Opinion
CASE NO. 18-11026
08-22-2018
IN THE MATTER OF: DERRICK JERROD JOHNSON Debtor
DECISION
On August 22, 2018
This case is part of a disturbing pattern of abusive filings that have plagued the court over the past six to nine months. The debtor, who proceeds pro se, files a petition for relief under Chapter 13, representing, under oath, that it received the required credit counseling necessary for eligibility, but does not have the certificate demonstrating that fact. See, Voluntary Petition, part 5, No. 16. The filing is a minimum one consisting of: the petition; a list of creditors, which identifies only a single creditor that seems to be a mortgage holder; and an application to pay the filing fee in installments. See, N.D. Ind. L.B.R. B-1002-1(a) (listing minimum requirements established by the Bankruptcy Code and Rules of Bankruptcy Procedure). Although such minimal filings are permissible, debtors are required to follow through with what they started and file the remaining documents (the various bankruptcy schedules, statements, a proposed plan, and the credit counseling certificate) within 14 days, as well as pay the filing fee installments. None of that happens and the cases end up being dismissed, often without prejudice because the automatic dismissal deadline of § 521(i) passes before the court can act after giving the requisite notice to the debtor, the trustee, and creditors. Even when the court has been able to attach some sanction or other prejudice to the dismissal, see, 11 U.S.C. § 349(a), the frequency with which the pattern repeats itself suggests that the sanctions it has thus far been using are not sufficient to deter the abuse. That is how the present case comes to be before the court.
The case began on June 4, with a minimum filing. It was dismissed on July 9, 2018 after the debtor failed to respond to the court's order of June 5, 2018 which required him to demonstrate eligibility for relief under title 11 by filing a certificate demonstrating the completion of pre-petition credit counseling or show cause why compliance should be excused, see, 11 U.S.C. § 109(h), and failed to pay the July 5 installment (he had proposed) due on account of the filing fee, as required by the court's order of June 4, 2018. At the time of the dismissal, the chapter 13 trustee had filed a motion to dismiss, because of the debtor's failure to file required schedules, statements and a proposed chapter 13 plan, see, 11 U.S.C. §§ 521(a); 1321, which had been scheduled for a hearing on August 7, 2018; so, the order of dismissal retained jurisdiction to consider whether the case should be dismissed with any prejudice and the hearing of the 8th would remain on the calendar for that purpose. The debtor failed to appear for that hearing, at which the court concluded that some type of prejudice was appropriate, that it should be more severe than what the court had heretofore been resorting to, and the matter was taken under advisement to consider just what that should be: in particular a one year restriction on the debtor's eligibility for relief under title 11, a denial of discharge of all the debts that might have been discharge in this case, or something else.
This decision supplements the findings of fact and conclusions of law stated on the record at that hearing. --------
The court has discretion to dismiss a case with prejudice when it finds cause to do so, either through § 349(a) or § 105 of the United States Bankruptcy Code. See, 11 U.S.C. § 349(a), 105(a). See also, In re Casse, 198 F.3d 327, 335 (2nd Ci.r 1999); In re Tomlin, 105 F.3d 933, 938 (4th Cir. 1997); In re Dempsey, 247 Fed. Appx 21. (7th Cir. 2007); In re Cusano, 431 B.R. 726, 736 (6th Cir. BAP 2010); In re McNichols, 454 B.R. 422, 435 (Bankr. N.D. Ill. 2000); In re Hall, 258 B.R. 908, 910 (Bankr. N.D. Ind. 2001). In a like manner, what kind of prejudice (or how much) it should attach to such a dismissal is also a matter committed to its discretion. See, Casse, 198 F.3d 327; Tomlin, 105 F.3d at 938; Cusano, 431 B.R. at 736; In re Gonzalez-Ruiz, 341 B.R. 371, 386 (1st Cir. BAP 2006). It can run a gamut from a short bar to further filings, to the wholesale denial of the opportunity to ever discharge debts that might have been discharged in the case, and anything in between, see, Casse, 198 F.3d 327; Tomlin, 105 F.3d at 937; Gonzalez-Ruiz, 341 B.R. at 386; Cusano, 431 B.R. at 736 (2 year bar); In re Garcia, 479 B.R. 488 (Bankr. N.D. Ind. 2012) (3 year bar); Hall, 258 B.R. at 911; In re Jones, 289 B.R. 436 (Bankr. M.D. Ala. 2003) (discharge denied and 5 year bar), in order to successfully address, punish and deter the misconduct before it.
The court is satisfied that this case is an abuse of the bankruptcy process. It was filed for no purpose other than to create the automatic stay and the debtor never had the intent or the desire to follow through with any of the obligations that come with filing a petition for relief under Chapter 13. Furthermore, the debtor misrepresented that intent when he sought (and received) permission to pay the filing fee in installments, constituting a fraud upon the court. The debtor also made a false oath when he swore, under penalties of perjury, that he had completed the pre-petition credit counseling which is a prerequisite for an individual's eligibility for bankruptcy relief. As such, that representation was material and, given the lack of any response to the court's order to show cause, the court concludes it was knowingly and fraudulently made.
Although the court could dismiss this case with prejudice to the debtor's opportunity to ever discharge the debts that might have been dischargeable in this case, see e.g., 11 U.S.C. § 727(a)(4)(A) (discharge may be denied where the debtor knowingly and fraudulently makes a false oath), it will not do so; at least not now. Nonetheless, it is satisfied that something more than the 180-day bar so often resorted to is necessary to curb the systemic abuse this case represents. Accordingly, the court concludes that the debtor shall not be eligible for relief under any Chapter of title 11 for one year from this date. Furthermore, to combat the abusive use of the opportunity to pay the filing fee in installments, the debtor shall not be eligible for relief under any chapter of title 11 until all fees due the clerk of court on account of this case have been paid in full and in any future case the debtor may file the debtor must pay the fees in full upon the presentation of the case and may not ask to waive those fees or to pay them in installments.
An appropriate order will be entered.
/s/ Robert E . Grant
Chief Judge, United States Bankruptcy Court