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Bankruptcy Appellate Panel Upholds Denial of Credit Counseling Waiver - Bourgeois v. Bank of America

March 29, 2013

Vincent Howard and our Fontana foreclosure defense attorneys were disappointed to see a decision upholding the dismissal of a bankruptcy or failure to complete credit counseling. Since the 2005 changes to the bankruptcy laws, everyone filing for bankruptcy must complete credit counseling. This has been widely criticized by consumer advocates, who say it's insulting as well as burdensome. In Bourgeois v. Bank of America, it also prevented a man from saving his home. Robin Lynn Bourgeois filed for Chapter 7 bankruptcy while he was in jail, which prevented him from doing the mandatory credit counseling on time. He requested a temporary waiver, noting that his home was going to be sold at a foreclosure auction soon and he would get the counseling within 15 days. The bankruptcy court dismissed his case and the Bankruptcy Appellate Panel upheld its decision, finding no abuse of discretion.

The opinion doesn't say why Bourgeois, of Minnesota, was in jail. He filed his petition for Chapter 7 bankruptcy on August 17, 2012. On the filing, he checked a box noting that he had requested credit counseling from an approved agency but was unable to get it within seven days, and asked for a temporary waiver. The accompanying note said his home was scheduled for a sheriff's sale on August 16, the day before the petition was filed. The bankruptcy court didn't grant his temporary waiver and dismissed the case on August 20. In September, Bourgeois moved for reconsideration, repeating that he was incarcerated, and additionally asked for a restraining order against the bank's repossession. The bankruptcy court denied the motion for reconsideration as well. The BAP of the Eighth U.S. Circuit Court of Appeals dismissed his original appeal as untimely, but granted a motion for rehearing.

Unfortunately for Bourgeois, the panel did not change the outcome. It first noted that it would hear the appeal despite its untimeliness, in part because Bourgeois was still in jail and representing himself. Characterizing his appeal as a motion for relief from a final judgment, the court nonetheless denied it. It said there was no merit to the argument that Bourgeois should have been given a waiver because he was in jail, citing three district-court cases on the topic. The panel also ruled that the argument was waived because Bourgeois did not raise in his appeal of the dismissal of his case. The panel further dismissed an argument that Bank of America had violated the automatic stay with the sheriff's sale, noting that the petition was actually filed after the sheriff's sale. Finding no abuse of discretion by the bankruptcy court, the BAP upheld the dismissal of the case.

Vincent Howard and our Costa Mesa foreclosure defense lawyers would have liked to see a more detailed discussion of why incarceration is not a valid basis for a waiver. The panel itself noted, when ignoring the petition's untimeliness, that incarceration makes communications difficult. Rules like the prison mailbox rule, discussed in this appeal, are expressly designed to put prisoners on a fair footing when filing court papers; surely something similar would be fair for bankruptcy filers. We hope the courts that decided otherwise were not prejudiced against prisoners, a problem ex-offenders commonly encounter. At Howard Law, P.C., our Murrieta foreclosure defense attorneys believe the same consideration should be given to every legally sufficient petition for bankruptcy relief, no matter what kind of past the filer might have.

If you are considering bankruptcy as a way to stop a foreclosure sale, don't wait to call Vincent Howard and the team at Howard Law. You can send us a message online or call 1-800-872-5925.

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