Monday, April 10, 2006

Credit Counseling Not "Adequate" For Debtors Who Can't Understand It

We've previously noted here that at least one point of agreement in interpreting the BAPCPA amendments is that judges have little flexibility in considering filings by debtors who have not satisfied the pre-filing credit counseling requirement of 11 U.S.C. 109(h). See "Got Credit Counseling?" A recent decision by Judge A. Jay Cristol, In re Petit-Louis, 338 B.R. 132 (Bankr.S.D.Fla. 3/1/06), however, holds that the requirement cannot be imposed on a debtor who has very limited English-speaking ability, where no approved counseling agency had counselors who spoke the debtor's language.

In Petit-Louis, Judge Cristol waived the pre-petition credit counseling requirement because, notwithstanding considerable effort, the Creole-speaking Mr. Petit-Louis was unable to find a single credit counseling agency in the Southern District of Florida which could provide counseling to him in Creole. Judge Cristol concluded that Mr. Petit-Louis’s inability to obtain counseling in Creole, combined with the fact that he could not afford to hire a translator, created a barrier to the bankruptcy court that Congress did not intend to create when it mandated that debtors complete a credit counseling course before filing. (The debtor had obtained a waiver of the filing fee under the new in forma pauperis filing provisions authorized by the new Act).

Prior to filing, Mr. Petit-Louis contacted every single certified credit counseling agency in the Southern District of Florida to determine whether the agency could provide credit counseling in Creole. Not one agency could do so. For this reason, Mr. Petit-Louis filed his voluntary petition for chapter 7 and attached a letter explaining his efforts to obtain credit counseling and requesting a waiver of the requirement based on unavailability in his district.

In response to Mr. Petit-Louis’s waiver request, the U.S. Trustee argued that the Office of the U.S. Trustee had not decertified the Southern District of Florida pursuant to its authority under Section 109(h)(2), and that she did not have authority to waive the requirement for individual debtors such as Mr. Petit-Louis. Judge Cristol looked to Section 109(h)(2), which provides that the pre-filing credit counseling requirement shall not apply to debtors who reside in districts in which the United States trustee determines that there are not agencies “reasonably able to provide adequate services” to debtors. He stated that this provision “places the obligation for providing the credit counseling in a meaningful way upon the Office of the United States Trustee”.

The U.S. Trustee contended that her office has provided meaningful access to potential debtors because there are ten approved credit counseling agencies in the Southern District of Florida. To the extent the agencies do not provide counseling in Creole, the debtor can access any of the agencies by hiring an interpreter. Judge Cristol rejected the U.S. Trustee’s position that Mr. Petit-Louis should be required to pay for a translator for the credit counseling course. He stated that a debtor who cannot pay the filing fee “obviously… could not pay for a certified interpreter and Congress has provided in forma pauperis for such Debtors”. The court had found (without objection from the U.S. Trustee) that Mr. Petit-Louis, who had a total family income of less than $17,000 per year to support a family of six, qualified for the filing fee waiver. Judge Cristol found that Congress did not intend for Mr. Petit-Louis to be precluded access to the bankruptcy court simply because he could not afford to hire a translator.

The U.S. Trustee has filed a nineteen page motion for reconsideration of the waiver. The motion for reconsideration is based on the U.S. Trustee’s (mis)understanding that Judge Cristol waived the counseling requirement pursuant to Section 109(h)(3)’s exigent circumstances waiver. The U.S. Trustee contends that the court lacks authority to permanently waive the credit counseling requirement under Section 109(h)(3) and that Mr. Petit-Louis failed to file a “Certification”, as required by the provision, anyway. The Certification requirements are discussed in the previous post "Got Credit Counseling?" The U.S. Trustee's motion for reconsideration remains pending.

(In the interest of full disclosure, I should advise that my firm colleagues Lisa Keyfetz and John Kozyak are providing pro bono assistance to Mr. Petit-Louis and Legal Services of Greater Miami in responding to the U.S. Trustee's motion for reconsideration).

1 comment:

Sadhra said...

the article http://www.moneysavingfreetips.com/consumer-credit-counciling.html says to be wary of ccc firms coz:

"Thus as a consumer, you have to beware! Avoid "debt settlement" firms who promise to completely get rid of your debt within months and who ask for a $3000 upfront fee. These usually turn out to be scams who upon receiving the money will run off from the country, disconnect their phones or set up a new firm under a new name."

legit cc firms will not ask for more than 20$ for setup... so this is a good point to remember!