"As far as credit counseling goes..."

Well, there appears to be at least point on which BAPCPA is manifestly clear: there will be no evading the threshold pre-filing credit counseling requirement, at least not without a signed certification that the debtor attempted to but was unable to obtain counseling prior to filing. Several other courts have joined in the chorus to strictly enforce the credit counseling additions to the 11 U.S.C. 109 eligiblity provisions, and to deny extensions unless they make the necessary certifications.

In In re LaPorta, __ B.R. __, 2005 WL 3078507 (Bankr. D. Minn. 10/27/05), a pro se debtor filed her petition together with an unsigned, unverified statement that began "As far as credit counseling goes...", and then proceeded to explain that the credit counseling agencies listed on the U.S. Trustee's website were too far for her to travel, but that she was willing to take a free online course if one was available. A separate submission indicated that the filing was intended to prevent the repossession of the debtor's car.

The court dismissed the petition on the basis that Ms. LaPorta was not eligible to be a debtor under 11 U.S.C. 109. She did not complete the counseling requirements, her unsigned statement was not a "certification" (which must be signed under penalty of perjury) sufficient to be treated as a request for an extension, and even if it were, it failed to certify that she had in fact made a request for credit counseling services that had not been provided. Finding the statute "utterly clear," the case was dismissed. While the court acknowledged that the result "is harsh," it found no other result possible under BAPCPA, particularly given Congress' insertion of the new counseling requirements into 109, the section that defines the eligibility to be a debtor.

Meanwhile in Texas, a court had similarly denied a motion for extension of time to comply with the counseling requirements which was not accompanied by a certification, and which did not demonstrate that the debtor had requested but was unable to obtain counseling services. In re Hubbard, 332 B.R. 285 (Bankr. S.D. Tex. 10/31/05). A week later, however, the court reconsidered, and entered an order requiring the U.S. Trustee of the district to describe what procedures it had followed in determining that credit counseling was available in the district. In re Hubbard, __ B.R. __, 2005 WL 3061939 (Bankr. S.D. Tex. 11/8/05). Under 109(h)(2), the credit counseling requirements do not apply if the U.S. Trustee determines that adequate counseling services are not reasonably available in the district.

Things did not end well for the debtor or her counsel. The U.S. Trustee responded to the court that there were several counseling services available, and indeed 53 of 79 petitions filed after October 17, 2005 by debtors represented by counsel included certifications of having received counseling. Only six requests for extension had been made, five of which (including Ms. Hubbard) were made by debtors all represented by the same lawyer. The court on November 16, 2005 entered an order striking the debtor's petition (and those of the four other debtors represented by the same lawyer) and has required debtor's counsel to show cause why his fees should not be disgorged.

A court in Ohio has also joined the bandwagon. In re Cleaver, Case No. 05-46572 (Bankr. S.D. Ohio 11/17/05) (link to as-yet unpublished opinion here; thanks to alert reader Edward J. Boll, III of Lerner, Sampson & Rothfuss, L.P.A. in Cincinnati for the tip). In Cleaver, Judge Walter found that a motion for extension which was also signed by the debtor "barely suffices" as a "certification," but that its contents were inadequate since it did not indicate that the debtor had attempted to obtain counseling before filing.

Judge Walter noted a couple other interesting questions that may be presented by 109(h)(3) as well, although they were not presented by Mr. Cleaver's inadequate motion. For instance, he queries whether the required certification that the debtor requested but was unable to obtain the counseling services "during the 5-day period" beginning on the day the request was made effectively imposes a five day "waiting period" after requesting counseling before a debtor can file the petition with the requested certification. He also raises the question of whether a certification that a single agency could not provide the services would be adequate, or whether the prospective debtor must certify that no approved agency could provide the services within five days.

These questions may await another day -- but in the meantime, it appears increasingly clear that courts will not be accepting petitions if they are not accompanied by a signed certification satisfying all of the requirements of 109(h)(3), including that the debtor had requested but not been able to obtain counseling.