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Sixth Circuit BAP Upholds Dismissal of Bankruptcy Where Debtor Did Not Finish Counseling - In re Ingram

December 28, 2011

At Howard Law, P.C., we've written frequently in this space about the changes in bankruptcy law created by the 2005 bankruptcy law. Among these is a requirement that bankruptcy filers complete credit counseling before they are permitted to file for bankruptcy. This requirement has been criticized as patronizing and burdensome, but it has rarely been called ambiguous. So our Claremont consumer bankruptcy attorneys were interested to see a decision from the Bankruptcy Appellate Panel of the Sixth U.S. Circuit Court of Appeals about a debtor who completed only part of the counseling before filing. In In re Ingram, the BAP affirmed the bankruptcy court's decision to dismiss the case for lack of meeting this basic requirement.

William Warren Ingram of Ohio filed for Chapter 13 bankruptcy on Nov. 17, 2010. The next day, he filed a certificate of credit counseling saying he had completed the counseling as of Nov. 18, 2010. At a December hearing, Ingram told the bankruptcy court this was a mistake and he'd actually finished the counseling as of Nov. 17. The court invited his trustee to look into the matter, and the trustee discovered that Ingram had completed online counseling on Nov. 17 but the phone portion of the counseling on Nov. 18. The bankruptcy court ultimately found that Ingram had not completed the counseling session by the date of the petition, making him ineligible for bankruptcy. In its order, the court noted that the counseling requirement was "a trap for the unwary," particularly people without attorneys. It also denied a motion to reconsider in which Ingram argued that the credit counseling company was misleading. Ingram appealed.

The BAP of the Sixth Circuit agreed with the court that Ingram's bankruptcy case could not stand. The bankruptcy code requires that debtors complete credit counseling within 180 days before filing; this requirement is waived only when "exigent circumstances" merit a waiver; when counseling is not available in the seven days before filing; or the certification is otherwise satisfactory to the court. Some appeals courts have held that bankruptcy courts have the discretion to waive the counseling requirement; others have found that courts may not waive it because the lack of credit counseling robs them of jurisdiction. An earlier Sixth Circuit BAP case permitted a waiver because the debtor had waited until after several advantageous decisions had been made. Nonetheless, it declined to create a waiver for Ingram. The law's requirements are clear and the bankruptcy court was correct in applying them to require dismissal of Ingram's bankruptcy, the BAP said.

We believe this case is a good example of why it's so important to hire an experienced Orange County personal bankruptcy lawyer like Vincent Howard, when so much is at stake. If Ingram was self-represented, as the bankruptcy court's comments imply, he lacked access to the advice of an attorney who has been doing this job for years. Experienced bankruptcy attorneys don't just fill out forms -- they understand how to balance legal requirements like credit counseling with the practicalities facing bankruptcy filers, like avoiding eviction. Most importantly, our San Diego individual bankruptcy attorneys can advise clients on how to avoid small mistakes like these that have vitally important consequences for their cases.

If you're deep in debt and you're not sure you'll ever be able to pay it off, you should call Howard Law, P.C., to discuss whether bankruptcy is right for you. For a consultation, send us an email or call toll-free at 1-800-872-5925.

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