Wayne and Lanae Grantham (Debtors) filed for Chapter 7 bankruptcy. Wayne Grantham filed a certificate of credit counseling, but Lanae Grantham did not.
Instead, the Debtors filed a motion seeking to excuse Lanae’s failure to seek counseling on the basis of physical or mental disability. Specifically, Lanae was suffering physical and mental difficulties associated with her chemotherapy treatment for breast cancer. The court was required to determine whether Lanae should be excused from the credit counseling requirement or the bankruptcy proceeding should be dismissed with respect to her.
WAYNE JOHNSON, UNITED STATES BANKRUPTCY JUDGE Section 109(h)(1) of the Bankruptcy Code provides that no individual may file a bankruptcy case unless that individual has received credit counseling from an approved agency during the 180-day period prior to filing the petition. The credit counseling may be conducted in person, by telephone or Internet. 11 U.S.C. § 109(h)(1). The statute is clear. Obtaining credit counseling prepetition is mandatory and the vast majority of published cases conclude that a bankruptcy case must be dismissed when a debtor fails to obtain pre-petition counseling.
While credit counseling is mandatory, Congress has created limited exceptions. Section 109(h)(4) exempts from credit counseling a debtor whom the court determines is unable to complete it due to incapacity or disability. Incapacity is defined [to mean that] the debtor is impaired by reason of mental illness or mental deficiency so that he is incapable of realizing and making rational decisions with respect to his financial responsibilities; and “disability” means that the debtor is so physically impaired as to be unable, after reasonable effort, to participate in an in person, telephone, or Internet briefing.
With respect to physical impairment, the motion indicates that Mrs. Grantham is currently undergoing chemotherapy in her fight against breast cancer. In her declaration she states that she is unable to complete online or telephone credit counseling because she experiences severe bone pain, fatigue, and nausea.
However, the note from her doctor (which is attached to her declaration) does not state that Mrs. Grantham cannot participate in credit counseling by phone or by computer. Rather, the note from her doctor asks that Mrs. Grantham be excused from “any court appearance.” This limitation does not prevent telephone calls or using a computer. In that regard, Mrs. Grantham does not state in her declaration that she has discontinued using telephones or computers.
Also, the Debtors have not cited any case authority in support of their request. The Court, however, has reviewed quite a number of decisions. Overall, they tend to indicate that section 109(h)(4) does not apply to Mrs. Grantham’s situation.
For example, in the case of In re Ferrell, 391 B.R. 292, 293 (Bankr. D.S.C. 2008), the debtors asserted they had physical disabilities which they argued were sufficient to warrant an exemption under section 109(h)(4). The court described the disabilities as follows: Debtors’ counsel presented medical records confirming that Debtor Troy Hovis Ferrell, Jr., who is 68 years old, recently left a nursing home and suffers from heart problems, diabetes, and infections and that Debtor Rose Marie Ferrell, who is 58 years old, suffers from breast cancer.
Notwithstanding these physical challenges, the court declined to grant an exemption. The court held that the “evidence presented supports Debtors’ contention that they suffer from medical conditions that certainly may make it difficult for them to obtain the financial management course in person; however, no evidence was presented that their medical conditions are so severe as to render Debtors unable to participate in a telephone or Internet financial management course.” Id. at 294. The Ferrell decision is the case most factually comparable because the physical disability of Mrs. Ferrell and Mrs. Grantham is the same: breast cancer.
There is no evidence that Mrs. Grantham suffers from “dementia,” “memory loss” or “a general state of confusion.” Mrs. Grantham has testified (in her declaration) on her own behalf in support of the Excusal Motion. In doing so, she has demonstrated mental acuity and awareness sufficient to support the motion.
She seems to understand what she is doing and the Court can detect no lack of mental ability in the declaration or the motion. And if Mrs. Grantham can understand the motion, she can understand credit counseling.
In conclusion, the Court is truly sympathetic to Mrs. Grantham’s plight. Her situation is quite challenging and the burdens she faces are considerable. The Court hopes and prays she recovers and heals completely.
When faced with hardship, sympathy and empathy can stir an impulse to bend rules or the law in favor of an afflicted person. But not only would that be unfaithful to the statute and the caselaw; but it also would be myopic. Bending the rules or not following the statute would harm Mrs. Grantham.
It is precisely because Mrs. Grantham is struggling with her health that she needs to make the best possible financial decisions at this time—especially if and when to file for bankruptcy. She needs excellent financial and legal advice now. For example, if she files for bankruptcy too soon, she could incur large medical costs post-petition that will not be dischargeable in this case or future cases filed within four to eight years. Such post-petition nondischargeable debts could weigh upon her very heavily for up to another eight years.
In any event, the statute is clear and the duty of the courts is to adhere to it. In this instance, while Mrs. Grantham may be physically disabled to an extent that in-person credit counseling is not reasonable, there is no evidence to support the conclusion that she could not complete counseling by telephone or the Internet using a computer. Similarly, there is no evidence that Mrs. Grantham lacks cognitive understanding or the ability make rational financial decisions or to participate in telephonic or internet counseling. She seems entirely rational.
Accordingly, for the reasons stated, the Court shall enter a separate order dismissing the case as to Mrs. Grantham only and denying the Excusal Motion.
CRITICAL THINKING:
How did the judge arrive at his decision? Do you agree with the judge’s definitions of physical and mental disabilities? Is the judge’s decision too harsh with respect to requiring absolute strict compliance with the filing deadline? Why or why not?
ETHICAL DECISION MAKING:
It is often said that the law establishes the moral minimum while ethics poses the question of whether one has an obligation to go beyond the moral minimum.
Should the judge have gone beyond the moral minimum in this case with respect to Grantham’s illness?