ability to fund a
Chapter 13 plan is the most important consideration under §
707(b), and that a finding of ability to pay alone is
sufficient to sustain a § 707(b) dismissal.
Local Rule - 1017-2
In re
Tennant (9th Cir. BAP 2004) BAR TO REFILING MAY BE
INVALID WITHOUT HEARING. The BAP has "serious doubts"
whether a local rule providing for an automatic bar on
refiling for 180 days after dismissal for failure to file
schedules is enforceable in the absence of a motion, hearing
and finding of willful failure
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