Hon. David T. Thuma, United States Bankruptcy Judge.
Before the Court is Debtor's request to set aside an order dismissing her Chapter 13 case. The dismissal order was entered pursuant to 11 U.S.C. § 521(i), prompted by Debtor's failure to file a "Chapter 13 Statement of Current Monthly Income" within 45 days of the petition date. The Court concludes that the statement is not required by § 521(a)(1), so failing to provide it did not trigger the "automatically dismissed" directive of § 521(i)(1). Because the case should not have been dismissed, the Court will grant the motion.
Debtor filed this case on November 20, 2015. She did not file her bankruptcy schedules, statement of financial affairs, Chapter 13 plan, or other documents by December 4, 2015, as required by Bankruptcy Rule 1007(c).
On January 13, 2016, Debtor filed her CMI Statement.
The parties agreed that the Court could rule on the motion based on the facts in the case record, without the need for an evidentiary hearing or briefing.
Section 521(a)(1) provides in part:
Section 521(i) provides:
Section 521(i) was enacted in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"). As is too often the case with BAPCPA provisions, § 521(i) is not well drafted. While the general purpose of § 521(i) is clear — Congress did not want debtors to file bankruptcy and simply "camp out" behind the shelter of the automatic stay — implementing the subsection has proven difficult.
1. Is a Dismissal Order Required? Does "automatically dismissed" mean that no dismissal order is needed? Compare In re Fawson, 338 B.R. 505 (Bankr.D.Utah 2006) (statute does not require court action; the case is dismissed by operation of the statute itself), and In re Adibi, 2007 WL 1556838, at *2 (Bankr.S.D.Tex.2007) (§ 521(i) results in cases being automatically dismissed by statute), with In re Spencer, 388 B.R. 418, 422 (Bankr.D.D.C. 2008) (no dismissal until the court enters an order), and In re Parker, 351 B.R. 790, 801 (Bankr.N.D.Ga.2006) (same).
2. What if Debtor Arguably Complied with § 521(a)(1)? Can a case be automatically dismissed if the debtor arguably complied with § 521(a)(1)? In some instances, e.g., where no schedules at all have been filed, noncompliance is obvious. In other cases, such as this one perhaps, a debtor's compliance with § 521(a)(1) is debatable. See, e.g., CFCU Cmty Credit Union v. Swimelar, 2008 WL 189929, at *4 (N.D.N.Y.2008) (automatic dismissal may not be appropriate before a judicial determination that the debtor has in fact failed to file the required documents); Miller v. Cameron (In re Miller), 383 B.R. 767, 772 (10th Cir. BAP 2008) ("Whether year-to-date figures or some `other evidence of payment' presented by a debtor satisfies the statute [§ 521(a)(1)(B)(iv)] will depend on the particular facts and circumstances of any given case"); In re Reynolds, 370 B.R. 393, 397 (Bankr.N.D.Okla.2007) (to the same effect). It is unfair to dismiss a case without notice or a hearing if there is a genuine dispute whether the debtor complied with her disclosure obligations.
3. Harmonizing § 521(i) with the "unless otherwise ordered" language of § 521(a)(1)(B). Section 521(i) requires automatic dismissal if the information required under § 521(a)(1) is not timely filed, while § 521(a)(1)(B) requires the debtor to file the specified information "unless the court orders otherwise..." Does the Court have the authority to deny a motion to dismiss by using the "unless the court orders otherwise" language to waive, after the 45-day deadline, the filing requirement? Two circuit courts have addressed this issue and answered in the affirmative. See Wirum v. Warren (In re Warren), 568 F.3d 1113, 1117-19 (9th Cir.2009); Segarra-Miranda
4. Does the Court Have Discretion Not to Dismiss? If a debtor misses the 45-day deadline, does the bankruptcy court retain any discretion or must it dismiss the case "automatically"? Most courts have held that they lack discretion and must dismiss. See, e.g., In re Fawson, 338 B.R. 505, 511 (Bankr.D.Utah 2006) (if debtor misses the 45-day deadline, the case is automatically dismissed and the court lacks discretion to keep the case in bankruptcy); In re Lovato, 343 B.R. 268, 270 (Bankr.D.N.M.2006); In re Ott, 343 B.R. 264, 268 (Bankr.D.Colo.2006). Some courts have held that a modicum of discretion remains, particularly where the debtor seeks to take advantage of the auto-dismissal provisions over the opposition of the case trustee. See In re Bliek, 456 B.R. 241, 245 (Bankr.D.S.C.2011); In re Thrower, 2014 WL 1873399, at *4 (W.D.N.C. 2014); In re Scotto, 2010 WL 1688743, at *9 (Bankr.E.D.N.Y.2010).
5. Interplay with § 1307(c)(9). Before BAPCPA, two Bankruptcy Code provisions dealt with a chapter 7 or 13 debtor's failure to file required information. In Chapter 7 cases, § 707(a)(3) provided that the United States trustee could seek dismissal of a case if the debtor did not file the information required by § 521(a)(1).
6. Construing § 521(i)(2). If a court has not dismissed a case, would any party have the right at any time to demand dismissal within 7 days, per § 521(i)(2)? What if the demand were made a year after the petition date? See, e.g., In re Wilkinson, 346 B.R. 539, 543 (Bankr. D.Utah 2006) (discussing the "wholesale uncertainty" that would arise if the court had to wait for a party to file for dismissal under § 521(i)(2)); In re Brickey, 363 B.R. 59, 66 (Bankr.N.D.N.Y.2007) (discussing the concern voiced by Fawson); In re Soto, 491 B.R. 307 (1st Cir. BAP 2013) (§ 521(i)(2) motion was made seven months after the petition date).
This case illustrates yet another drafting ambiguity created by BAPCPA's additions to § 521. The Dismissal Order was entered because Debtor did not file a CMI Statement. The assumption underlying the dismissal was that § 521(a)(1) requires Chapter 13 debtors to file the statement.
The assumption should be examined. Only two provisions in § 521(a)(1) could be interpreted to require a CMI Statement. The first, § 521(a)(1)(B)(ii), requires "a schedule of current income and current expenditures." This subsection has been part of the Bankruptcy Code since 1978, and has always been understood to require the information on Schedules I and J. See, e.g., In re Kavanaugh, 2006 WL 6589901, at *1 (Bankr.N.D.Ga.2006); In re Cummisky, 2008 WL 6045992, at *1 (Bankr. E.D.N.C.2008); In re Kuhns, 2011 WL 4713225, at *2 (Bankr.N.D.Ohio 2011). No reported decision has construed the provision to require a CMI Statement.
The other subsection, § 521(a)(1)(B)(v), was added in 2005 as part of BAPCPA. It requires "a statement of the amount of monthly net income, itemized to show how the amount is calculated." Some courts have held that this subsection requires a CMI Statement. See, e.g., In re Turner, 384 B.R. 852, 856 (Bankr.D.Colo.2008); In re Meek, 370 B.R. 294, 295 n.3 (Bankr.D.Idaho 2007); In re Copeland, 2006 WL 2578877, at *2 (Bankr.S.D.Tex. 2006). This Court disagrees, for a number of reasons.
First, "monthly net income" is not "current monthly income." The latter phrase is used a number of times in the Code. See, e.g., §§ 101(10A); 527(a)(2)(C); 704(b)(2); 707(b)(2)(A); 1322(d)(1); and 1325(b)(2). All of these provisions were added by BAPCPA, so it seems reasonable to conclude that Congress would have used the same phrase in § 521(a)(1)(B)(v) had it intended to refer to current monthly income. It did not. Instead, it used "monthly net income," which it not defined and appears nowhere else in the Code.
Second, not all debtors must calculate their current monthly income. In particular, the "abuse" provisions of § 707(b) do not apply to Chapter 7 debtors whose debts are primarily business debts, so there is no need to calculate their "current monthly income." See In re Moates, 338 B.R. 716 (Bankr.N.D.Tex.2006) (there is no "means test" for Chapter 7 debtors with primarily business debts, so the § 521(a)(1)(B)(v) requirement is fulfilled by Schedules I and J); In re Beacher, 358 B.R. 917 (Bankr.S.D.Tex.2007) (in Chapter 7 cases with primarily business debts, schedules I and J satisfy the requirements of § 521(a)(1)(B)(v)); In re Giacoma, 2007 WL 2916297 (Bankr.D.Utah 2007) (citing and adopting Beacher). Construing § 521(a)(1)(B)(v) to require CMI Statements from such debtors would impose an unnecessary burden or expose them to auto-dismissal. See Beacher, 358 B.R. at 921 (completing the CMI Statement takes substantial time and expense; asking these debtors to do so would violate the legal maxim that "the law requires no one to do
Third, after BAPCPA was enacted the official forms of Schedules I and J were updated to include the information required by §§ 521(a)(1)(B)(v) and 521(a)(1)(B)(vi).
Fourth, Official Form 122C-1 asks for much more information than "monthly net income." "Monthly net income" in revised Schedule J is simply total income from Schedule I, less total expenses from Schedule J. The CMI Statement, on the other hand, requires disclosure and/or calculation of "average monthly income," "median family income," "current monthly income," deductions from income, total deductions from income, average monthly payments, and whether the debtor has above-median or below-median income. Much of the information in a CMI Statement is not required by § 521(a)(1)(B)(v).
While it is difficult to read § 521(a)(1)(B)(v) as requiring a CMI Statement, Bankruptcy Rule 1007(b)(6) is clear as a bell:
This rule was adopted in 2008 to implement BAPCPA. The Advisory Committee Notes state:
Bankruptcy Rule 1007(b)(6) implements those portions of Chapter 13 (all added by BAPCPA) that require calculation of current monthly income, such as §§ 1322(d), 1325(b)(2), 1325(b)(3), and 1325(b)(4).
The Court concludes that § 521(a)(1) does not require Chapter 13 debtors to file
If the Dismissal Order was entered in error, the Court should set it aside. Bankruptcy Rule 9023 and Rule 59(e) provide:
Rule 59(e) applies to dismissal orders as well as final judgments. See, e.g., In re H & H Const. & Inv. Inc., 2011 WL 846560, at *1 (Bankr.D.D.C.2011); In re Perez, 2013 WL 3946019, at *1 (Bankr. D.P.R.2013); In re Kwiatkowski, 2005 WL 2860329, at 2 (Bankr.E.D.Pa.2005). A party seeking to alter or amend a judgment "must either clearly establish a manifest error of law or must present newly discovered evidence." In re Cook, 497 B.R. 167, at *3 (10th Cir. BAP 2013) (citing Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir. 1997)).
The current policy of the Court, implemented by the Clerk's Office in 2005, is to "auto-dismiss" Chapter 13 cases if the debtor does not file a CMI Statement within 45 days of the petition date. As shown above, that policy was based on the mistaken belief that § 521(a)(1) requires Chapter 13 debtors to file a CMI Statement. This case should not have been "auto-dismissed," so the Court, pursuant to Rule 59(e), will set aside the Dismissal Order.
In this district the Court's procedures include entry of dismissal orders if debtors do not file the information required by § 521(a)(1) within 45 days of the petition date. These procedures are reasonable in general, and comport with Congressional intent. Given the serious nature of "automatic dismissal," however, it should not be done unless the § 521(i) mandate is clear. In this case, automatic dismissal was not required because § 521(a)(1) did not obligate Debtor to file a CMI Statement. The Dismissal Order was entered in error, the mistake will be corrected, and the Court's policies changed accordingly. A separate order will be entered.
4 Collier on Bankruptcy ¶ 521.12 (16th ed.) (citations omitted).
