For the past year, most of us have focused on the BAPCPA revisions to the Code, including the new filing requirements for debtors, limitations in the automatic stay for repeat filers, and clashes between the specific language of the Code, “absurd results,” and (what the particular court believes is) the intent of the drafters. However, all of those questions existed prior to the BAPCPA with the interpretation of §109(g)(2) (unchanged in the BAPCPA), which states the following —
(g) Notwithstanding any other provision of this section, no individual or family farmer may be a debtor under this title who has been a debtor in a case pending under this title at any time in the preceding 180 days if . . . . (2) the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title.
Note that this subsection does not include consideration of 1) the merits or disposition of the stay relief motion, 2) the time lapse between the stay relief motion and dismissal, or 3) the good faith (or absence thereof) of the debtor in dismissing the case and re-filing the new case.
Take the example of the recent case of In re Beal, 2006 WL 2147972 (E.D. Wis. July 28, 2006). The lender filed a motion to lift the stay, and the debtors responded. However, the lender mistakenly reported to the court that the debtors had not responded, and the motion was granted. Upon notice of the mistake, and by agreement of the lender, the order was vacated and the motion withdrawn. Fourteen months later, the debtors dismissed their case and then filed another petition in order to include additional debt. The trustee moved for dismissal based upon a strict, mechanical reading of §109(g)(2). The District Court, on appeal, analyzed the cases, academic commentary* and Congressional intent and found that a strict application in this case would not fulfill the purpose of the statute.
* The court quoted extensively from Judicial Follies: Ignoring the Plain Meaning of Bankruptcy Code §109(g)(2), 48 Ariz. L.Rev. 149 (Spring 2006). The author, Ned Waxman, is Professor at the College of William and Mary and a former law clerk for Judge Drake.
In contrast, consider the facts of In re Harris, No. 05-12216, 2005 Bankr. LEXIS 1629 (Bankr. N.D. Ga. July 29, 2005) (Judge Drake). On May 13, 2005, the debtor dismissed his Chapter 13 case (his third case) after the lender filed a motion for relief. On July 1, 2005, the debtor filed a fourth case, just before a July 5 foreclosure, and the lender filed a motion for relief and request for expedited hearing. At the time, the debtor was behind seventeen payments. Judge Drake, in a 17 page order, reviewed the case law, and the different approaches taken by courts (including the interpretation of the word “following” as used in §109(g)(2)). Although Judge Drake appeared to indicate that he would inclined to follow the less mechanical approach to acoid an unjust or absurd result, it was not necessary in this case because dismissal would be appropriate under any analysis.
I recommend reading these cases and Ned’s article, all of which are available by clicking the links, as the analysis may be applicable to the BAPCPA revisions (and, of course, the continuing debate over §109(g)(2).