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BAPCPA imposes same standards and responsibilities on debtors and counsel for omitted or false data on schedules as is traditionally applied to other kinds of pleadings

In re Thomas, 342 B.R. 758 (S.D.Tex. 2006) RULE 9011

BAPCPA imposes same standards and responsibilities on debtors and counsel for omitted or false data on schedules as is traditionally applied to other kinds of pleadings. Debtor criticised here for not informing her attorney of student loan lawsuit and for not advising attorney for loan agency of her bankruptcy, and debtor’s attorney criticised for not making sufficient inquiry into debtor’s creditors to discover the lawsuit.


In re McCray, 342 B.R. 668 (Bkrtcy.D.Dist.Colo. 2006) §§362(b)(22), 362(d)(4)

Debtors had filed several petitions to frustrate eviction by owner who had newly acquired property in foreclosure. Court held that there was no lease or rental agreement, nor did the owner have “security interest” per se because by acquiring ownership its security interest was extinguished, and accordingly new BAPCPA provisions of §362 did not apply. Nevertheless the court ruled that it had the power under §105(a) to terminate the stay and issue an order preventing the stay from arising in cases filed by those debtors over the next 2 years.


In re Hess, 347 B.R. 489 (Bkrtcy.D.Vt. 2006)

In one case the debtor’s petition was inadvertently filed without the required certificate of prepetition counseling; attorney had put signed petition in envelope ready to be mailed to court while waiting for a certificate of counseling to be provided by a credit counseling agency. An employee mailed it. The attorney had not been able to adequately supervise the office due to a serious life-threatening medical emergency. In another case the debtor obtained credit counseling within the 180-day prescribed period and signed a certificate attesting to that fact, but it turned out the credit counseling agency was not at the time approved by the U.S. Trustee. The court noted that an “exemption” is temporary while a “waiver” is permanent. The exemption is equivalent to an extension which the court can grant for up to 45 days after the date the petition is filed upon satisfaction of three criteria. The court cited a Supreme Court opinion to the effect that “… when strict application of the plain language would result in manifest injustice, judicial discretion must be exercised.” The court found that under the circumstances the cases should not be dismissed. CONTRARY: The court acknowledged that other decisions hold the court has no discretion and must dismiss where the credit counseling requirement is not satisfied, including In re Hedquist, 342 B.R. 295 (Bkrtcy.8th Cir. BAP 2006); In re Cleaver, 333 B.R. 430 (Bkrtcy.S.D.Ohio 2005); In re Ross, 338 B.R. 134 (Bkrtcy.N.D.Ga. 2006); In re DiPinto, 336 B.R. 693 (Bkrtcy. E.D.Pa. 2006); In re Sosa, 336 B.R. 113 (Bkrtcy.W.D.Tex. 2005); Inre Rodriguez, 336 B.R. 462 (Bkrtcy.D.Idaho 2005); In re Talib, 335 B.R. 417 (Bkrtcy.W.D.Mo. 2005); In re Childs, 335 B.R. 623 (Bkrtcy.D.Md. 2005); In re Watson, 332 B.R. 740 (Bkrtcy.E.D.Va. 2005); In re Gee, 332 B.R. 602 (Bkrtcy.W.D.Mo. 2005).


In re Moser, 347 B.R. 471 (Bkrtcy.W.D.N.Y. 2006) §521(e)(2)(A), 521(e)(2)(B)

The court held that the debtor’s attorney’s oversight in failing to file tax return with trustee was “circumstance beyond the control of the debtor, thus avoiding dismissal of case. The code provides that in the event of failure to file the return (or transcript of return) with the trustee as required shall result in the case being dismissed unless the debtor can persuade the court the failure was due to “circumstances beyond the control of the debtor.” In this case the trustee did not receive the documents prior to the meeting of creditors. The debtor’s attorney attempted to present them at the meeting, but the trustee declined to accept them and subsequently moved to dismiss the case. The attorney testified that the debtors had given him the copies of the returns in a timely manner but that he neglected to file them with the trustee.

The court recited the rule that generally the acts of the attorney are imputed to the client. The court observed “The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 has created many new pitfalls for practitioners of bankruptcy law. Even excellent attorneys will encounter an enhanced risk for inadvertent delay.” The court cited in agreement the rulings in In re Grasso, 341 B.R. 821 (Bkrtcy.D.N.H. 2006) and In re Merrill, 340 B.R. 671 (Bkrtcy.D.N.H. 2006).


In re Capers, 347 B.R. 169 (Bkrtcy.D.S.C. 2006) §1328(f), § 348(a)

Debtor filed a chapter 13 less than 4 years, but more than 2 years after filing prior chapter 13 that was subsequently converted to chapter 7 resulting in a discharge. If prior case was “filed” as a chapter 7 debtor was eligible for a discharge in subsequent chapter 13 only if the chapter 7 were filed more than 4 years prior to second case; if prior case was “filed” as a chapter 13 debtor was eligible for new discharge if prior case was filed more than 2 years before second case. rustee argued that debtor was not eligible for discharge because literal language of § 1328(f)(1) prohibits a discharge in a subsequent chapter 13 filed within 4 years of filing a chapter 7 which resulted in a discharge, notwithstanding that the chapter 7 started out as a chapter 13. If the case was treated as a chapter 13 debtor was prohibited from a second discharge only if the previous chapter 13 had been filed within 2 years of bankruptcy. Debtor argued that she did not “file” a chapter 7 case even though she received a discharge as a chapter 7. Court rejected debtor’s argument and held that the prior case should be treated as a chapter 13 due to literal language of § 348(a), which provides that upon conversion the case shall be deemed filed “under the chapter to which the case was converted.” Thus case filed as a chapter 13 but converted to chapter 7 had to be treated as a chapter 7 which made 4-year period applicable.


In re Jewell 347 B.R. 120 (Bkrtcy.W.D.N.Y. 2006)

Debtor moved from Colorado to New York less than 730 days prior to filing chapter 7 in New York, thus debtor was not eligible for N.Y. exemptions. Debtor claimed Colorado exemptions. Colorado was an “opt-out” state and its exemptions under Colorado law were available only to debtors who resided in Colorado at the time the bankruptcy was filed. The court ruled that N.Y. exemptions were not available due to the 730-day rule, and the Colorado exemptions were not available due to the Colorado exemption statute, but that the language of § 522(b)(3) permitting debtors in those circumstances to elect the Federal exemptions.

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