Tell Us How You Really Feel About Credit Counseling

While judges have been fairly uniform in applying the new credit counseling requirements under BAPCPA (and dismissing cases where debtors fail to comply with them), that doesn't mean they are happy about it. In In re Valdez, ___ B.R. ___, 2005 WL 3526495 (Bankr. S.D. Fla. 12/13/05), Judge A. Jay Cristol of the Southern District of Florida, when required to dismiss a case filed by a pro se debtor who was unaware of the counseling requirement, rhetorically queried:

"The Court wonders what exactly was intended by Congress in regard to this Code section. Is it the intent of Congress that poor, ignorant persons who do not know the law and cannot afford to obtain the advice of counsel are to be denied protection and assistance of the Bankruptcy Code which is available to more affluent and better educated persons? Or is it the intent of Congress that decent, honest, hardworking persons, who have suffered financial misfortune or tragedy, be educated by budget and credit counseling services to help them determine if there is a more appropriate way to deal with their financial problems? Sadly, the language in the Code does not clearly reveal Congress' intent; either the Code language was inartfully drafted or the congressional intent was indeed the former less compassionate, harsher result, rather than the latter."

While expressing the "sympathy of the Court" to the debtor who was the object of this harsh result, Judge Cristol held that he could not modify statutory language based on sympathy and was required to dismiss the case because the debtor had not fulfilled the pre-petition counseling requirement.

Judge Thomas Fulton of Kentucky is also willing to give Congress the benefit of the doubt. In In re Graham, __ B.R. __, 2005 WL 3629925 (Bankr. W.D. Ky. 12/21/05), he suggests a somewhat discretionary standard for evaluating whether credit counseling could have been obtained by a debtor prior to filing, looking to what a debtor could "reasonably accomplish in light of his or her particular, and likely exigent, circumstances." Believing (perhaps against evidence to the contrary) that Congress continues to have the intent to "provide relief and a fresh start to honest but unfortunate debtors who would otherwise face a series of untenable choices," Judge Fulton suggests that "Surely such a body of persons ostensibly guided by mercy would not strand the lost so squarely between Scylla and Charybdis!"

Judge Frank Monroe of Texas was not nearly so generous to Congress. In In re Sosa, ___ B.R. ___, 2005 WL 3627817 (Bankr. W.D. Tex. 12/22/05), Judge Monroe notes how those responsible for passing the Act "did all in their power to avoid the proffered input" from sitting bankruptcy judges, professors, and professional associations in order to further an agenda "to make more money off the backs of the consumers in this country," suggesting that calling BAPCPA a "consumer protection" act is "the grossest of misnomers."

On the pre-filing credit counseling required by 11 U.S.C. 109(h)(1), Judge Monroe sarcastically notes, "No doubt this is a truly exhaustive budget analysis." While viewing the pre-filing requirement as "inane," Judge Monroe nonetheless found it to be a clear and unambiguous provision -- sarcastically adding, "obviously designed by Congress to protect consumers." As a result, even though the debtors actually completed credit counseling after having filed their petition, the court was required to dismiss their case, leading Judge Monroe to wonder, "Can any rational human being make a cogent argument this this makes any sense at all?"

Upon entering the dismissal order, Judge Monroe concluded, "Congress must surely be pleased."

Meanwhile, one debtor has been spared from the application of BAPCPA. In In re Looper, ___ B.R. ___, 2005 WL 3455200 (Bankr. E.D. Tenn. 2005), the court has concluded that a debtor who filed his petition on the effective date of BAPCPA -- October 17, 2005 -- would not be subject to the new credit counseling provisions. Why? Because he was a prisoner serving a life sentence without the possibility of parole. How did inmate Looper get a break, while so many other debtors have not?

In Looper, the debtor presented his petition for mailing to the clerk's office on October 14, 2005, and it arrived on October 17, 2005 and was stamped as filed on that latter date. But under Supreme Court precedent, pro se prisoners are protected by the "Prisoner Mailbox Rule," under which documents to be filed by a pro se prisoner (who can't personally travel to the courthouse to physically file documents) are deemed "filed" when they are delivered to prison officials for mailing. Because the court found no specific provision of the Bankruptcy Code and Rules defining "filing," it concluded that the "Prisoner Mailbox Rule" applied and the petition was treated as having been filed on October 14, 2005. As a result, the debtor was not required to comply with BAPCPA's new credit counseling requirements, which apply to petitions filed on or after October 17, 2005.

Isn't it good to know some debtors can still get a break?