§ 21.2     Timing, Procedure and Form
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 21.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

A Chapter 13 debtor has five choices with respect to the prepetition briefing requirement for eligibility in § 109(h)(1):1

(1) check box 1 in Part 5 of Official Form 101,2 certifying that the debtor received a briefing from an approved nonprofit budget and credit counseling agency (NBCCA) within 180 days before the petition, file the § 521(b) certificate3 from that NBCCA and attach a copy of any debt repayment plan that was developed through the NBCCA;4
(2) check box 2 in Part 5 of Official Form 101, certifying that the debtor received a briefing from an approved NBCCA within 180 days before the petition but does not have the required § 521(b) certificate—in which case the form instructs that the debtor “MUST” file the missing certificate within 14 days, together with any payment plan developed with the agency;
(3) check box 3 in Part 5 of Official Form 101 certifying that exigent circumstances merit a temporary exemption from the prepetition briefing requirement and certifying that the debtor requested credit counseling from an NBCCA but was unable to obtain the services during the seven days5 after that request;6
(4) check box 4 in Part 5 of Official Form 101 to assert the permanent waiver of the briefing requirement in § 109(h)(4) based on incapacity, disability or active military duty in a combat zone;7 or
(5) (there is no check box) assert the permanent waiver of the briefing requirement in § 109(h)(2) based on a determination by the U.S. trustee (or bankruptcy administrator) that the approved NBCCAs for the district are not reasonably able to provide adequate services.8

 

[2]

The temporary exemption in § 109(h)(3)(A) specifies that the debtor must certify with respect to exigent circumstances and the prepetition effort to obtain a briefing.9 There is no similar statutory certification requirement with respect to the permanent waivers of the briefing requirement in § 109(h)(2) or (4).

[3]

Section 109(h)(2) requires a “determination” by the U.S. trustee (or bankruptcy administrator) with respect to the adequacy of NBCCA services, but the section does not reveal how that determination is communicated to the public or asserted by a debtor. In contrast, § 109(h)(4) specifies the briefing requirement shall not apply when “the court determines, after notice and a hearing,” that the debtor is unable to complete a briefing because of incapacity, disability or active military duty in a combat zone.10

[4]

The procedure and form for asserting the permanent waivers of the prepetion briefing requirement in § 109(h)(2) and (h)(4) are in Bankruptcy Rule 1007(b)(3) and (c) and in Part 5 of the current form for the petition, Official Form 101. As indicated above, Part 5 of Official Form 101 now contains four check boxes, only the fourth of which actually addresses a permanent waiver of the prepetition briefing requirement. Check box 4 signals that the debtor is incapacitated, disabled or on active military duty in a combat zone for purposes of § 109(h)(4).11 There is no check box or other mechanism in Part 5 of Official Form 101 to use when the debtor asserts the permanent waiver of the prepetition briefing requirement in § 109(h)(2)—that the U.S. trustee or bankruptcy administrator has determined that NBCCA services are not adequate in the district.12

[5]

Prior to December 2015, the Official Form for the petition, then Official Form 1, contained an Exhibit D with five check boxes, not four. Check box 5 in (former) Exhibit D to (former) Official Form 1 was marked when “the U.S. trustee or bankruptcy administrator has determined that the credit counseling requirement of 11 U.S.C. § 109(h) does not apply in this district.”13 The current version—Part 5 of Official Form 101—is silent with respect to how a debtor asserts the permanent waiver in § 109(h)(2).

[6]

Part 5 of Official Form 101, after check box 4, contains this instruction: “If you believe you are not required to receive a briefing about credit counseling, you must file a motion for waiver of credit counseling with the court.”14 The forms drafers have implemented the statutory requirement in § 109(h)(4) that the court make a determination, after notice and a hearing, with a requirement that a motion be filed with the petition. The statute does not mandate this timing, but perhaps it is a good idea to get the determination of eligibility based on the § 109(h)(4) waiver of the prepetition briefing requirement out of the way earlier in the Chapter 13 case.

[7]

Unfortunately, the instruction quoted above could be interpreted to require a motion when the debtor believes the briefing requirement does not apply for any reason––including the waiver in § 109(h)(2) when the U.S. trustee or bankruptcy administrator has determined that NBCCA services are insufficient in a district. The statute does not require a court determination with respect to the waiver in § 109(h)(2), but the words in Part 5 of Official Form 101 may be read that way. The elimination of the check box with respect to § 109(h)(2) perhaps reflects that prepetition briefings are widely available by phone and by Internet and, at least at this writing, there are no districts in which the U.S. trustee or bankruptcy administrator has determined that NBCCA services are not available.15

[8]

This discussion has teeth. Under (former) Exhibit D to (former) Official Form 1, the motion requirement was strictly interpreted by some courts to require exactly the right motion filed with the petition––debtors who failed to timely file the motion or failed to file the correct motion lost the prepetition briefing waiver and some were booted out of bankruptcy altogether.16

When the correct motion is timely filed asserting the waiver in § 109(h)(4), it is appropriate for the bankruptcy court to set a hearing at which the debtor may have to present evidence of incapacity, disability or active duty in a military combat zone.17 It is not obvious how a debtor would do so when active duty in a military combat zone is the ground for waiver of the prepetition briefing requirement. Presumably, the debtor would not be available to testify and counsel would have to find some other admissible form of proof of the debtor’s status.

[9]

The cases just cited demonstrate that the Advisory Committee on Bankruptcy Rules has been stutter-stepping toward workable implementation of the waivers of the prepetition briefing requirement in § 109(h)(2) and (h)(4). In some of the cases here and below,18 you will see that the evolution of what is now Part 5 of Official Form 101 worked to disadvantage some debtors by confusion and by the use of words. For example, former check box 4 in Exhibit D to former Official Form 1 assumed that the permanent waiver in § 109(h)(4) applied notwithstanding the absence of a cross-reference to subparagraph (4) in § 109(h)(1).19 Former check box 5 in Exhibit D to former Official Form 1 referred to a “credit counseling requirement” in § 109(h) when there was no credit counseling requirement in § 109(h)––there is only a requirement that the debtor be briefed with respect to the availability of credit counseling services.20 Notice that Part 5 to current Official Form 101 half-pregnantly refers to waiver of “a briefing about credit counseling.” Some progress perhaps.

[10]

Bankruptcy Rule 1007(c) instructs debtors to file with the petition “documents required by” other parts of Rule 1007(b)(3). When the debtor asserts that § 109(h)(1) does not apply because of a determination by the U.S. trustee or bankruptcy administrator under § 109(h)(2), it is not obvious what documents are required by Bankruptcy Rule 1007(b)(3). The U.S. Department of Justice through the Executive Office for United States Trustees has occasionally issued press releases that NBCCA services are insufficient for § 109(h)(2)(A) purposes.21 It seems unlikely that the Justice Department has issued any documents “required” by Bankruptcy Rule 1007(b)(3) or (c).

[11]

When the debtor asserts permanent waiver of the prepetition briefing requirement based on incapacity, disability or active duty in a military combat zone under § 109(h)(4),22 the “motion for waiver of credit counseling” contemplated by Part 5 of Official Form 101 is a “document required” by Bankruptcy Rule 1007(b)(3)(D) that would have to be filed with the petition to satisfy Bankruptcy Rule 1007(c). The statute does not mandate this timing, but careful practice cautions in favor of filing the motion with the petition when § 109(h)(4) is in play.

[12]

Local practice will determine how motions for the permanent waiver in § 109(h)(4) will be set, to whom notice must be given and how objections and evidence will be managed. Of course, under § 102(1), bankruptcy courts have substantial discretion whether to schedule or hold a hearing when a debtor moves for permanent waiver of the briefing requirement under § 109(h)(4). It is consistent with the general policy that eligibility issues should be determined expeditiously to avoid delaying debtor and creditor rights23 that, in the absence of an objection, courts will not require evidentiary hearings on uncontested § 109(h)(4) motions.

[13]

It is at least interesting that there is no “after notice and a hearing” in § 109(h)(2) with respect to permanent waiver of the briefing requirement when the U.S. trustee or bankruptcy administrator determines that NBCCA services are inadequate in a district. Perhaps it will be common knowledge within a district when § 109(h)(2) applies and bankruptcy courts will allow permanent waiver of the briefing requirement without motions, court determinations or any other procedure. Presumably, the U.S. trustee would move to dismiss a petition with box 4 checked in Part 5 of Official Form 101 if the U.S. trustee has not determined that NBCCA services are inadequate in the district and no § 109(h)(4) condition for waiver is present.

[14]

Section 109(h)(2) does not say the “determination” of inadequate NBCCA services must preexist the petition. Though it makes sense to assess whether the briefing requirement for eligibility applies when the petition is filed, § 109(h)(2) simply says § 109(h)(1) “shall not apply” in a district for which the U.S. trustee or bankruptcy administrator “determines” that the approved NBCCAs are not able to provide adequate services. It is possible to interpret § 109(h)(2) that a determination of NBCCA inadequacy after the petition would permanently excuse the briefing requirement with respect to debtors in the district who have (recently?) filed petitions without first being briefed. It is perhaps more likely that a condition or circumstance will develop after the petition that would qualify the debtor for a permanent waiver of the briefing requirement under § 109(h)(4).

[15]

Imagine a debtor who checks box 3 in Part 5 of Official Form 101 asserting a temporary exemption under § 109(h)(3)24 based on the exigent circumstance that the debtor is assigned basic training with the military or is sick. After the petition and before the debtor obtains a briefing,25 a circumstance develops that would qualify the debtor for permanent waiver from the briefing requirement under § 109(h)(4)—for example, assignment to a combat zone or adverse medical events. Nothing in § 109(h)(4) precludes a motion for permanent waiver after the petition. Even if the court determines the debtor was not entitled to temporary exemption under § 109(h)(3),26 the Code does not prohibit a postpetition determination that the debtor is entitled to permanent waiver of the briefing requirement under § 109(h)(2) or (h)(4).

[16]

Katrina is another example of this thought. The hurricane was asserted as an exigent circumstance for § 109(h)(3) purposes by debtors seeking temporary exemption from the briefing requirement before the U.S. trustee determined that NBCCAs were not adequate in some of the districts affected by Katrina.27 The statute does not preclude a postpetition determination under § 109(h)(2) that waives the briefing requirement in pending cases.


 

1  See § 18.1  In General.

 

2  See § 36.25  Briefing Requirement and Certificate.

 

3  See 11 U.S.C.§ 521(b), discussed in § 19.3.

 

4  See § 19.1  What is a Briefing?, § 19.2  Timing of Briefing and § 19.3  Certificate from NBCCA: 11 U.S.C. § 521(b).

 

5  Prior to December 1, 2009, the seven-day period in § 109(h)(3) was five days. See Statutory Time-Periods Technical Amendments Act of 2009, Pub. L. No. 111-16, 123 Stat. 1607 (2009).

 

6  See 11 U.S.C.§ 109(h)(3), discussed in § 20.1  In General, § 20.2  Timing, Procedure and Form for Certification of Exigent Circumstances, § 20.3  Which Circumstances Are Exigent and Which Exigent Circumstances Merit a Waiver?, § 20.4  Prepetition Request and § 20.5  Briefing after Temporary Exemption.

 

7  11 U.S.C.§ 109(h)(4), discussed in § 21.4  11 U.S.C. § 109(h)(4): Incapacity, Disability or Active Military Duty.

 

8  11 U.S.C.§ 109(h)(2)(A), discussed in § 21.3  11 U.S.C. § 109(h)(2): Inadequate NBCCA Services.

 

9  See 11 U.S.C. § 109(h)(3)(A)(i) & (ii), discussed in § 20.2  Timing, Procedure and Form for Certification of Exigent Circumstances.

 

10  11 U.S.C. § 109(h)(4), discussed in § 21.4  11 U.S.C. § 109(h)(4): Incapacity, Disability or Active Military Duty.

 

11  See § 21.4  11 U.S.C. § 109(h)(4): Incapacity, Disability or Active Military Duty.

 

12  See § 21.3  11 U.S.C. § 109(h)(2): Inadequate NBCCA Services.

 

13  Exhibit D to former Official Form 1, discussed further in § 36.25  Briefing Requirement and Certificate.

 

14  Part 5, Official Form 101 (12/15).

 

15  See § 21.3  11 U.S.C. § 109(h)(2): Inadequate NBCCA Services for further discussion of § 109(h)(2).

 

16  See, e.g., In re Rich, No. 08-00728, 2009 WL 361501 (Bankr. D.D.C. Feb. 9, 2009) (Teel) (Failure to file motion in support of certification of disability is fatal to claim of exemption from prepetition briefing.); In re Winston, No. 07-20593-D-13L, 2007 WL 1650926, at *2 (Bankr. E.D. Cal. June 6, 2007) (Bardwil) (unpublished) (Disabled debtor required by Bankruptcy Rule 1007(b)(3)(D) to assert exemption from briefing with petition and to request and notice hearing at that time; debtor asserting disability for first time in response to trustee’s motion to dismiss failed to submit evidence that disability rendered debtor unable to participate in in-person, telephone or Internet briefing. That debtor mistakenly completed Internet course on personal financial management before petition was evidence that debtor could have obtained prepetition credit counseling. “Fed. R. Bankr. P. § 1007(b)(3)([D]) requires a debtor asserting that they are exempt from the credit counseling requirement, to affirmatively request that the court make such a determination. This request is to be made at the time the petition is filed, and the request is to be made by way of a noticed hearing (11 U.S.C. § 109(h)(4)).”); In re Swiatkowski, 356 B.R. 581 (Bankr. E.D.N.Y. Nov. 16, 2006) (Cyganowski) (Official Form 23 certifying that no personal financial management course was required because debtor was incapacitated or disabled does not suffice as a motion for permanent waiver of prepetition briefing requirement; even if form is treated as a motion for permanent waiver, facts are inconsistent with debtor’s claim of disability or incapacity given that debtor obtained credit counseling approximately two months after the petition, physically appeared at § 341 meeting of creditors and responded ably to trustee’s questions.).

 

17  See, e.g., In re Myers, 350 B.R. 760 (Bankr. N.D. Ohio Aug. 24, 2006) (On debtor’s motion to excuse prefiling briefing based on chronic dementia and inability to speak or communicate, court scheduled a hearing and concluded that debtor was incapacitated for purposes of § 109(h)(4), because debtor did not have capacity to execute power of attorney used by debtor’s spouse to file petition, and after further hearing, bankruptcy court appointed spouse as next friend to file petition on behalf of incapacitated debtor.).

 

18  See § 21.3  11 U.S.C. § 109(h)(2): Inadequate NBCCA Services and § 21.4  11 U.S.C. § 109(h)(4): Incapacity, Disability or Active Military Duty.

 

19  See § 21.1  In General. This omission was remedied in part by technical amendment in 2010. See Bankruptcy Technical Corrections Act of 2010, Pub. L. No. 111-327, 124 Stat. 3557 (2010).

 

20  See § 19.1  What is a Briefing?.

 

21  See § 21.3  11 U.S.C. § 109(h)(2): Inadequate NBCCA Services.

 

22  See § 21.4  11 U.S.C. § 109(h)(4): Incapacity, Disability or Active Military Duty.

 

23  See, e.g., § 14.3  Use of Statements and Schedules in Eligibility Calculations.

 

24  See § 20.1  In General, § 20.2  Timing, Procedure and Form for Certification of Exigent Circumstances, § 20.3  Which Circumstances Are Exigent and Which Exigent Circumstances Merit a Waiver?, § 20.4  Prepetition Request and § 20.5  Briefing after Temporary Exemption.

 

25  See § 19.1  What is a Briefing?.

 

26  See § 20.3  Which Circumstances Are Exigent and Which Exigent Circumstances Merit a Waiver?.

 

27  See § 21.3  11 U.S.C. § 109(h)(2): Inadequate NBCCA Services.