Trustee Blog

Motion to Dismiss By Riverside UST

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Judge Houle in Riverside had a case before him in which the US Trustee sought to dismiss a debtor who had filed two previous cases:


R (the “Debtor”) filed her voluntary chapter 7 petition on July 11, 20xx. Peter C. Anderson (the “Trustee”) is the duly appointed U.S. Trustee. On July 23, 20xx, U.S. Trustee filed the motion to dismiss this case (the “Motion”).


Trustee alleges that Debtor filed the instant bankruptcy case in bad faith because (1) she is only using the case to thwart pending eviction proceedings and (2) she submitted fraudulent documents in connection with this case.

First, Trustee provides that Debtor filed a skeletal petition, listing only 7 creditors. (B Decl., ¶ 4 Exhs. 2, 6). The Court notes on July 24, 2013, the day after Trustee filed the Motion, Debtor filed Schedules A, B, D, F, G, H, I and J, form 22-A and Statement of Financial Affairs.

Second, Trustee asserts that Debtor submitted a forged certificate of counseling that Debtor used in her prior filings in 2009 for Case Nos. 6:09-bk-xxxxx and 6:09-bk-xxxxx. (Id. at ¶ 5, Exhs. 4-5).

The Trustee requests the Court dismiss this case pursuant to § 707(b)(3)(A) or, in the alternative, § 707(a). Trustee further requests the Court impose a two year re- filing bar pursuant to § 349 and § 105(a). Furthermore, if the case is not dismissed, the Trustee requests the Court extend the bar date for filing a section 727 complaint to

deny Debtor’s discharge by ninety days. Applicable Law: 11 U.S.C. §§ 707(a) & (b), § 349 Legal Analysis:

I. 11 U.S.C. § 707(a)

Section 109(h) directs a debtor to obtain credit counseling 180 days prior to the petition date. 11 U.S.C. §109(h); see also In re Mingueta, 338 B.R. 833, 838 (Bankr. C.D.Cal. 2006) (citing In re Wallert, 332 B.R. 884, 891 (Bankr. D. Minn. 2005)). In addition, a debtor must file a certificate with the court demonstrating compliance with section 109(h) credit counseling. 11 U.S.C. § 521(b)(1).

In accordance with 11 U.S.C. section 707(a)(1), a court may dismiss a case only for cause, “including unreasonable delay by the Debtor that is prejudicial to creditors.”

II. 11 U.S.C. § 707(b)(3)

In considering whether granting relief would be an abuse of the chapter 7 in a case where the presumption [of abuse] does not arise or is rebutted, the court shall consider whether the debtor filed the petition in bad faith or the totality of the circumstances of the debtor’s financial situation demonstrates abuse. 11 U.S.C. § 707 (b)(3). Furthermore, a finding of bad faith requires a review of the totality of the circumstances. In re Eisen, 14 F.3d 469, 470 (9th Cir. 1994) “Bad faith” is not defined; however, courts have opined that the debtor’s bankruptcy case must be consistent with the policy and goal of the bankruptcy code (i.e. giving honest debtors a fresh start while maximizing payment to unsecured creditors). See In re Mitchell, 357 B.R. 142 (Bankr. C.D. Cal. 2006); see also In re Hegeny, 2009 WL 5217674 at *4 (Bankr. E.D. Wash. Dec. 31, 2009).

Trustee alleges that Debtor forged a Certificate of Counseling used in a prior case and falsely submitted it in the instant case. Although the certificate numbers are similar, this is not sufficient to establish that Debtor forged the Certificate of Counseling incorporated as exhibit 4. In addition, Debtor is unrepresented by counsel and, as noted earlier, has filed Schedules A, B, D, F, G, H, I and J, form 22-A and

Statement of Financial Affairs. Further, Debtor has scheduled creditors. Considering the totality of the circumstances, there is not enough evidence that Debtor filed the instant case in bad faith, and thus to dismiss the case under 11 U.S.C. § 707(b)(3)(A).

III. 11 U.S.C. § 349

Section 105(a) of the Bankruptcy Code grants bankruptcy courts the power to issue “any order, process, or judgment that is necessary or appropriate to carry out the provisions” of the Bankruptcy Code; “a court may exercise its equitable power only as a means to fulfill some specific Code provision.” In re Saxman, 325 F.3d 1168, 1174 (9th Cir. 2003); see also Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 375 (2007) (noting the “broad authority granted to bankruptcy judges to take any action that is necessary or appropriate to ‘prevent an abuse of process’). Pursuant to Section 349 of the Code, a court may dismiss a case, for cause, with a re-filing bar. 11 U.S.C. § 349; see In re Leavitt, 171 F.3d 1219, 1223 (9th Cir. 1999); see also In re Mitchell, 357 B.R. 142, 157 (Bankr. C.D.Cal 2006) (finding that debtor’s bad faith filing was sufficient to impose a 180-day re-filing bar under §349).

Here, as it is unclear that Debtor forged the Certificate of Counseling filed on July 11, 20xx, the Court declines to impose a two year re-filing bar. However, Trustee has provided sufficient grounds to extend the time to file a complaint objecting to discharge.

Tentative Ruling:

Based on the foregoing, Trustee’s Motion to Dismiss is DENIED pursuant to § 707(b)(3)(A). Trustee’s request for a re-filing bar is DENIED as to a 180-day re-filing bar. Trustee’s request to extend the deadline to file a complaint objecting to discharge is GRANTED.


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