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Absolute Right to Dismiss Chapter 13:
Brown v. Billingslea (In re Brown) (9th Cir BAP, July 23, 2015) To the extent Debtor argues that he has an absolute right to dismiss his case under § 1307(b) he is mistaken. The Ninth Circuit in Rosson held that a chapter 13 debtor’s right of voluntary dismissal under § 1307(b) was not absolute, but was qualified by the authority of a bankruptcy court to deny dismissal on grounds of bad faith conduct or “to prevent an abuse of process.” 545 F.3d at 774 (citing § 105(a)).
Having found no error, we AFFIRM.
Automatic Dismissal for failure to file “required” documents:
See In re Acosta-Rivera, 557 F3d 8 (1st Cir. 2009) held that the court has discretion not to dismiss a case where missing pay stubs or other required information has become irrelevant or extraneous. Note however, that in this case debtor sought dismissal to prevent the trustee from administering an asset that would generate enough to pay all claims in full.
In re Warren, 568 F3d 1113 (9th Cir. 2009) agreed with Acosta-Rivera to hold that the bankruptcy court has discretion not to dismiss an “automatically dismissed” case where the missing information is not important or as in this case, dismissal is should by the debtor.
In re Formaneck, 2015 Bankr. LEXIS 2307 (Bankr. D. Colo. July 13, 2015) (Romero, C.B.J.). Case dismissed as failure to make postpetition mortgage payments directly to creditor was a material default under debtor’s chapter 13 plan.
Chapter 13 conversion to 7:
In re Sobczak, 369 B.R. 512 (9th Cir. BAP 2007). In a case arising out of Arizona, the BAP reversed the Bankruptcy Court’s dismissal of the debtor’s case, holding that (a) the debtor in a case converted from Chapter 7 to Chapter 13 had standing to move for dismissal of his bankruptcy, but (b) dismissal of the debtor’s bankruptcy in the circumstances presented was improper. The BAP found that the debtor’s realization that in bankruptcy he was limited by §522 to Ohio’s $5,000 homestead exemption, rather than the Arizona $150,000 exemption that would apply if he were not in bankruptcy, was not a proper basis for allowing the debtor to move under §1307 to dismiss his case.
In re Jackson, 348 B.R. 487 (Bkrtcy.S.D.Iowa 2006) LEE M. JACKWIG, Bankruptcy Judge WHERE DEBTOR FAILS TO TIMELY FILE REQUIRED DOCUMENTS CASE IS DEEMED AUTOMATICALLY DISMISSED ON 46TH DAY ONLY IF REQUESTED BY PARTY IN INTEREST § 521(a)(1), 521(i)(2)
As of the 45th day after filing the petition debtor was still one credit advice short thus failing to satisfy § 521(a)(1)(B)(iv). Debtor’s error was due to mistaken numbering on the payment advices. The court issued an order dismissing the case, and debtor moved for reinstatement on the basis of excusable neglect.
The court reinstated the case, not on the basis of excusable neglect, but on the theory that despite the “automatic” term in the statute the court should not sua sponte dismiss the case without a motion to do so by a party in interest pursuant to § 521(i)(2). Thus the “automatic” language of § 521(i)(1) is qualified by subparagraph (2) which requires a motion.
In re Ott, 343 B.R. 264 (Bkrtcy.D.Colo. 2006) COURT HAS NO DISCRETION TO ENLARGE THE TIME LIMITATIONS PRESCRIBED IN THE CODE SECTION GOVERNING DEBTOR’S FAILURE TO FILE ALL REQUIRED INFORMATION § 521(a)(1)(B)(iv)
Debtor filed chapter 7 two days after effective date of BAPCPA. Debtor failed to file required “payment advices” (pay stubs or other evidence of income) as required under BAPCPA per § 521(a)(1)(B)(iv) within 45 days of filing the petition as required under § 521(i). Debtor’s counsel informed court he may have inadvertently failed to inform debtors that pay stubs had to be filed by a certain date. Case was dismissed automatically on the 46th day.
Debtors moved for relief from judgment based on counsel’s confusion over the filing requirements of BAPCPA. The court, observing that by passing BAPCPA Congress viewed debtors “as the moral equivalent of shoplifters” reluctantly held that the court had no discretion to retroactively extend the 45-day deadline. Citing Judge Keith Lundin’s treatise on Chapter 13, the court observed that the dismissal is automatic and requires no order by the court.
“BAPCPA is a complex and extensive statute that is, at times, unforgiving to debtors and to their counsel. Snares and traps are present throughout BAPCPA for unwary debtors. By the design of Congress, the Court is not in a position to extricate counsel and debtors from these perils.”
In re Pak, 343 B.R. 239 (Bkrtcy.N.D.Cal. 2006). HELD: A DEBTOR’S ACTUAL AND ANTICIPATED FUTURE INCOME MUST BE CONSIDERED IN DECIDING WHETHER TO GRANT OR DENY MOTION TO DISMISS AS AN AB– USE 11 U.S.C. § 707(b)(3)(B)
Under the “totality of circumstances” test for abuse in chapter 7 as prescribed by 11 U.S.C. § 707(b)(3)(B) where the debtor’s income is below the state median, the debtor’s actual and anticipated future income may be taken into consideration.
In re Lovato, 343 B.R. 268 (Bkrtcy.D.N.M. 2006). HELD: FAILURE TO SUBMIT “PAYMENT ADVICES” GIVES COURT NO CHOICE BUT TO DISMISS CASE 11 U.S.C. § 521(a)(1)(B)
Pro per debtor filed Chapter 7 bankruptcy but failed to provide “payment advices” or other evidence of income and tax returns within 45 days of filing the petition. the Code requires that the debtor filed payment advices or other evidence of income received within the 60 days immediately prior to filing the bankruptcy, or the case shall be dismissed on the 46th day. Failure to do so leaves the court no option but to dismiss. (note: the local rule in this court was not to file the documents with the court but rather with the trustee).
Section 707: In re Price (01/07/04 – No. 02-16458) U.S. 9th Circuit Court of Appeals) Bankruptcy court was justified in dismissing a Chapter 7 petition for substantial abuse pursuant to 11 U.S.C. section 707(b), based on findings that the debtor had primarily consumer debts and had the ability to fund a Chapter 13 plan, despite evidence that the debt to be discharged consisted primarily of commercial debt. http://caselaw.lp.findlaw.com/data2/circs/9th/0216458p.pdf The remaining substantive issue is whether Price meets the substantial abuse standard of Section 707(b). The term “substantial abuse” is not defined in the Bankruptcy Code. Rather, courts have examined the totality of the circumstances in determining whether substantial abuse exists in a particular case, utilizing criteria such as the following:
(1) Whether the debtor has a likelihood of sufficient future income to fund a Chapter 11, 12, or 13 plan which would pay a substantial portion of the unsecured claims;
(2) Whether the debtor’s petition was filed as a consequence of illness, disability, unemployment, or some other calamity;
(3) Whether the schedules suggest the debtor obtained cash advancements and consumer goods on credit exceeding his or her ability to repay them;
(4) Whether the debtor’s proposed family budget is excessive or extravagant;
(5) Whether the debtor’s statement of income and expenses is misrepresentative of the debtor’s financial condition; and
(6) Whether the debtor has engaged in eve-of bankruptcy purchases.
3 Norton Bankruptcy Law and Practice 2d § 67:5, at 67-10 (William L. Norton, Jr. et al. eds., 1997).
The primary factor defining substantial abuse is the debtor’s ability to pay his debts as determined by the ability to fund a Chapter 13 plan. Thus, we have concluded that a “debtor’s ability to pay his debts will, standing alone, justify a section 707(b) dismissal.” Kelly, 841 F.2d at 914.
The trustee argues that we need not reach any of the issues raised by Price because Congress created a bright line test: that dismissal is required whenever a debtor is able to fund a Chapter 13 plan. However, the text of the section and its legislative history belie this interpretation. Indeed, Congress specifically rejected such proposals. See 6 Collier ¶ 707.04, at 707-16. Rather, Congress committed the question of what constitutes substantial abuse to the discretion of bankruptcy judges within the context of the Code. Section 707(b) provides that the court “may” dismiss a case “if it finds that the granting of relief would be a substantial abuse of the provisions of this chapter.” Put another way, while “debtor’s ability to pay his debts will, standing alone, justify a section 707(b) dismissal,” Kelly, 841 F.2d at 914, the debtor’s ability to pay his or her debts does not compel a section 707(b) dismissal of the petition as a matter of law. In addition, as Kelly noted, a bankruptcy court could make a finding of substantial abuse under the facts of a particular case even if the debtor did not have the ability to fund a Chapter 13 plan. Id. at 914-15. Thus, Kelly did not establish an absolute, per se rule. Rather, Kelly quite appropriately held that ability to fund a Chapter 13 plan is the most important consideration under § 707(b), and that a finding of ability to pay alone is sufficient to sustain a § 707(b) dismissal.
Local Rule – 1017-2
In re Tennant (9th Cir. BAP 2004) BAR TO REFILING MAY BE INVALID WITHOUT HEARING. The BAP has “serious doubts” whether a local rule providing for an automatic bar on refiling for 180 days after dismissal for failure to file schedules is enforceable in the absence of a motion, hearing and finding of willful failure