PHILIP A. BRIMMER, United States District Judge.
This is an appeal by debtor Keith Fogel from the April 1, 2014 order [Docket No. 6-1 at 92-94] of the United States Bankruptcy Court for the District of Colorado (the "bankruptcy court") dismissing this case sua sponte. The Court's jurisdiction is based on 28 U.S.C. § 158(a).
Debtor filed for Chapter 13 bankruptcy on November 4, 2010. Docket No. 6-1 at 6. On January 25, 2011, the bankruptcy court signed two orders confirming debtor's amended plan, which called for debtor to make $100 monthly payments to the bankruptcy trustee for 36 months. Id. at 70, 72. According to debtor's personal representative, the debtor made the first three payments on the amended plan. Docket No. 7 at 9. Debtor died on February 24, 2011. Docket No. 6-1 at 88. After his death, debtor's wife, Joan Fogel, was appointed
After completing the payments on the amended plan, debtor's personal representative received the certification form to obtain discharge, Local Bankruptcy Form 3015-1.11, but could not file the form since debtor had not completed the financial management course required by 11 U.S.C. § 1328(g). Docket No. 7 at 10.
On January 27, 2014, debtor's personal representative moved the bankruptcy court pursuant to 11 U.S.C. § 1328 to waive the requirement that debtor complete the financial management course and the requirement that debtor file a certification pursuant to § 1328. Docket No. 6-1 at 86-87. Debtor's personal representative provided notice of the motion to all parties against whom debtor sought relief on January 27, 2014, which notice stated that any objections must be filed no later than February 13, 2014. Bankruptcy Case No. 10-38010-TBM (Docket Nos. 55, 57). The motion was not opposed, including objections, by any creditor. See Docket No. 6-1 at 90. On April 1, 2014, slightly more than two months after debtor's personal representative filed the motion, the bankruptcy court denied the motion and sua sponte dismissed the case. Id. at 93. The bankruptcy court held that, where a sole Chapter 13 debtor dies, the case must be dismissed. Id. Debtor's personal representative filed a motion for reconsideration on April 14, 2014, id. at 94, which the bankruptcy court denied on June 20, 2014. Id. at 107. Debtor's personal representative filed this appeal.
A party may appeal the "final judgments, orders, and decrees" of a bankruptcy court to either the district court or a bankruptcy appellate panel. 28 U.S.C. § 158(a), (c)(1). A district court reviews the Bankruptcy Court's legal conclusions de novo, its factual findings for clear error, and its discretionary decisions for abuse of discretion. In re Baldwin, 593 F.3d 1155, 1159 (10th Cir.2010); Busch v. Busch (In re Busch), 294 B.R. 137, 140 (10th Cir. BAP 2003) (lifting of automatic stay); Brasher v. Turner (In re Turner), 266 B.R. 491, 494 (10th Cir. BAP 2001) (excluding an exhibit); Dennis Garberg & Assocs., Inc. v. Pack-Tech Int'l Corp., 115 F.3d 767, 771 (10th Cir.1997) (entering default judgment).
Section 1328 of Title 11 of the United States Code provides that, before a debtor can receive discharge of debts provided for by a repayment plan, the debtor must, as soon as practicable after completion of all payments, certify that all amounts owed have been paid. 11 U.S.C. § 1328(a). One prerequisite to obtaining an order of discharge is that the debtor must, after filing a petition, complete an instructional course concerning personal financial management. Id. § 1328(g)(1); In re Bouton, 2013 WL 5536212 at *2 (Bankr. S.D.Ga. Oct. 7, 2013); In re Levy, 2014 WL 1323165, at *1 (Bankr.N.D.Ohio Mar. 31, 2014).
The Bankruptcy Court's justification for dismissing this matter sua sponte was based on two premises: first, that dismissal is mandatory in the case of a sole Chapter 13 debtor who dies before receiving a discharge and, second, that a deceased debtor's spouse cannot act on the debtor's behalf even if she is appointed as the personal representative of the debtor's estate.
While a Chapter 13 case "may be dismissed" upon the death of the debtor, the rule requires that the bankruptcy court consider whether "further administration [of the plan] is possible" and whether further administration of the plan is "in the best interest of the parties." Fed. R. Bankr. P. 1016. If the bankruptcy court, in its discretion, determines that these factors weigh in favor of continuing the plan, "the case may proceed and be concluded in the same manner, so far as possible, as though the death . . . had not occurred." Id. Thus, Rule 1016, which the bankruptcy court relied upon, does not mandate dismissal upon the death of the debtor.
In denying debtor's personal representative's motion to reconsider, the bankruptcy court reasoned that "the continued existence of the debtor is crucial to the continued administration of [the] case." Docket No. 6-1 at 109. The bankruptcy court did not, however, base its conclusion on the facts of this particular case, but rather on the general observation that, in a Chapter 13 case, the plan is typically funded by the debtor's future earnings. Id. While the debtor's continued existence may be crucial in cases where the debtor's income is necessary to make plan payments, there may be situations, as this case demonstrates, where a plan can be administered and payments made despite the death of the debtor. See In re Terry, 2015 WL 1321486, at *4.
The bankruptcy court also held that a non-debtor spouse cannot represent a Chapter 13 debtor after his or her death. Docket No. 6-1 at 93. The bankruptcy court cited In re Shepherd, 490 B.R. 338, 342-43 (Bankr.N.D.Ind.2013), for the proposition that a deceased debtor's spouse may not receive the benefit of a discharge in the deceased debtor's case. See Docket No. 6-1 at 109. In Shepherd, the court held that a personal representative of a debtor's estate cannot substitute for the deceased debtor. The court reasoned that, under 11 U.S.C. § 109(a), only a "person" qualifies for bankruptcy protection and a probate estate is not a "person." In re Shepherd, 490 B.R. at 342. While Shepherd is correct that there is no formal mechanism for substituting a party for a deceased debtor, it does not follow that a case must necessarily terminate upon the debtor's death. "If no party could ever act on behalf of a deceased debtor because there is no separate
On the undisputed facts of this case, there is no reason to believe that the debtor's spouse, having been appointed as the personal representative of the debtor's estate, is not an appropriate representative of the debtor. While it is true, as the bankruptcy court noted, that the debtor's spouse is self-interested given that she hopes to strip the second deed of trust on the debtor's residence, under the facts of this case such self-interest does not disqualify her from representing the debtor. The spouse's interest in achieving the strip of the second mortgage from debtor's residence is what the debtor intended, see Docket No. 6-1 at 70, 72, and is therefore not inconsistent with the plan. Moreover, debtor's spouse made the remaining plan payments and, despite notice to the creditors, including notice to the holder of the second deed of trust, see Bankruptcy Case No. 10-38010-TBM (Docket No. 57 at 1), no objections were made. While the bankruptcy court justifiably took the concerns of creditors into account when considering the motion for reconsideration, Docket No. 6-1 at 110, the policy goals of the bankruptcy
Debtor argues that the Court erred in denying his motion to waive the requirement that he take a financial management course before obtaining a discharge. Docket No. 7 at 18. The Court addresses this issue as it may be relevant on remand.
Section 1328(g) of Title 11 of the United States Code prohibits a Chapter 13 debtor from being granted a discharge "unless after filing a petition the debtor has completed an instructional course concerning personal management described in section 111." 11 U.S.C. § 1328(g)(1). This requirement, however, does not apply to a debtor described in § 109(h)(4). 11 U.S.C. § 1328(g)(2). Section 109(h)(4) excludes a debtor "whom the court determines, after notice and hearing, is unable to complete [the personal financial management course] because of incapacity, disability, or active military duty in a military combat zone." 11 U.S.C. § 109(h)(4).
The Court finds that the death of a debtor constitutes "incapacity" for the purposes of Section 109(h)(4). See In re Bouton, 2013 WL 5536212, at *2 ("The death of a debtor constitutes a disability under § 109(h)(4)"); In re Levy, 2014 WL 1323165, at *3 (N.D.Ohio Mar. 31, 2014) (holding that the instructional course requirement "does not impede `further administration' contemplated under Rule 1016"). Consequently, if the bankruptcy court concludes on remand that further administration of the case is possible and in the interests of the parties, waiver of the financial management course requirement would be appropriate.
For the foregoing reasons, it is
