In Re Fischer
- Reporters:
- ,
- Before:
- Kishel
This Chapter 7 case came on before the undersigned United States Bankruptcy Judge at Mankato, Minnesota, on March 24,1987, upon Debtor‘s motion for an order dismissing this case. Debtor appeared by his attorney, Cyril J. Bernardy. No appearance was made or on behalf of the Chapter 7 Trustee or any other party in interest. Upon the motion, a post-hearing supporting affidavit, and all the other files, records, and proceedings in this case, the Court makes the following Order.
On November 10, 1986, Debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code in this Court. In his Statement of Financial Affairs, Debtor alleged that he was currently engaged in farming. He apparently farms “in partnership” with his parents. His A schedules reveal a debt structure typical of that of a Minnesota farmer-debtor, and include secured obligations in favor of Farm Credit Services, the Federal Land Bank, ASCS, and several contract for deed vendors. His B schedules list farming equipment of a total value of $260,000.00. He schedules one or the other of his parents as joint owners on several parcels of real estate and joint obligors on several secured debts. He also schedules his parents as his major unsecured creditors, for an obligation of $85,000.00. On his Schedule C, Debtor announced his intention to retain all of the property encumbered by his various secured debts and to reaffirm all of those debts other than, possibly, some debt subject to his lien avoidance rights under
The Notice of No-Assets Bankruptcy Case, Etc. entered by the Clerk on November 18, 1986, set December 17, 1986, as the date of the meeting of creditors in this case. Debtor’s counsel advises the Court that Debtor did not appear at the meeting due to illness. The Chapter 7 Trustee has never complained formally or informally of Debtor’s nonattendance. On January 27, 1987, the Federal Land Bank Association of St. Paul and Production Credit Association of Southwest Minnesota filed motions for relief from stay, which came on before the undersigned for hearing on February 24, 1987. On February 11, 1987, Debtor filed an ex parte motion requesting the Court to dismiss this case. The Court declined to consider the motion ex parte and advised Debtor’s counsel through the Clerk’s office that a motion to dismiss required notice to all creditors and a hearing. No creditor or party in interest timely commenced proceedings objecting to Debtor’s discharge in bankruptcy. On February 18, 1987, this Court entered an Order granting Debtor a discharge in bankruptcy. On February 20, 1987, Debtor’s counsel served all of Debt- or’s creditors with a motion for dismissal, the one now before the Court. On February 24, 1987, the Court heard the two motions for relief from stay. Debtor did not appear in opposition, and the Court entered Orders granting both motions.
Debtor now requests the Court to dismiss this case. He states that his various debt obligations to Federal Land Bank and the Production Credit Association will be satisfied in some fashion, through the Farmers State Bank of Mountain Lake’s agreement “to back the operation of [his] parents” once his bankruptcy case is dis
Counsel does not cite the section of the Bankruptcy Code on which he is relying as authority for the motion to dismiss.
However, one critical fact militates against dismissal of this case at Debtor’s behest. The Court has already granted Debtor a discharge in bankruptcy. At hearing, counsel opined that the Court somehow was remiss in entering discharge, as Debtor had never attended a meeting of creditors. Review of the docket reveals that neither the Trustee nor any creditor formally or informally complained of Debt- or’s nonattendance at the meeting of creditors. No party in interest timely objected to Debtor’s discharge under
The grant of discharge prevents consideration on the merits of Debtor’s motion in the form it was cast. Dismissal of this case at this point would leave Debtor with all of the benefits of discharge, without having gone through the process of liquidation under Chapter 7. 1 Dismissal without revocation of discharge would defeat equity by upsetting the mutuality of debtors’ benefits and debtors’ duties in bankruptcy.
It is then appropriate to address the issue of Debtor’s right to obtain a revocation of his discharge, anticipating that that may be his next request.
In addition, the enumerated grounds under
If a bankruptcy court were to revoke a discharge whenever a bankrupt reaffirmed and paid his debts, debtors might be encouraged to file for bankruptcy in situations where they might not otherwise. Filing for bankruptcy is intended to be a drastic step, one which a debtor should take only when other means of resolving financial problems have failed. While the debtor clearly benefits from a discharge in bankruptcy, he does so only at a price; he may, for example, find that his creditworthiness has been seriously impaired by the bankruptcy adjudication. If a bankrupt thought that he could obtain all the benefits of bankruptcy but, in the long term, could avoid the unpleasant side effects, he might be encouraged to file for bankruptcy before trying other, less drastic means of resolving his problems. Thus, the seriousness with which filing for bankruptcy is properly regarded could be undermined.
In re Morgan, 668 F.2d at 263-64.
For these reasons, this Court will not revoke Debtor’s discharge at the present time, and would not do so if Debtor specifically petitioned for that relief on notice to creditors through a written motion or adversary proceeding. It is unfortunate that Debtor’s initial decision to seek bankruptcy relief may have been ill-considered. However, this Court cannot take responsibility for Debtor’s original decision to file for bankruptcy, and it cannot take responsibility for his failure to exercise sufficient control over the progress of this case to prevent the outcome today. To allow Debtor to revoke his discharge and/or to dismiss his bankruptcy case after he has enjoyed the manifest protection of the automatic stay for months, after creditors have been forced to come to this Court for relief from stay to pursue their state-law remedies, and after the Court has entered discharge, would undermine the integrity of the bankruptcy system by cheapening the relief which Chapter 7 affords to financially-distressed debtors.
The Court is aware that this conclusion may affect Debtor’s ability to negotiate the refinancing of his farm-related debt. By all rights, however, it should not of itself thwart the plans described in Debtor’s affidavit. Even if the Court had revoked discharge and dismissed the case, the bankruptcy filing would remain a matter of public record which would still show up on any summary of financial information prepared by a credit bureau. Debtor has lost no property through liquidation to date; it is by no means certain that he will. His bankruptcy discharge in no way affects his
WHEREFORE, IT IS HEREBY ORDERED:
1. That Debtor’s motion for dismissal of this case is denied.
2. That Debtor shall attend an adjourned meeting of creditors in this case as soon as his Chapter 7 Trustee schedules it.
Notes
. Neither, the Court suspects, would dismissal really meet Debtor’s needs. Debtor has not actually alleged that the Farmers State Bank of Mountain Lake requires revocation of discharge as a prerequisite to its refinancing proposal. However, it is logical to assume that this is so — if only by imputing to the Bank the reasonable wish to have a paper record on Debtor’s creditworthiness which is free of the besmirchment of bankruptcy discharge.