Cite as: Keith M. Lundin, Lundin On Chapter 13, § 36.33, at ¶ ____, LundinOnChapter13.com (last visited __________).
One of the sillier sections added to the Bankruptcy Code by BAPCPA is § 521(a)(1)(B)(iii). Unless the court orders otherwise, if § 342(b) applies, the debtor shall file a certificate:
(I) of an attorney whose name is indicated on the petition as the attorney for the debtor, or a bankruptcy petition preparer signing the petition under section 110(b)(1), indicating that such attorney or the bankruptcy petition preparer delivered to the debtor the notice required by section 342 (b); or,
(II) if no attorney is so indicated, and no bankruptcy petition preparer signed the petition, of the debtor that such notice was received and read by the debtor.1
This new debtor duty is the latest iteration in a long-running congressional fixation on legislating that debtors have certain minimum information about bankruptcy before they file a petition.2 It began in 1984 when § 342(b) was enacted to require the clerk of the bankruptcy court to give an individual with primarily consumer debts “written notice” of each chapter of Title 11 under which the individual may proceed.3 Although not required by the statute, Official Form 1 for many years has contained an exhibit that required counsel to certify that the debtor had been informed of the chapters under which the debtor could proceed and that the debtor had been explained the relief available under each chapter.4
BAPCPA amended § 342(b) to expand the written notice that the clerk of the bankruptcy court is required to give to an individual whose debts are primarily consumer debts before the commencement of a bankruptcy case:
(b) Before the commencement of a case under this title by an individual whose debts are primarily consumer debts, the clerk shall give to such individual written notice containing—
(1) a brief description of—
(A) chapters 7, 11, 12, and 13 and the general purpose, benefits, and costs of proceeding under each of those chapters; and
(B) the types of services available from credit counseling agencies; and
(2) statements specifying that—
(A) a person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury in connection with a case under this title shall be subject to fine, imprisonment, or both; and
(B) all information supplied by a debtor in connection with a case under this title is subject to examination by the Attorney General.5
After BAPCPA, it looks like both the clerk and debtor’s attorney must give consumer debtors a written notice before the filing of a bankruptcy case that contains the information described above in § 342(b). Two presumably identical written notices—one from the clerk and one from the debtor’s attorney. If that isn’t double silly enough, § 521(a)(1)(B)(ii)(I) then requires a “certificate” from the debtor’s attorney attesting that the clerk’s notice was delivered to the debtor. If a bankruptcy petition preparer signed the petition under § 110(b)(1),6 then the bankruptcy petition preparer must provide the certificate. Triple silly is found in § 527(a)(1), which requires every Debt Relief Agency—including debtors’ attorneys and bankruptcy petition preparers—to (third time?) give the notice required by § 342(b).7
Not to beat this to death, but the three § 342(b) notices are not necessarily required in all Chapter 13 cases and aren’t required at all in some. The § 342(b) notice required by § 527(a)(1) only applies to Chapter 13 debtors with primarily consumer debts and nonexempt assets valued at less than $150,000.8 The bankruptcy clerk is only required to give the § 342(b) notice to a Chapter 13 debtor with primarily consumer debts—without regard to the debtor’s asset values.9 Ironically, a Chapter 13 debtor whose debts are not primarily consumer debts—perhaps a debtor recently emerged from a failed business or a debtor engaged in business—would not receive the § 342(b) notice from anyone and counsel would be free of the certification requirement in § 521(a)(1)(B)(iii).
Thankfully, the new certificate required by § 521(a)(1)(B)(iii) has been incorporated into Exhibit B on Official Form 1. Now all that remains is for someone to flesh out the content of the written notice in § 342(b), as amended by BAPCPA. An Official Form for that written notice would be helpful.
Section 342(b)(1)(B) is also partially redundant of the “briefing” by a nonprofit budget and credit counseling agency that is a new eligibility requirement under § 109(h)(1).10 Under § 109(h)(1), the prepetition briefing must include an outline of the “opportunities for available credit counseling.” The written notice required by § 342(b)(1)(B) must contain a brief description of “the types of services available from credit counseling agencies.”11 There is a strong scent of overkill here.
If the petition was prepared with the assistance of a bankruptcy petition preparer,12 Official Form 1 includes a statement by the bankruptcy petition preparer that the notices required by § 342(b) were provided to the debtor. This would seem to satisfy the requirement in § 521(a)(1)(B)(iii)(I) that a certificate be filed when a bankruptcy petition preparer delivered the § 342(b) notice to the debtor.
The pro se debtor13 is required by § 521(a)(1)(B)(iii)(II) to file a certificate that the § 342(b) notice “was received and read by the debtor.”14 Official Form 1 has been modified to include a sentence above the signature of the debtor: “I have obtained and read the notice required by § 342(b) of the Bankruptcy Code.” This should satisfy the certificate requirement in § 521(a)(1)(B)(iii)(II), as amended by BAPCPA.
As silly as it seems to redundantly require a written § 342(b) notice from the clerk and from debtor’s counsel or a bankruptcy petition preparer, together with a certificate that the written notice was delivered, Congress put real teeth into these requirements. Section 521(i)(1) provides that the failure of a Chapter 13 debtor to file the “information” required by § 521(a)(1) within 45 days of the petition has the result that “the case shall be automatically dismissed effective on the 46th day.”15 The attorney certificate with respect to the § 342(b) notice is in a subdivision of § 521(a)(1). Failure to file “the information” required by the certificate—by counsel, by the bankruptcy petition preparer or by the debtor in a pro se case—results in the automatic dismissal of the Chapter 13 case.
It is reasonable to expect debtors’ attorneys will quickly become aware of the new § 342(b) certificate requirement and that most commercially available forms will include the recently modified Exhibit B to Official Form 1 that reflects the BAPCPA changes to § 521(a)(1). Perhaps the same cannot be said for all bankruptcy petition preparers, and there are certainly going to be problems with pro se debtors. Pro se debtors are unlikely to know about the § 342(b) written notice and will not know to file the “certificate” that the notice has been received and read as required by § 521(a)(1)(B)(iii)(II). There is trouble ahead when Chapter 13 petitions filed by pro se debtors are “automatically” dismissed on the 46th day because the debtor was not aware of the § 342(b) written notice or failed to file the appropriate certificate.16 It will be small consolation that the § 342(b) certificate is in subpart (B) of § 521(a)(1) and is subject to the predicate that the bankruptcy court can order otherwise with respect to the filing of the certificate.
1 11 U.S.C. § 521(a)(1)(B)(iii)(I), (II).
2 See § 34.2 [ Petition, Signed by the Debtor ] § 36.2 Petition, Signed by Debtor—“Wet” Signature Issues.
3 See § 302 of Pub. L. No. 98-353, 98 Stat. 352 (clerk’s notice of available chapters), codified at 11 U.S.C. § 342(b) (before Bankruptcy Abuse Prevention and Consumer Protection Act of 2005).
4 See Exhibit B to Official Form 1.
5 11 U.S.C. § 342(b).
6 See § 24.3 [ Bankruptcy Petition Preparers ] § 4.2 Bankruptcy Petition Preparers.
7 See 11 U.S.C. § 527(a)(1), discussed in § 366.1 [ WARNING! You Are a Debt Relief Agency ] § 4.1 WARNING! You Are a Debt Relief Agency.
8 See 11 U.S.C. § 527(a)(1), discussed in § 366.1 [ WARNING! You Are a Debt Relief Agency ] § 4.1 WARNING! You Are a Debt Relief Agency.
9 See 11 U.S.C. § 342(b).
10 11 U.S.C. § 109(h)(1) is discussed in § 369.1 [ In General ] § 18.1 In General.
11 11 U.S.C. § 342(b)(1)(B).
13 See § 93.1 [ Pro Se Debtors ] § 69.2 Pro Se Debtors.
14 11 U.S.C. § 521(a)(1)(B)(iii)(II).
15 11 U.S.C. § 521(i)(1).
16 This and other problems that inhere in the “automatic dismissal” in 11 U.S.C. § 521(i)(1) are discussed in § 388.1 [ Consequences of Failure to File Required Information, Including “Automatic Dismissal” ] § 42.2 Consequences of Failure to File Required Information, Including “Automatic Dismissal”.