In Re Talib

Citations: 335 B.R. 424; 2005 Bankr. LEXIS 2496; 2005 WL 3429224Docket: 19-40054

Court: United States Bankruptcy Court, W.D. Missouri; December 12, 2005; Us Bankruptcy; United States Bankruptcy Court

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In re Moneica L. Talib, a bankruptcy case filed on November 18, 2005, involved the Debtor's request to waive prepetition credit counseling due to exigent circumstances. The Debtor consulted a credit counseling service just before a scheduled foreclosure sale but was informed that counseling could only occur within two days, not prior to the sale. Consequently, the Court determined that the Certification did not meet the requirements of § 109(h)(3)(A)(ii), which led to the dismissal of the case.

The Debtor subsequently filed a motion to vacate the dismissal, arguing several points: (1) inconsistencies between the requirements of subparagraphs (A)(i) and (A)(ii) justify a departure from strict statutory interpretation; (2) a literal application of § 109(h)(3)(A)(ii) leads to unreasonable outcomes; (3) five days is an insufficient timeframe to obtain necessary counseling, especially if the debtor is unaware of the requirement; and (4) the circumstances outlined in the Certification demonstrate compliance with the counseling requirement.

The Court found these arguments unpersuasive, affirming that all three requirements of § 109(h)(3) must be satisfied. It clarified that the objective requirement in (ii) serves to limit rather than contradict the exigent circumstances established in (i), reasserting that demonstrating exigent circumstances alone is not sufficient for waiver eligibility. The motion to vacate was therefore denied.

Only debtors who meet the criteria of § 109(h)(3)(A)(ii) qualify under exigent circumstances. The Court clarified that its previous Order is based on a literal application of the statute, not an interpretation. The Debtor argues that this literal application leads to an absurd outcome, specifically that debtors who seek credit counseling just before a foreclosure may be ineligible due to timing. While the Court acknowledged that this requirement can be burdensome and produce harsh results, it does not equate to absurdity, nor has the Debtor provided evidence of inconsistency with legislative intent. The statute does not suggest that the exception applies whenever a debtor cannot secure counseling prior to a foreclosure or repossession. Congress intentionally imposed limitations on the exigent circumstances exception to prevent abuse and to discourage delays in seeking bankruptcy until just before creditor actions. The Debtor's claim that the five-day period is insufficient for many is noted, but the Court cannot alter the statutory requirements, which reflect Congress's policy decisions. The five-day period could have been adequate had the Debtor requested counseling sooner, as she was informed that services were available within two days. The Court emphasized that ignorance of the requirement does not excuse noncompliance. The Debtor contends that being told credit counseling is available within five days, but after the foreclosure date, effectively means it is unavailable "until infinity," which the Court rejected as a misinterpretation of the statute.

The Court acknowledges the Debtor's frustration with the statutory requirement for credit counseling, particularly given its timing relative to the foreclosure sale. However, the Debtor's claim is undermined by the fact that credit counseling was available within two days of her request, which falls within the mandated five-day period. Consequently, the Debtor's Certification does not meet the criteria outlined in § 109(h)(3)(A)(ii), making her ineligible for a waiver and to be classified as a debtor. The statutory focus is on the ability to access required counseling from the request date, regardless of the foreclosure timeline, and the Court notes that the Debtor bears some responsibility for her situation, having only sought counseling the day before the sale without providing a rationale for the delay. All three conditions of § 109(h)(3)(A) must be met for a waiver to be granted, and since the Debtor confirmed she could obtain counseling within two days, she did not satisfy the second requirement. Therefore, her ineligibility to be a debtor leads to the conclusion that dismissal of her case is warranted, with the Court seeing no justification to reconsider its prior orders.