By: Donald L Swanson
A recent bankruptcy appellate decision by a U.S. District Court highlights a persistent bankruptcy problem:
- How to deal with pro se filers who abuse the bankruptcy system by repeated filings.
The case is Hayes v. U.S. Bank Trust, N.A., Case Nos. 6:24-cv-00004 & 00011 in the U.S. District Court for the Western District of Virginia:
- On September 2, 2024, the District Court affirms a Bankruptcy Court dismissal of Debtor’s sixth-of-seven Chapter 13 bankruptcy petitions; and
- the last four of Debtor’s seven bankruptcy petitions are filed (i) pro se, and (ii) within less than one-year’s time.
Debtor’s Bankruptcy Petitions History
Here is a historical chronological of Debtor’s Chapter 13 petitions:
- Case No. 08-60109—filed by counsel on January 22, 2008; dismissed on October 3, 2008;
- Case No. 15-60738—filed by counsel on April 21, 2015; dismissed on June 26, 2015;
- Case No. 22-60684—filed by counsel on July 13, 2022; dismissed on September 19, 2022;
- Case No. 23-60473—filed pro se on April 24, 2023; dismissed on September 21, 2023;
- Case No. 23-60941—filed pro se on August 30, 2023; dismissed on October 6, 2023;
- Case No. 23-61366—filed pro se on December 14, 2023; dismissed on March 7, 2024—along with an order barring Debtor from filing a bankruptcy petition for 365 days (until March 7, 2025); Debtor appealed, and the District Court affirmed on September 2, 2024; and
- Case No. 24-60255—filed pro se on March 15, 2024 (one week after the sixth Petition’s dismissal and 365-days bar order); dismissed on March 18, 2024; Debtor appealed, and the District Court affirmed because Debtor “violated the prefiling injunction by filing a new bankruptcy petition” (see Case No. 6:24-cv-00012, Doc. 16).
Appellate Affirmance
What follows is a summary of the U.S. District Court’s September 3, 2024, opinion affirming in all respects the Bankruptcy Court’s dismissal order of March 7, 2024—including the 365-days bar for refiling—in Debtor’s sixth-filed Chapter 13.
In the last fifteen years, Debtor has filed seven petitions for bankruptcy under Chapter 13 of the Bankruptcy Code to avoid foreclosure on his residence and has appealed at least nine bankruptcy court orders.
This Court, (i) previously affirmed the dismissal of Debtor’s 2022 bankruptcy petition, and (ii) most recently rejected Debtor’s appeal of an order denying his request for intra-district transfer of his December 14, 2023 bankruptcy.
On March 7, 2024, the Bankruptcy Court dismissed Debtor’s December 14, 2023, petition (his sixth) and imposed a 365-day refiling injunction.
Debtor’s Appellant Brief does not address the bankruptcy court’s dismissal order directly. Instead, it lays out a series of claims against Appellees U.S. Bank Trust and Fay Servicing. Construing such claims liberally, it appears:
- Debtor took out a loan for property in or around 1992, but in 2005, Debtor asserts, the loan was rescinded making it “void ab initio” and not subject to foreclosure; and
- Debtor also alleges that the loan was improperly transferred between loan servicers, asserting that in servicing his loan and attempting to foreclose on his property, Appellants violated several statutes including 15 U.S.C. §§ 1641 (g), (f)(2), 15 U.S.C. 1692(e)–(f).
Debtor’s Bankruptcy Petition was properly dismissed:
- Debtor repeatedly failed to comply with the requirements of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, despite multiple orders and hearings, by failing to file such items as a list of creditors, a schedule of assets and liabilities, a statement of debtor’s financial affairs, a statement of the amount of monthly net income, and a payment plan, and by failing to pay filing fees in Court-authorized installments; and
- the Bankruptcy Code provides that, if an individual debtor in a voluntary Chapter 13 case fails to file all the information required, “the case shall be automatically dismissed,” and Debtor’s excuse that he “cannot complete schedules requested by CH. 13 Trustee until the alleged mortgage has been legally voided….” is not sufficient.
Additionally, the Bankruptcy Court properly exercised its discretion in barring Debtor from filing a new petition for 365 days, due to repeated abuses of the bankruptcy system. Serial filings and repeated failures to comply with the Bankruptcy Code and Procedures and with Bankruptcy Court orders are sufficient grounds to warrant such a bar on filing.
Conclusion
The problem of abusive pro se filings in bankruptcy is persistent. It doesn’t go away.
So, the question is this: How should the bankruptcy system solve that problem.
Unfortunately, I don’t have an answer.
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