Opinion
Case No.: 3:22-bk-00813-BAJ
2022-06-09
IN RE: Justice Queen AL-AMEEN, Debtor.
ORDER DENYING DEBTOR'S MOTION TO WAIVE REQUIREMENT OF OBTAINING CREDIT COUNSELING PRIOR TO FILING PETITION AND DISMISSING CASE
Jason A. Burgess, United States-Bankruptcy Judge
This case came before the Court for hearing on June 6, 2022, on the Debtor's Motion to Waive Requirement of Obtaining Credit Counseling Prior to Filing Petition (the "Motion") (Doc. 14). The Chapter 7 Trustee appeared at the hearing but did not take a position on the matter. The Debtor failed to appear at the hearing. At the conclusion of the hearing, the Court took the matter under advisement. As the Court will expound on in this Order, 11 U.S.C. §§ 109(h)(3)(A) and (h)(4) sets forth narrow and clear requirements that a Debtor must meet for a bankruptcy court to grant a waiver of the pre-petition credit counseling requirement. Upon review, and for the reasons explained herein, the Court finds the Debtor failed to meet any of the requirements to the narrowly tailored exceptions. Accordingly, the Court will deny the Motion, and the Case will be dismissed because the Debtor is not eligible to be a debtor under the Bankruptcy Code.
On the day of the hearing, the Debtor filed a "Judicial Notice" in which she stated that she would not be present for the hearing. (Doc. 34). No explanation, however, was given as to why she could not attend the duly noticed hearing. The Debtor also stated that she had completed the credit counseling course and would soon be filing a certificate of completion with the Court. Id. On June 8, 2022, the Debtor filed a Certificate of Counseling which reflects that she completed the course on June 7, 2022, more than a month after the filing of her petition. (Doc. 36). "The language of § 109(h)(1) is plain and unambiguous." In re Carey, 341 B.R. 798, 802 (Bankr. M.D. Fla. 2006). Under § 109(h)(1) a debtor is required to receive credit counseling within 180 days prior to filing a petition in bankruptcy. Therefore, although the Court acknowledges that the Debtor has now completed the course, it does not alter the Court's analysis as to whether the Debtor has met any of the narrowly tailored exceptions to the pre-petition credit counseling requirement under § 109(h)(1).
Background
On April 25, 2022, the Debtor filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code. The docket reflects that this is the fourth time the Debtor has filed for bankruptcy protection since 2015. On May 9, 2022, the Debtor filed the Motion and in support thereof alleged that she was unable to comply with the requirements of 11 U.S.C. §§ 109(h)(3)(A) and (h)(4) because she is disabled. The Motion is vague as to the nature and extent of the Debtor's disability and does not contain a satisfactory explanation as to how her disability prevented her from taking a telephonic or online credit counseling course. Further, there is no supporting documentation attached to the Motion.
The previous cases filed by the Debtor include: a Chapter 13 case filed in the Northern District of Georgia on April 5, 2021, and dismissed on April 30, 2021, for failure to file information (Case No. 21-bk-52779-PMB); a Chapter 7 case filed in the Middle District of Florida on March 22, 2019, and closed on July 20, 2020 (Case No. 3:19-bk-01041-JAF); and a Chapter 13 case filed in the Middle District of Georgia on March 2, 2015, and dismissed for failure to make plan payments on January 17, 2017 (Case No. 15-bk-70245-JTL). Notably, in the Debtor's former Chapter 7 case, the court denied the Debtor's Motion for Exemption from Completion of Financial Management Course, and the entry of the Debtor's discharge was subsequently withheld because of her failure to file the certificate of completion as required by 11 U.S.C. § 727(a)(11). (Case No. 3:19-bk-01041-JAF, Docs. 71, 118).
The docket reflects that in addition to the filing of the petition, that the Debtor was capable of filing various pleadings soon after the commencement of the case, including an Application to Have Filing Fee Waived, Schedules A-J, and a detailed Motion for Contempt Against the Jacksonville Housing Authority. (Docs. 3, 15, 20).
Discussion
A. 11 U.S.C. § 109(h)(3)(A)
The requirements to obtain a waiver of the pre-petition credit counseling requirement under 11 U.S.C. § 109(h)(3)(A) are narrow, and a debtor must submit a certification that:
(i) describes exigent circumstances that merit a waiver of the requirements of paragraph (1); (ii) states that the debtor requested credit counseling services from an approved nonprofit budget and credit counseling agency, but was unable to obtain the services referred to in paragraph (1) during the 7-day period beginning on the date on which the debtor made that request; and (iii) is satisfactory to the court. (emphasis added)
Prior to discussing the merits of the Debtor's Motion, the Court notes that based on the clear language in the statute, compliance can only be excused if a debtor satisfies all three requirements of § 109(h)(3)(A) .
See In re Davenport, 335 B.R. 218, 221 (Bankr. M.D. Fla. 2005).
Pursuant to the first statutory requirement, the Court must decide whether the Debtor has described exigent circumstances that justify the waiver of the credit counseling requirement. As § 109(h)(3)(A) does not define "exigent circumstances," the determination of "[w]hether exigent circumstances exist is an issue that courts determine on a case-by-case basis by looking at the surrounding facts." In re England, No. 8:13-BK-05850-MGW, 2013 WL 2467789, at *1 (Bankr. M.D. Fla. June 10, 2013).
The Debtor's Motion is vague and simply requests a waiver based upon a disability. The Court scheduled the hearing to give the Debtor the opportunity to explain the exigent circumstances that prevented her from complying with the credit counseling requirement. However, the Debtor failed to appear at the hearing. Upon review of the docket, the Court notes that although the Debtor was capable of preparing and filing her petition, along with various other pleadings, soon after the commencement of the case, she was inexplicably not capable of complying with the requirement to take a simple pre-petition credit counseling course. Additionally, because this is the Debtor's fourth time filing for bankruptcy protection she should have been familiar with the pre-petition credit counseling requirement. Based upon the Motion, the Court cannot find that exigent circumstances existed which merit a waiver of the pre-petition credit counseling requirement.
The Debtor refers to herself in the Motion "as a disabled citizen [to have] survived head injuries," but provides no additional details or documentation. (Doc. 14).
Because the Debtor failed to appear at the hearing, it is also not clear to the Court why the Debtor was unable to complete the course pre-petition as required by § 109(h)(1), but was capable of taking the course approximately six weeks after the petition date, which also coincided with when the Court had set the matter for hearing.
Under the second requirement of § 109(h)(3)(A), the Court must decide whether the Debtor requested credit counseling services from an approved nonprofit budget and credit counseling agency but was unable to obtain the services during the 7-day period beginning on the date the debtor made the request. The Debtor's Motion is silent as to the second requirement, and as already stated she failed to appear at the hearing. Therefore, the Debtor fails to meet the second requirement.
The Court next looks at the third requirement under § 109(h)(3)(A), which requires a determination that the Debtor's certification "is satisfactory to the court." § 109(h)(3)(A). Based upon the Debtor's failure to meet the requirements of § 109(h)(3)(A)(i) and (ii), the Court cannot be satisfied with the certification. Therefore, the third factor is also not present in this case.
(i) 11 U.S.C. § 109(h)(4)
As the Debtor fails to meet the requirements under § 109(h)(3)(A) to obtain a waiver of the pre-petition credit counseling requirement, the Court next considers whether the Debtor is entitled to a waiver under § 109(h)(4) based upon her claim that she is disabled. 11 U.S.C. § 109(h)(4) provides:
The requirements of paragraph (1) shall not apply with respect to a debtor whom the court determines, after notice and hearing, is unable to complete those requirements because of incapacity, disability, or active military duty in a military combat zone. For the purposes of this paragraph, incapacity means that the debtor is impaired by reason of mental illness or mental deficiency so that he is incapable of realizing and making rational decisions with respect to his financial responsibilities; and "disability" means that the debtor is so physically impaired as to be unable, after reasonable effort, to participate in an in person, telephone, or Internet briefing required under paragraph (1).
The exemption provided for in § 109(h)(4) is a permanent exemption and the Debtor qualifies only if she is not able to complete the credit counseling "because of incapacity, disability, or active military duty." 11 U.S.C. § 109(h)(4). As reflected on the Debtor's petition, the Debtor claims that she was not required to receive pre-petition credit counseling because of a disability. Specifically, under the section titled "Explain Your Efforts to Receive a Briefing About Credit Counseling," the Debtor selected the box which states: "[m]y physical disability causes me to be unable to participate in a briefing in person, by phone, or through the internet, even after I reasonably tried to do so." (Doc. 1, p. 5).
The Court finds that the statute is very clear in how disability is defined in the context of § 109(h)(4), and "the duty of the courts is to adhere to it." In re Grantham, 617 B.R. 344, 354 (Bankr. C.D. Cal. 2020). As wisely observed by another bankruptcy court that closely examined the statutory text of § 109(h)(4) :
The court begins from the premise that the term "disability" is commonly used to refer to an impairment that is inherent to the person, not one which is imposed by external conditions the alleviation of which would relieve the disability. It is clear, of course, that Congress was not satisfied that the common understanding of "disability" would be sufficient; after all, the statute takes the extra step of defining "disability." ...... It appears more likely that in choosing to define "disability," Congress did not intend to alter its common meaning, but rather meant to clarify the degree or severity of the disability that was required to warrant an exemption. This reading is borne out by Congress's use of the phrase "so physically impaired ...," U.S.C. § 109(h)(4) (emphasis added), which implies a distinction from some lesser form of physical impairment.
In re Hubel, 395 B.R. 823, 826 (N.D.N.Y. 2008).
Additionally, some courts have adopted a three prong test to determine whether a debtor is eligible to qualify for a disability exemption under § 109(h)(4). The test requires a debtor to demonstrate that: "(1) the debtor is severely physically impaired; (2) the debtor has made a reasonable effort, despite the impairment, to participate in the prepetition credit counseling; and (3) the debtor is unable, because of the impairment, to participate meaningfully in an in person, telephone, or Internet briefing prepetition." In re Tulper, 345 B.R. 322, 326 (Bankr. D. Colo. 2006) (stating that exemptions under § 109(h)(4) are "only available under limited circumstances" because the statute "is rigid in setting the bar for the granting of the exemption very high."); see also In re Smith, 2007 WL 5117434, at *1 (Bankr. D.S.C. Nov. 29, 2007) (finding that the Social Security Administration's decision that the debtor was eligible for disability benefits did not alone "prove physical disability so severe as to render Debtor unable to participate in a pre-petition credit counseling briefing"); In re Winston, No. 07-20593-D-13L, 2007 WL 1650926, at *1 (Bankr. E.D. Cal. June 6, 2007) ; In re Hall, 347 B.R. 532, 534-35 (Bankr. N.D. W.Va. 2006) (citing 2 Collier on Bankruptcy P 109.09[4] (Alan N. Resnick & Henry J. Sommer eds. 15th ed. rev. 2006)) ("The purpose of the exemption is to avoid ‘the absurd situation in which a debtor would be required to obtain a briefing even if suffering from Alzheimer's disease or some other disability that would make the briefing meaningless or even impossible.’ "). The Court also agrees with the reasoning used by the court in Hall which states:
[W]hether or not a debtor suffers from a severe physical impairment is a matter of proof. What constitutes a "reasonable effort," as is required by § 109(h), is not defined and is open to a case by case determination. Indeed, a debtor's physical impairment may be so severe as to wholly excuse the debtor from making any effort in obtaining the required service under the premise that the law will not require a futile act. Also, § 109(h) requires that a debtor be able to "participate in an in person, telephone, or internet briefing." What constitutes "participation" is a value judgment.... If a debtor cannot meaningfully participate in an instructional course on personal financial management due to a "disability," then the course will not aid the debtor in avoiding future financial distress, and the debtor's mere physical
presence during a course serves no meaningful purpose.
In re Hall, 347 B.R. 532, 536 (Bankr. N.D. W.Va. 2006).
As recognized by the court in Hall, whether a debtor is inflicted with a severe physical impairment is a matter of proof. Id. at 536. The Court finds that the Debtor has woefully failed to offer adequate proof that she qualifies for the exemption under § 109(h)(4). As already discussed, the Debtor's Motion is vague and does not include any supporting documentation with respect to the Debtor's disability. Therefore, there is no evidence before the Court as to why the Debtor's disability rendered her "so physically impaired" as to prevent her from completing a telephonic or online pre-petition credit counseling course. The Court also notes that to the extent the Debtor suffers from a disability, the severity of the disability did not prevent the Debtor from preparing and filing her petition, as well as various other pleadings, including a detailed Motion for Contempt Against the Jacksonville Housing Authority (Doc. 20), soon after the commencement of her case. Moreover, the Debtor was capable of successfully taking the credit counseling course only six weeks after filing her bankruptcy petition. (Doc. 36). For these reasons, the Court finds the Debtor does not qualify as disabled under the definition prescribed in § 109(h)(4).
Conclusion
Based upon the foregoing, the Court finds that the Debtor failed to meet the narrow requirements set forth in §§ 109(h)(3)(A) and (h)(4). As the Debtor is not eligible to obtain a waiver of the pre-petition credit counseling requirement, the Court must dismiss the Case because she may not be a debtor under the bankruptcy code based upon her failure to comply with the statute. Accordingly, it is
Pursuant to 11 U.S.C. § 109(h)(l) "[s]ubject to paragraphs (2) and (3), and notwithstanding any other provision of this section other than paragraph (4) of this subsection, 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." (emphasis added).
ORDERED :
1. The Debtor's Motion is DENIED .
2. The Case is DISMISSED .