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responded that their petition should be stricken under 1109(h), arguing that since an ineligible debtor's filing a petition does not commence a case, there was no case to dismiss. The issue was whether the failure to obtain counseling warranted striking the petition or dismissing the case. The bankruptcy court dismissed the petition, holding that the ineligbilty of a debtor under § 109(h) did not divest the court of subject matter jurisdiction of the case. The bankruptcy court further held that the automatic stay applied because under § 301 the stay arises on the filing of the petition not the commencement of the case.
The issue before the bankruptcy court was how to dispose of a petition where a debtor failed to obtain the credit counseling required under 109(h). The bankruptcy court held that it was authorized, under 11 U.S.C. § 105(a) and by its docket management power, to decide on a case-by-case basis whether a matter filed in violation of 109(h) required striking the petition or whether dismissal for cause was appropriate. Failure to file a credit counseling certificate alone was not cause to dismiss; however, failure to obtain counseling in combination with other factors (multiple filings, an extension being sought and granted) may suggest bad faith and warrant dismissal with prejudice.
The issue here, as in the previous two cases, was whether failure to comply with Section 109(h) rendered a debtor ineligible and whether the case should be dismissed or stricken. The court held that the case was commenced and existed until the court determined that the debtor was ineligible; therefore, dismissal of the case was appropriate. Striking the debtor's petition as void ab initio would allow repeated petitions by an ineligible debtor. Further, dismissal is the primary remedy in other subsections of 109 and nullifying an ineligible case would unduly burden case administration.
In re Alberta Gillcrese, 346 B.R. 373 (Bankr. W.D. PA. 2006 )
The debtor filed for Chapter 13 bankruptcy and then failed to make her Ch. 13 plan payments . The bankruptcy court dismissed that case, and the debtor again filed under Ch. 13. Pursuant to § 362(c)(3)(A) the bankruptcy court ruled and the parties did not dispute that the automatic stay terminated as to the debtor and the debtor's property 30 days after the filing of the second case. The only issue before the court was whether the stay was also terminated as to property of the bankruptcy estate under the language of §
