Trustee Blog

Bankruptcy Dismissal 109(g)

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Here is a discussion by Judge Houle on dismissing a case 109(g) or with a 180 day bar to re-filing. This was a Riverside case with Trustee Cohen and not Trustee Danielson.

On December 31, 20xx (collectively, “Debtors”) filed for chapter 13 relief. Amrane Cohen was the duly appointed chapter 13 trustee (“Trustee”).

On November 28, 2011, Hilton Resorts Corporation (“Hilton”) filed its Motion for Relief from the Automatic Stay as to the Debtors’ timeshare interest in real property(“RFS Motion”).

On January 26, 2012, the Court entered the Order Granting the RFS Motion (Doc. No. 39).

On June 12, 2012, the Trustee filed a Motion to Dismiss the Debtors’ case for failure to make plan payments, which the Debtors opposed and which the Trustee subsequently withdrew.

On April 8, 2013, the Trustee filed a second Motion to Dismiss for failure

make plan payments. The Debtors again opposed, however, on June 4, 2013, the Debtors filed their request for voluntary dismissal.

The case was dismissed on June 6, 2013 with a 180 day bar to refiling under § 109(g)(2).

On July 5, 2013, the Debtors filed their Motion to Remove Section 109(g) bar from dismissal order (“Motion”). Service was improper upon Hilton.

DISCUSSION

Section 109(g)(2) states in relevant part:

Notwithstanding any other provision of this section, no individual … may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if—

(2) the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title.

11 U.S.C. § 109(g)(2).

The purpose of § 109(g)(2) is to prevent abusive filings. Greenwell v. Carty (In re Carty), 149 B.R. 601, 603 (9th Cir. BAP 1993).

If it were not for this section, it would be possible for a debtor to delay foreclosure and deny the secured creditor the opportunity to have their rights adjudicated within a reasonable period of time. If the filing of a subsequent premature petition did not toll the running of the 180 days, it would be very simple to render Section 109(g) ineffective and meaningless by the act of dismissing and refiling bankruptcy petitions, whenever foreclosure loomed on the horizon. In re Leafty, 479

 

 

B.R. 545, 550-551 (9th Cir. BAP 2012)(internal citations omitted).

Section 109(g)(2) is not jurisdictional in nature and, therefore, the bankruptcy court has discretion to suspend the application of the statute and not dismiss a debtor’s case under certain circumstances. In re Luna, 122 B.R. at 577; see also Mendez v. Salven, 367 B.R. 109, 116 (9th Cir. BAP 2007) (§ 109 eligibility is not jurisdictional). In In re Luna, the lender had not complied with the bankruptcy court’s order granting relief from stay that required the lender to provide a payoff and reinstatement notice to the debtor, and the debtor had tendered the amount to reinstate the debt based upon the debtor’s calculations. 122 B.R. at 576. When the debtor filed a second case, the Panel found that mechanical application of § 109(g)(2) was inappropriate where doing so would produce an illogical, unjust, or capricious result, or when the benefit of a dismissal would inure to a bad faith creditor. Id. at 577.

Turn in on April 14, 2014 blog post to find out what Judge Houle did…

 

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