Ch. 7 Debtor Can’t Reopen Case After Paying Fee Late

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By Diane Davis

A Chapter 7 debtor who failed to file a fee to keep her bankruptcy case active can’t get it reopened 15 months later, the U.S. Bankruptcy Court for the Northern District of Ohio held ( In re Hicks , 2017 BL 263600, Bankr. N.D. Ohio, No. 16-60628, 7/28/17 ).

Based on court rules, the bankruptcy court didn’t have the authority to extend the final installment payment beyond 180 days after the bankruptcy petition was filed, Judge Russ Kendig wrote July 28.

The court cautioned bankruptcy practitioners that the reason for the delay in not paying the required fee must be included in any motion to reopen a dismissed case, and the debtor didn’t do that here.

“Discharges are not favors given for attending a party,” the court said. “Allowing debtors to continually ignore their obligations, only to later seek to avoid the repercussions, creates a culture of only performing obligations if it is convenient,” the court said, concluding it wouldn’t condone or foster that culture.

Christina Hicks filed Chapter 7 bankruptcy in March 2016, but couldn’t pay the filing fee so she asked if she could pay the fee in installments. The court granted her request and ordered her to make one $335 installment payment no later than July 14.

The court dismissed her no asset case when Hicks didn’t respond to an order to explain why she didn’t pay her installment fee on time.

Fifteen months later, Hicks paid the $335 fee and asked the court to reopen her case. She said reopening it would support bankruptcy’s fresh start policy and no prejudice would come to her creditors because she had no assets.

The court rejected Hicks’ arguments, saying she overlooked the reason she didn’t get her debts wiped out, which was the failure to pay the filing fee. As a result, the court viewed the matter as a motion to reconsider the dismissal order under Bankruptcy Rule 9024 of the Federal Rules of Bankruptcy Procedure.

The debtor must not only provide an explanation for not paying the fee, but explain her 10-month delay in moving to reopen the case. She failed to do so, the court said.

Rule 1006 provides that the court may extend the time of any installment if the last installment is paid no later than 180 days after filing the petition, the court said.

Further, Rule 9006(b)(3) makes the 180-day period under Rule 1006 absolute, the court said. Thus, the court didn’t have authority to extend the date of the final installment past Sept. 26, the court said.

Pauline R. Aydin Shuler, Canton, Ohio, represented Hicks; Chapter 7 Trustee Lisa M. Barbacci represented herself.

To contact the reporter on this story: Diane Davis in Washington at DDavis@bna.com

To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com

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