In Re Falcone
MEMORANDUM OF DECISION REGARDING MOTION TO DISMISS PETITION
I. Introduction
The matter before the Court is the motion of Dartmouth Supply, Inc. (“Dartmouth”) to dismiss the petition of Mary G. Falcone (the “Debtor”) on the grounds that the Debtor failed to comply with 11 U.S.C. § 109(h)(3). Although the Debtor acknowledges that she did not comply with the statutоry requirements, she asks that I exercise my discretion and find that she has substantially complied. For the reasons set forth below, I will enter an order granting the motion to dismiss.
II. Background
On January 19, 2007, the Debtor filed for relief under Chapter 13. On Form Bl, p. 2, the Debtor disclosed that she completed and signed Exhibit D and made it part of the petition. In Exhibit D, Individual Debtor’s Statement of Compliance With Credit Counseling Requirement, the Debtor checked Statement No. 3. That Statement provides as follows:
I certify that I requеsted credit counseling services from an approved agency but was unable to obtain the services during the five days from the time I made my request, and the following exigent circumstances merit a temporary waiver of the credit counseling requirement so I can file my bankruptcy case now. [Must be accompanied by a motion for determination by the court.] [Summarize exigent circumstances here.]
In support of this choice, the Debtor explained that shе was unable to obtain counseling on the petition date as the foreclosure sale of her house was to be conducted that day and any counseling would have delayed the petition. She further explained that she intendеd to obtain counseling. The Debtor did not file a motion to accompany the form.
On January 22, 2007, the Court issued an Order to Update. Of the documents requested, one included the Certification of Credit Counseling or a Certified Request for an Extension of Time. The Order to Update reflected that these documents were due on February 6, 2007. Directly below the due date, the Order to Update provided that the due date may be subject to limitations set forth in 11 U.S.C. § 109(h).
On February 2, 2007, the Debtor filed hеr Certificate of Credit Counseling. The document reflects that the Debtor obtained counseling on February 1, 2007 at 5:37 p.m. On February 15, 2007, the Debt- or filed another Exhibit D to her petition. In this exhibit, she checked off Statement
On March 9, 2007, Dartmouth filed its motion to dismiss on the grounds that the Debtor failed to comply with 11 U.S.C. § 109(h)(1). Dartmouth explained that the Debtor did not obtain credit counseling before filing her petition and did not file a motion to obtain a waiver of her obligation to do so. Dartmouth contended that based upon the plain language in the statute, the case should be dismissed. It further argued that even if I were to consider applying a totality of the circumstances test to the facts, dismissal would be warranted particularly in light of the fact that foreclosure should not be considered an exigеnt circumstance.
In her response, the Debtor explained that the applicable Exhibit D is the one she filed with her petition and not the one that was filed on February 15, 2007. The Debtor further explained that she failed to file an accompanying motion due to an oversight at her counsel’s office. She provided the Court with a certificate of counseling within 15 days of the date of petition which she argues satisfies Fed. R. Bankr.P. 1007(b)(3).
With respect to the motion for exigent сircumstances that she intends to file, the Debtor described that it was her estranged husband who approached counsel on January 17, 2007 to discuss the foreclosure which was to be held on January 19, 2007. Counsel contacted the Debtor оn January 18, 2007. Debtor first heard of the foreclosure on January 17, 2007. It was not until the morning of January 19, 2007, that the Debtor and her counsel decided that she should file a petition in order to stay the foreclosure proceeding. The Debtor, howеver, was working out of state that day and was not aware until that evening of the credit counseling requirement. Despite several attempts, she was unable to reach credit counselors over the weekend.
On March 28, 2007, the Debtor filed a motion to extend the time for credit counseling and a certification of exigent circumstances that only her counsel signed. The motion does not contain a certification that the Debtor received or attempted to receive any counseling pre-petition. In the motion, the Debtor claimed that her failure to file for credit counseling prior to filing was due to oversight and the misunderstanding of a paralegal. She then offered the samе chronology as was contained in her response to the motion to dismiss.
At the hearing on the dismissal motion and the Debtor’s response, the parties repeated the foregoing arguments. I took the matter under advisement. The following constitutes my finding of facts and conclusions of law.
III. Discussion
Dartmouth contends that no matter which standard I apply to interpret the requirements of 11 U.S.C. § 109(h), the facts of this case warrant dismissal. The Debtor contends that § 109(h) is not jurisdictional and that in exercising my discretion, I should deny the motion to dismiss. In support, the Debtor cites to
In re Mon-edad,
Section 109(h)(3) provides for an extension of time to obtаin the counseling if the debtor can demonstrate exigent circumstances warranting a waiver and that prior to filing the debtor attempted but could not procure counseling for five days after making the request. 11 U.S.C. §§ 109(h)(3)(A)® and (ii). The certification for an extension must be satisfactory to the court. 11 U.S.C. § 109(h)(3)(A)(iii). These three requirements are in the conjunctive. The extension provides the debt- or with up to 45 days post-petition to complete the counseling.
The issue before the Cоurt is whether the Debtor is entitled to a continuance to comply with 11 U.S.C. § 109(h)(1), pursuant to 11 U.S.C. § 109(h)(3), or whether her case should be dismissed or stricken for her failure to comply with the statute. Dartmouth argues that because the Debtor did not file a certifiсation with respect to exigent circumstances and did not submit documentation that would demonstrate that she sought but was unable to obtain counseling pre-petition, her case should be dismissed. The Debtor counters that I should exercise my discretion and look to the totality of circumstances including the exigent circumstances of the case.
The vast majority of cases that have considered whether to grant a debtor a continuance to obtain crеdit counseling even though the debtor has failed to certify an attempt to obtain such counseling pre-petition, have ruled against the debtor for failure to comply with § 109(h)(3)(A)(ii).
See Clippard v. Bass,
The Debtor is correct that when interpreting 11 U.S.C. § 109(h)(3), some courts have ruled that they may exercise discretion to determine compliance with the statute.
See, e.g., In re Hess,
I need not decide whether I have such discretion as dismissal is warranted whether the standard is strict application of the statute or an exercise of discretion. The Debtor made no attempt to comply with the requirements pre-petition. The circumstances were not extraordinary. The Debtor did not meet the requirements for an extension of time and did not comply with § 109(h)(1). As such, I cannot grant an extension of time and conclude that the Debtor is ineligible to be a debtor.
The second issue presented in this case is whether I must dismiss the case or whether I should rule that the petition should be stricken. There is a split of authority. A majority of courts have ruled that dismissal is the proper remedy on the grounds that because a bankruptcy court retains jurisdiction to decide eligibility, it has a case before it that can only be disposed of by way of dismissal.
Bass,
The minority view is that because the debtor was inеligible to file, there is no case before the court and the petition must be stricken. Such a result, these courts contend
inter alia,
would also be consistent with 11 U.S.C. § 707, which does not provide that failure to seek credit counseling is grounds for dismissal, and an equitable remedy for the multiple filing penalties in 11 U.S.C. § 362.
See Adams v. Finlay,
In
Torneo,
the court explained that the courts which have stricken petitions have provided more commentary оn the grounds therefor than those courts that have dismissed petitions for failure to comply with 11 U.S.C. § 109(h).
IV. Conclusion
For the reasons set forth above, I will enter an order granting the motion to dismiss.
Notes
. This exception is not applicable in this district.
. Section 109(h)(4) provides for a total exemption from credit counseling if a debtor, on motion to the court, can demonstrate incapacity, disability or active military duty. There is no argument that this subsection is applicable to the Debtor.
. 11 U.S.C. § 521(i)(l) provides for automatic dismissal if the debtor fails to file the documents listed in (a)(1) of that section. The credit counseling requirements are listed in subsection (b).