In re Arkuszewski
OPINION AND ORDER
Alexandra G. Arkuszewski appeals the dismissal of her bankruptcy petition (“Petition”). The bankruptcy court dismissed
BACKGROUND
Neither party disputes the facts or the bankruptcy court’s factual findings. Ar-kuszewski filed a voluntary petition for chapter 13 bankruptcy relief under 11 U.S.C. § 101, et seq. Arkuszewski filed the Petition at 12:41 p.m. (CST) on November 25, 2013. On December 11, 2013, Marilyn 0. Marshall, the Chapter 13 Trustee (“Trustee”), filed a Motion to Dismiss Case for Ineligibility on the grounds that Arkuszewski had not complied with Section 109(h) of the Bankruptcy Code by filing a certificate of credit counseling within fifteen days of the filing of the bankruptcy case. Section 109(h) states that, subject to enumerated exceptions:
an individual may not be a debtor under this title 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 (including a briefing conducted by telephone or on the Internet) that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis.
11 U.S.C. § 109(h)(1). On December 19, 2013, Arkuszewski filed a certificate of credit counseling stating that she received the counseling on November 25, 2013 at 7:31 p.m. (EST). Therefore, according to Arkuszewski’s certificate, she received the credit counseling approximately six hours after filing her bankruptcy petition. On January 30, 2014, the Bankruptcy Court dismissed Arkuszewski’s case for ineligibility based on her failure to receive credit counseling prior to the filing of her petition. Arkuszewski filed a motion to vacate that dismissal order, which was denied. The Bankruptcy Court ultimately issued an Amended Memorandum of Decision on March 24, 2014 explaining its reasons for denying the motion to vacate. This appeal followed.
LEGAL STANDARD
Under 28 U.S.C. § 158(a)(1), this Court has jurisdiction to hear appeals from final judgments, orders, and decrees of a bankruptcy court. The Court reviews a bankruptcy court’s findings of fact for clear error and its legal conclusions de novo. Kovacs v. United States,
ANALYSIS
The legal question presented by this appeal is whether Section 109(h) requires the bankruptcy petitioner to complete credit counseling prior to the filing of the petition or whether the petitioner may complete the credit counseling up until midnight of the date of the filing of the petition. For the reasons that follow, the Court finds that Section 109(h) requires that a petitioner receive credit counseling prior to the filing of her petition.
I. Bankruptcy Code Section 109(h)(1)
Arkuszewski argues that she complied with the plain meaning of Section 109(h)(1) by receiving credit counseling on the same day she filed her Petition. The Trustee argues that Arkuszewski cannot be qualified as a debtor if she did not receive credit counseling before the filing of the Petition. The contested language of Section 109(h)(1) is: “an individual may
For a question of statutory interpretation, the Court looks first to the text of the statute, United States v. Ron Pair Enter., Inc.,
When determining plain meaning, the Court examines the statute as a whole and considers the language in context. See K Mart Corp. v. Cartier, Inc.,
The court in Moore explained, “Eligibility is determined as of the filing of the petition.” Id. “[Eligibility to be a debtor under a particular chapter of the Bankruptcy Code is not the equivalent of a jurisdictional question.” In re Lane,
Arkuszewski agrees that eligibility is determined as of the filing of the petition, but contends that failing to complete pre-petition counseling is not a bar to becoming a debtor. For this argument, she relies on In re Walker, the only case that finds against a bright line time-of-filing requirement for § 109(h)(1).
As used in § 109(h)(1), though, the present perfect tense does not indicate continuing activity. Rather, the tense is used in a phrase or sentence to set out an action, completed in the past, that has a present effect. Among [The Cambridge Grammar’s] examples ... [is] the sentence “She has run ten kilometers,” and [it] explains that this completed act of running will result in a present effect such as “She is tired” or “She is hot.” In § 109(h)(1), the phrase ... “has .., received” ... sets out the completed action, and the result is that the individual is eligible to be a debtor in a bankruptcy case. Eligibility begins when the past action — receipt of a credit counseling briefing — has been completed.
Id. The Court finds this explanation of the phrasing more persuasive and will follow the majority of courts that interpret this requirement as a pre-requisite to eligibility. See In re Moore,
Whatever the classification of this tense, the operative inquiry is on the meaning of “date.” In further support of her plain meaning argument, Arkuszewski points to sections of the Bankruptcy Code that specify a time period beginning “after filing of the petition” to argue that “date” means the full day of filing and if Congress had wanted a bright line cut-off for this requirement, it would have included that language. Doc. 3 at 9 (citing § 1328(g)(1) — a financial management course must be completed “after filing of the petition” to receive a discharge, and § 109(h)(3) — discussing exemptions that “shall cease to apply to that debtor on the date on which the debtor meets the requirements of paragraph (1), but in no ease may the exemption apply to that debtor after the date that is 30 days after the debtor files a petition”). However, neither of the “dates” in these phrases refers to the date of the filing of the petition and therefore has the possibility for ambiguity related to the time of filing versus the entire day; Rather, these are dates that are keyed to sometime after the filing of the petition.
And while it is generally presumed that “Congress acts intentionally and purposefully,” when it “includes particular language in one section of a statute but omits it in another section of the same Act,” see Russello v. United States,
Arkuszewski first calls these other instances of “date” in the Code “extrinsic ambiguities”; however, extrinsic ambiguity does not refer to inter-textual conflicts — it means an ambiguity that arises from the application of the statute. See In re Draiman,
Arkuszewski next argues that courts interpret the other instances of “date of filing” to mean the moment of filing in order to avoid absurd or uncertain results related to the property of the estate or to avoid a gap period in classifying transfers, but that no such considerations are necessary with the credit counseling requirement. Arkuszewski’s argument, however, ignores the context of this phrase in the
Arkuszewski also argues that the enumerated exemptions from the credit counseling requirement support the interpretation that date of filing means the entire day. The Trustee maintains that these exceptions underscore that credit counseling is a prerequisite to filing. The Court agrees with the Trustee.
Sections 109(h)(2) — (4) establish exceptions and a temporary exemption from the credit counseling requirement. Section 109(h)(2) excuses debtors residing in a district in which the approved credit counseling agencies are not reasonably able to provide adequate services to additional individuals and § 109(h)(4) exempts debtors who are determined by a court hearing to be unable to complete the counseling requirements “because of incapacity, disability, or active military duty in a military combat zone.” 11 U.S.C. § 109(h)(2)-(4). Section 109(h)(3) allows a thirty to forty-five day exemption to debtors who submit a certification of exigent circumstances along with a statement that counseling services were requested but not timely available. Neither party asserts that Arkusz-ewski has applied for or would qualify for any of these sections.
Arkuszewski first argues that § 109(h)(2) and 109(h)(4) are not incompatible with the requirement that the debtor complete counseling on the day of the petition. These sections do not shed any light on this question. Arkuszewski next argues that § 109(h)(3) provides for a thirty to forty-five day “temporary abatement” of the credit counseling requirement when a petitioner requests it with a showing of exigent circumstances. But this section does not preclude the possibility that credit counseling “can only be received after the debtor files a petition when there are exigent circumstances.” Doc. 13 at 5. This stretches the plain meaning of the phrase too far — this section creates an exception in the case of exigent circumstances from the requirement that “an individual may not be a debtor under this title unless such individual has ... received” credit counseling. 11 U.S.C. § 109(h)(1). This phrasing limits those who can qualify to those who receive the counseling. That the statute includes express exemptions from that requirement implies that other, non-expressed exceptions are not valid. To hold otherwise would render § 109(h)(3) superfluous, something the Court must try to avoid in statutory interpretation. See Harrell v. U.S.P.S.,
Arkuszewski further argues that § 109(h)(3) shows that post-petition counseling is not mandated, again relying on In
Finally, the Trustee relies on the national form that is filed with a bankruptcy petition and requires a certification, under penalty of perjury, of compliance with § 109(h) stating either that credit counseling was received “within 180 days before the filing of my bankruptcy case,” or the exemption circumstances have been met. The Court agrees that this form’s language is consistent with a bright line, time-of-filing approach, see In re Lane,
Although the language of § 109(h)(1) is not entirely clear, the majority of courts have found that receipt of credit counseling before the filing of the petition is a pre-requisite to eligibility as a debtor. As discussed above, this Court agrees.
II. Legislative History of Bankruptcy Code Section 109(h)(1)
The Trustee argues that legislative history shows Congress’s intent to make credit counseling a pre-filing requirement. Arkuszewski states that Congress’s intent is unclear as to when debtors must complete the counseling. When statutory language is ambiguous, the Court may look to legislative history to help resolve the ambiguity. See Milner v. Dep’t of Navy,
Section 109(h)(1) was amended in 2010 through the Bankruptcy Technical Corrections Act of 2010, Pub.L. 111-327,124 Stat. 3557 (Dec. 22, 2010). Prior to this amendment, this section stated that an individual could not be a debtor unless he or she received credit counseling “during the 180-day period preceding the date of filing of the petition.” 11 U.S.C. § 109(h)(1) (2005) (emphasis added). There was a split among bankruptcy courts on how to interpret the timing of this requirement and whether a petitioner could receive counseling on the day of the filing or whether the statute required a “waiting period” of at least one day prior to filing. See In re Francisco,
The statute contains no indication that the change to § 109(h)(1) was anything other than a technical amendment intended to clarify that, as held by the better reasoned decisions, the required prepetition credit counseling could be received up until the moment of filing of the bankruptcy petition, and need not be received prior to the calendar day on which the petition was filed.
In re Koo,
Arkuszewski argues that this amendment shows Congress backing away from a “waiting period,” therefore credit counseling need not occur before the actual filing of the petition. However, courts and legal scholars still view credit counseling as a pre-filing requirement. In support of the moment of filing interpretation, the In re Koo court pointed to the 2005 House Report adding the credit counseling requirement “to require an individual — as a condition of eligibility for bankruptcy relief— to receive credit counseling within the 180-day period preceding the filing of a bankruptcy case” as evidence of Congress’s intention that this be a pre-filing requirement and concluded that the technical amendment in 2010 “was written with that legislative history on the books” and did nothing to alter it. Id. at *2 (citing H.R.Rep. No. 10931, at 54 (2005)).
That same House Report expressed Congress’s intent that credit counseling would assist the individual in making an “informed choice” about filing for bankruptcy, in the hopes that some cases would be resolved outside the court system. See H.R.Rep. No. 109-31, at 2 (“[The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005] requires debtors to receive credit counseling before they can be eligible for bankruptcy relief so that they will make an informed choice about bankruptcy, its alternatives, and consequences.”). Legal commentators agree that Congress intended credit counseling to be a pre-filing requirement. See Lindsay Sherp, To Strike or to Dismiss, That is the Question: How Courts Should Dispose of Bankruptcy Cases Filed by Debtors Who Failed to Obtain Credit Counseling, 60 Baylor L. Rev. 317, 320 (2008) (“The language of section 109(h) unambiguously reflects Congress’ intention to prevent individuals from filing for bankruptcy without first receiving credit counseling.”); Michael D. Sousa, Just Punch My Bankruptcy Ticket: A Qualitative Study of Mandatory Debtor Financial Education, 97 Marq. L. Rev. 391, 398 (2013) (“As for the pre-filing credit counseling course, Congress’s mission was to have prospective debtors understand the potential alternatives to filing for bankruptcy relief with the goal of having a significant portion of them settle their debt obligations outside of the bankruptcy system.”). The United States Government Accountability Office and legal scholars have acknowledged, however, that there is little to indicate that this counseling actually convinces petitioners to avoid a bankruptcy action. U.S. Gov’t Accountability Office, GAO-07-203, Bankruptcy Reform: Value of Credit Counseling Requirement is Not Clear, Highlights (2007) (“[T]he requirement may often serve more as an administrative obstacle than as a timely presentation of
Whether § 109(h)(1) has had the desired effect, the legislative history suggests that Congress intended the technical amendment to clarify that a petitioner had up until the moment of filing to receive the credit counseling,' bringing the statute in line with the so-called “bright line” cases. See In re Francisco,
Arkuszewski finally asks the Court to find in her favor because the Bankruptcy Code should be liberally interpreted to give debtor “the full measure of the relief afforded by Congress.” See Wright v. Union Cent. Life Ins. Co.,
Arkuszewski did not comply with the terms of § 109(h)(1) by completing her credit counseling approximately six hours after filing her Petition.
CONCLUSION
For the foregoing reasons, the decision of the bankruptcy court in dismissing Ar-kuszewski’s Petition is upheld. Arkuszew-ski’s'appeal [1] is denied.
Notes
. The leading bankruptcy treatise has cited Walker for this proposition. 2 Alan N. Res-nick & Henry J. Somme, Collier on Bankruptcy 109.09[1] (16th ed. 2015) ("Under the language of section 109(h), as amended in 2010, it appears that the credit counseling briefing could occur after the petition is filed, as long as it occurs on the same day. However, debtors would be well-advised to obtain the briefing prior to filing the petition if at all possible.” (citations omitted)).
. Although not argued before this Court, the bankruptcy court noted that Arkuszewski said a clerk’s office employee told her that it was "good enough” that she had started the process of credit counseling before filing. In re Arkuszewski,