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LIST-MEMBER SUBMITTED THIS QUESTION:
June
5 2008
Hello
Is
the effect of debtors failing to complete and file the
financial management course automatic dismissal of the
case? Is there a bar to re-filing within 6 months? Is
this an effective way to get out of a ch 7 that has gone
awry?
Thanks,
Alexis Crow, Charlottesville, VA
June
5 2008
As
I understand it, the case is closed with no discharge,
but it is not dismissed. Does that bar filing another
Chapter 7 since they didn't get a discharge nor was the
case dismissed? If there were assets they would still be
distributed, but if it's a no asset case, what's the
result? Good question. Anyone know?
Judi
Descalso
June 5
2008
This has
happened to me several times. as I understand it, the
case closed without a discharge. all I have done is a
simple motion to reopen the case, and after the order is
granted to reopen, I file the financial mang. cert. then
they grant the discharge and close the case.
Mark
Reed, Esq.
June
5 2008
I
got the impression this debtor did not want to complete
the Chapter 7 because it has gone awry and this might be
a way out of this one without precluding the filing of
another
Judi
Descalso
June 6
2008
I just
received a motion to dismiss because the client completed
the course a few days after the bankruptcy was filed. The
Judge's clerk sounded intent on dismissing it so I intend
to re- file Exhibit D to explain the exigent
circumstances for filing it before we received the filing
(plus the client's certification that the request for
services was made before the filing). The exigent
circumstances was avoidance of the automatic default
judgment after the expiration of the 35 days to respond
to/answer a summons and complaint.
I have no
idea how this will pan out since this is my first time
with this problem, but if the case is dismissed I intend
to reopen or re-file it, preferably reopen.
Rhinold
Lamar Ponder, Esq. Ponder & Williamson
Princeton, NJ 08540
June
6 2008
Thanks.
The debtors would like to get out of the Ch 7 because a
family member died intestate two days before the 341 and
they may inherit a substantial piece of
property.
Alexis
June 6
2008
I don't
understand what the problem is. As I understand the
message from Rhinold Lama Ponder, the debtor completed
the financial management course a few days after the bk
was filed.
Why is
that grounds for dismissal? What am I missing?
Morgan
King
Dublin, CA
June
6 2008
Sorry;
I see that she took it post filing
June 6
2008
11 USC
727 implies that a debtor may not take the debtor
education course pre-petition:
(a)(11)
after filing the petition, the debtor failed to complete
an instructional course concerning personal financial
management described in section 111, except that this
paragraph shall not apply with respect to a debtor who is
a person described in section 109 (h)(4) or who resides
in a district for which the United States trustee (or the
bankruptcy administrator, if any) determines that the
approved instructional courses are not adequate to
service the additional individuals who would otherwise be
required to complete such instructional courses under
this section (The United States trustee (or the
bankruptcy administrator, if any) who makes a
determination described in this paragraph shall review
such determination not later than 1 year after the date
of such determination, and not less frequently than
annually thereafter.); or
Bobby
Wilbert
June
6 2008
I
think terms are being used interchangeably which are not
interchangeable. If the case is dismissed a few days
after filing the case due to "failure to complete the
Financial Management Course" this is not possible. It is
only the failure to complete the credit counseling prior
to the filing of the case which subjects the debtor to a
dismissal. Exigent circumstances as a follow up the
earlier post are usually never deemed things that are
self-imposed "emergencies". Things like waiting until the
last minute to file bankruptcy and not completing the
credit counseling prior to filing because "my house was
being foreclosed" is not exigent circumstances here in
the 1st circuit. The rushing to beat the default judgment
scenario would be looked at the same way. I apologize if
I have completely misinterpreted the original poster's
issue.
Brian
R. Lewis, Lakeville, MA
June 6
2008
What I
wonder if Mr. Ponder meant the Credit Counseling rather
than the financial Management class. From what he said in
his initial message, I don't see a problem. If I am
correct then I see the reason for the MTD.
Derek
June
6 2008
Perhaps,
I misunderstood.
I
thought the original issue concerned reopening a
bankruptcy that was to be dismissed for failure to
complete the Financial Management course. Alexis wrote
"Is the effect of debtors failing to complete and file
the financial management course automatic dismissal of
the case?" Although she also wrote "Is this an effective
way to get out of a ch 7 that has gone awry?,"
I
don't think the responses understood that her clients
actually wanted the bankruptcy dismissed, as she later
re-stated.
Some
of the responses addressed how the case can be salvaged
despite the failure to complete the course before filing.
Mark Reed responded " this has happened to me several
times. as I understand it, the case closed without a
discharge. all I have done is a simple motion to reopen
the case, and after the order is granted to reopen, I
file the financial mang. cert. then they grant the
discharge and close the case."
My
response also concerned the problem of having filed a
petition before the debtor completed the course. For
failure to file after, I understand from a number of
responses that my case will be dismissed and that I am
just SOL. Unlike Mark's situation, I understand that in
New Jersey, the Judges consider this a jurisdictional
matter adn simply re-opening the case will not be
sufficient.
I
admit that I am totally baffled and extremely pissed. My
client completed the course within days of the defect. Of
course, we receive the cursory notice that if the defect
is not cleared in 15 days the case will be dismissed. The
defect was cleared well within that time period, but the
grace period, I see, clearly does not apply to the course
certificate.
However,
Exhibit D seemed to give some flexibility in terms of
when a course can be completed in emergent situations.
But based on the responses there is no real flexibility.
So, what good is "exigent circumstances" if you cannot
file because of imminent foreclosure or an imminent
default judgment in litigation. According to the National
Consumer Law Center's publication, Consumer Bankruptcy
Law and Practice: Special Guide to the 2005 Act , page
29, an emergent filing, without completion of the course,
to stop a foreclosure should be permissible. However this
is not a waiver, it simply allows completion of the
course within 30 days after the petition date. Brian has
pointed out that this is not acceptable in the first
circuit and if the counseling requirement is deemed
jurisdictional in the District of New Jersey, then it
seems the rest of the law is irrelevant here
too.
I
apologize for the lengthy recap, I simply wanted to
clarify what I had written earlier on this thread and
also apologize if my response created any confusion. I do
want to thank you for the responses too. Still I am not
happy because the outcome is ridiculous. I will need to
take the financial hit for this one because I should have
known that so-called or arguable "exigent circumstances"
are not a reason to file without having completed the
course.
Thanks.
(P.S.
Is there a fight in this problem somewhere? I don't mind
a good fight if I have a chance of winning?)
Rhinold
Lamar Ponder, Esq., Ponder & Williamson, Princeton,
NJ
June 6
2008
Mr.
Ponder is correct about my original question. The answers
indicated that there isn't a good way out for my clients
and the trustee/responder said he would oppose a
dismissal based on a debtor's failure to complete the
financial management course.
The
thread moved on and the other discussion was helpful, as
well.
In the
Western District of Virginia, the court issues an Order
of Deficiency that requires debtors to take and file a
credit counseling certificate within 15 days if one is
not taken prior to filing.
Apparently,
they are taking a more reasonable approach than some
jurisdictions.
Thanks
for the good input,
Alexis
Crow
June
9 2008
Problem
is that the court will close the case without ever
entering a discharge, meaning that the poor debtor has to
them pay a filing fee to reopen, go through the hoops to
show why the course (FMC) did not get done (or why the
certificate was not filed, actually), and that takes time
and money that most people could better use for other
pursuits. In Idaho the court believes that it is a part
of the lawyer's job to see to it the certificate gets
filed, and the judges are not willing to allow any
additional fees for reopening, preparing the filngs, or
attending the argument in court. We therefore stay on top
of this and probably hound our clients more than their
creditors were before they filed. Seems to work.
Cameron
Phillips, Coeur d'Alene, Idaho
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