In re Gossett, 06 B 14628.

• Decision Date: 24 April 2007
• Docket Number: No. 06 B 14628.,06 B 14628.
• Parties: In re Ashley Michelle GOSSETT, Debtor.
• Court: United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois

369 B.R. 361

In re Ashley Michelle GOSSETT, Debtor.

No. 06 B 14628.

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

April 24, 2007.

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COPYRIGHT MATERIAL OMITTED

John A. Lipinsky, Coman & Anderson, P.C., Lisle, IL, for Debtor.

MEMORANDUM OPINION

JOHN H. SQUIRES, Bankruptcy Judge.

These matters come before the Court on the motion of Ashley M. Gossett (the "Debtor") for sanctions pursuant to 11 U.S.C. §§ 362(a)(3) and 362(k)(I) against General Motors Acceptance Corporation ("GMAC") and the Development Group, and on the motions of GMAC to annul the automatic stay pursuant to 11 U.S.C. § 362(d) and to dismiss the case under 11 U.S.C. §§ 109(h)(1) and 707(a). For the reasons set forth herein, the Court grants GMAC's motion to dismiss. Because the Court finds the Debtor ineligible for relief in this case, the Court grants the relief requested by GMAC by virtue of the dismissal of the case pursuant to 11 U.S.C. § 707(a) whereby the stay terminated as a matter of law under 11 U.S.C. § 362(c)(2)(B). The Court denies the Debtor's motion for sanctions and GMAC's motion to annul the stay.

I. JURISDICTION AND PROCEDURE

The Court has jurisdiction to decide these matters pursuant to 28 U.S.C. § 1334 and Internal Operating Procedure 15(a) of the United States District Court for the Northern District of Illinois. They are core proceedings under 28 U.S.C. § 157(b)(2)(A), (G), and (0).

II. FACTS AND BACKGROUND

Most of the facts are undisputed and the parties waived their opportunity for an evidentiary hearing. On November 11, 2005, the Debtor executed a retail installment contract for a 2006 Pontiac G6 vehicle. In executing the contract, the Debtor granted GMAC a purchase money security interest in the vehicle which GMAC financed.

The Debtor alleges that on October 30, 2006, Kimberly Haskell ("Haskell"), the Debtor's step-mother, contacted GMAC to discuss the arrearages owed on the vehicle and to inform GMAC that the Debtor may be preparing to file a bankruptcy petition, GMAC informed Haskell that it intended to repossess the vehicle if the Debtor did not become current on the remaining $21,707.09 balance owed under the vehicle agreement.

On November 8, 2006, an agent for GMAC contacted the Debtor in regard to her account with GMAC. The Debtor indicated that she was planning to file for bankruptcy. The agent for GMAC informed her that GMAC requires a bankruptcy case number to "put the account in bankruptcy status." As no petition had been filed, the Debtor did not provide GMAC with a bankruptcy case number at that time.

Subsequently, the Debtor filed a pro se petition for relief under Chapter 7 of the Bankruptcy Code on November 8, 2006. As established by the Certificate of Counseling filed with the petition, she also received the credit counseling required under 11 U.S.C. § 109(h)(1) just minutes prior to filing her petition.

The Debtor alleges that she printed two copies of the "Notice of Bankruptcy Case Filing" from the bankruptcy court's website and kept both notices in the vehicle. One notice was allegedly placed on the dashboard and the other was taped to the steering wheel.

On November 15, 2006, the Development Group, at GMAC's direction, repossessed the vehicle at the Debtor's place of employment. Both GMAC and the Development Group claim that the notice of the bankruptcy filing was not on the dashboard or on me steering wheel of the vehicle.

Shortly after learning that the vehicle had been repossessed, Haskell contacted an agent of GMAC to inform it that the Debtor had filed a petition for bankruptcy and to provide GMAC with the case number. Haskell allegedly informed GMAC that it violated the automatic stay and requested that the vehicle be returned immediately.

GMAC alleges that on November 15, 2006, it attempted to contact the Debtor to arrange the return of the vehicle. On November 16, 2006, GMAC contacted Haskell to discuss the return of the vehicle. Haskell stated that all further discussions regarding the case should be directed to the Debtor's attorney. Shortly after the conversation with Haskell, GMAC left a voice-mail message with the Debtor's attorney regarding an attempt to return the vehicle.

Later on November 16, 2006, the Debtor filed the motion for sanctions against + and the Development Group for violating the automatic stay. On November 20, 2006, GMAC filed the motion to annul the automatic stay. Thereafter, on November 28, 2006, GMAC filed the motion to dismiss the case.

The Chapter 7 trustee appointed to the cased filed a no asset report on December 20, 2006. According to the papers filed on December 28, 2006 by the Development Group, the Debtor has purportedly released the Development Group from any claims in connection with the repossession, transport, and storage of the subject vehicle. Thus, the Court will consider only the remaining disputes between the Debtor and GMAC.

III. DISCUSSION

A. GMAC's Motion to Dismiss

1. 11 U.S.C. § 109(h) Analysis

Resolution of GMAC's motion to dismiss the case turns on the interpretation of 11 U.S.C. § 109(h)(1). It provides, in pertinent part, that "an individual may not be a debtor under this title unless such individual has, during the 180 — day period preceding the date of filing of the petition by such individual, received from an approved nonprofit budget and credit counseling agency ... an individual or group briefing ... that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis." 11 U.S.C. § 109(h)(1) (emphasis added). This new provision is sometimes referred to as the ticket into consumer bankruptcy for individual debtors, and is an eligibility requirement for relief with certain limited exceptions that are not applicable in the present case.

That some gap of time must exist between the end of the "180-day period" and the filing of the petition is obvious because the credit counseling must "preced[e] the date of filing of the petition." How much time must there be in the gap is not at all clear and, not surprisingly, has produced different results. Although this provision was enacted by the bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA") in 2005, there is already a split of authority on the issue of exactly when the pre-petition 180-day period ends. The first line of cases, upon which the Debtor relies, holds that the statute should be interpreted to allow a debtor to obtain the counseling within the 180 days prior to the moment the debtor filed the petition. See In re Spears, 355 B.R. 116 (Bankr.E.D.Wis. 2006); In re Hudson, 352 B.R. 391 (Bankr. D.Md.2006); In re Warren, 339 B.R. 475 (Bankr.E.D.Ark.2006); In re Barbaran, 365 B.R. 333 (Bankr.D.D.C.2007); In re Swanson, No. 06-00968-TLM, 2006 WL 3782906 (Bankr.D.Idaho Dec.21, 2006); In re Moore, 359 B.R. 665 (Bankr.E.D.Tenn. 2006). These cases allow the debtor to obtain credit counseling and file the bankruptcy petition on the same day as long as the debtor obtains the counseling certificate prior to filing the petition. Spears, 355 B.R. at 120; Hudson, 352 B.R. at 397; Warren, 339 B.R. at 480.

The second line of cases, upon which GMAC relies, holds that the statute requires the debtor to "complete the required counseling briefing on any day within 180 days prior to but not including the date upon which his or her bankruptcy petition is filed." In re Cole, 347 B.R. 70, 74 (Bankr.E.D.Tenn.2006); see also In re Murphy, 342 B.R. 671 (Bankr.D.D.C.2006); In re Mills, 341 B.R. 106 (Bankr.D.D.C. 2006).¹ Thus, pursuant to these cases, a debtor who obtains credit counseling on the same day that she files her petition is ineligible for bankruptcy relief. Mills, 341 B.R. at 109.

The Court has reviewed the cases on both sides of the issue and finds, as other courts have, that the two sides are diametrically opposed. See Spears, 355 B.R. at 117. Notably, however, the courts are able to find some support for either side of the argument. See Moore, 359 B.R. at 667-71 (providing a thorough review of the cases analyzing this issue). The issue arises because § 109(h)(1) does not pinpoint the precise moment in time when the 180-day pre-petition period terminates. The subject phrase is not one of the defined terms in 11 U.S.C. § 101, and the rules of construction in 11 U.S.C. § 102 do not solve the conundrum of exactly when the 180-day period ends. The statutory text is silent and congressional intent is unclear. The authorities on both sides of the issue raise various arguments for their differing conclusions.

For example, the Warren court interpreted the phrase "date of filing" in § 109(h)(1) to mean the "specific day, month, year, and time of day the petition was filed," noting that in bankruptcy cases, "the exact time of filing is a critical bright line in determining property rights of debtors and creditors. At the moment a petition for relief is filed, the automatic stay goes into effect, affording the debtor an extra measure of protection from the legal maneuvers of his creditors." Warren, 339 B.R. at 480 (emphasis added); see also Spears, 355 B.R. at 118-19; Hudson, 352 B.R. at 396. The Warren court turned to the legislative history of BAPCPA to support its interpretation, noting that the "House Report ... summarizes this section to mean that an individual debtor must `receive credit counseling within the 180-day period preceding the filing of the bankruptcy case'" and that "[n]othing in the legislative history suggests that Congress contemplated at least a one-day waiting period after completion of credit counseling...." Warren, 339 B.R. at 480 (quoting H.R. REP. NO. 109-31, pt.1, at 54 (2005), as reprinted in 2005 U.S.C.C.A.N. 88, 124-25).

Although the Hudson court did not find the legislative history to be conclusive, it did agree that the result in Warren was persuasive. The court noted that although the word "date" commonly and usually means "day,...