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Cases of Interest

No Order in the Court!

New Code section 11 U.S.C. § 521(i), states that if an individual debtor in a Chapter 7 or 13 case fails to file all of the documentation required by § 521(a)(1) within 45 days after the date of the filing of the petition, the case shall be "automatically dismissed" effective on the 46th day after the date of the filing of the petition. A court order dismissing the case is not required.

Several concerns have been raised regarding "automatic dismissals" that might occur, without any notice to interested parties. For example, debtors are required to file 60 days of "payment advices" with their petitions. If the debtor misses one pay advice, the case is "automatically dismissed." But what if no one recognizes this and the case goes on? What if the debtor receives a discharge? Can a party later challenge this on the basis that the case was "dismissed" on the 46th day?

One Florida judge mused over these questions and issued this creative opinion in a case curiously called In Re Riddle:

I do not like dismissal automatic,
It seems to me to be traumatic.
I do not like it in this case,
I do not like it any place.

As a judge I am most keen
to understand, What does it mean?
How can any person know
what the docket does not show?

What is the clue on the 46th day?
Is the case still here, or gone away?
And if a debtor did not do
what the Code had told him to
and no concerned party knew it,
Still the Code says the debtor blew it.
Well that is what it seems to say:
the debtor's case is then "Oy vay!"

This kind of law is symptomatic
of something very problematic.
For if the Trustee does not know
then which way should the trustee go?

Should the trustee's view prismatic
continue to search the debtor's attic
and collect debtors' assets in his fist
for distribution in a case that stands dismissed?
After a dismissal automatic
would this not be a bit erratic?

The poor trustee cannot know
the docket does not dismissal show.
What's a poor trustee to do -
except perhaps to say, "Boo hoo!"

And if the case goes on as normal
and debtor gets a discharge formal,
what if a year later some fanatic
claims the case was dismissed automatic?

Was there a case, or wasn't there one?
How do you undo what's been done?
Debtor's property is gone as if by a thief,
and Debtor is stripped but gets no relief.

I do not like dismissal automatic.
On this point I am emphatic!
I do not wish to be dramatic,
but I can not endure this static.
Something more in 521 is needed
for dismissal automatic to be heeded.

Dismissal automatic is not understood.
For all concerned this is not good.
Before this problem gets too old
it would be good if we were told:
What does automatic dismissal mean?
And by what means can it been seen?
Are we only left to guess?
Oh please Congress, fix this mess!
Until it's fixed what should I do?
How can I explain this mess to you?

If the Code required an old fashioned order,
that would create a legal border,
with complying debtors' cases defended
and 521 violators' cases ended,
from the unknown status of dismissal automatic,
to the certainty of a status charismatic.
The dismissal automatic problem would be gone,
and debtors, trustees and courts could move on.

As to this case, how should I proceed?
Review of the record is warranted, indeed.
A very careful record review,
tells this Court what it should do.
Was this case dismissed automatic?
It definitely was NOT and that's emphatic.

In re Riddle, Bankruptcy No. 06-11313 (Bankr. S.D. Fla. 2006).

Bankruptcy Report is produced by Becket & Lee LLP, Attorneys at Law, as a service to our clients. Copyright 2006 by Becket & Lee LLP, except as otherwise noted. Reproduction of this newsletter is strictly prohibited without written permission from the publisher.

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