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In re Hubel

September 8, 2008


The opinion of the court was delivered by: Gary L. Sharpe U.S. District Judge


I. Introduction

The Debtor, James William Hubel, appeals from a Letter Decision and Order of the Bankruptcy Court denying his request for an exemption from the credit counseling requirement of section 109(h) of the Bankruptcy Code. See 11 U.S.C. § 109(h). This court reviews the Bankruptcy Court's findings of fact for clear error, and its conclusions of law de novo. See Nat'l Union Fire Ins. Co. v. Bonnanzio (In re Bonnanzio), 91 F.3d 296,300 (2d Cir. 1996). Upon review, the Bankruptcy Court's Letter Decision and Order is affirmed.

II. Facts

Hubel is a prisoner under the jurisdiction of the State of New York Department of Correctional Services ("DOCS"). He has been incarcerated since December of 2002, and is scheduled for conditional release in November of 2008.

On February 15, 2008, Hubel filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code. Prior to his filing, Hubel did not complete the pre-petition credit counseling mandated by 11 U.S.C. § 109(h); instead, he filed an application for exemption from credit counseling pursuant to 11 U.S.C. §§ 109(h)(3) and (4). In his affidavit in support of his application, Hubel indicated that in preparing to file for bankruptcy, he requested and received from the Office of the United States Trustee a list of 18 approved credit counseling agencies. Hubel initiated contact with all 18 agencies, but only three responded. Of the three agencies that responded, only one agreed to waive its fee in light of Hubel's indigence.

The agency, C.C.C.S. of Buffalo, Inc. ("C.C.C.S.") offers its credit counseling in person, over the Internet, and over the telephone. Hubel's incarceration prohibits him from physically attending a credit counseling course. Moreover, Hubel lacks Internet access. Therefore, Hubel's only means of obtaining credit counseling was over the telephone. However, his request for permission to communicate with C.C.C.S. by telephone was denied by DOCS staff at the Hudson Correctional Facility, where Hubel resides.

Upon these facts, the Bankruptcy Court recognized that Hubel "effectively has no way to comply with § 109(h)." (Letter Decision and Order at 5.) Nevertheless, the Bankruptcy Court found no applicable statutory exception to the pre-petition credit counseling requirement, and therefore denied Hubel's request for an exemption. The instant appeal followed.

III. Discussion

Section 109 of the Bankruptcy Code, which sets forth who may be a debtor, provides, in part, that:

. . . an individual may not be a debtor under this title unless such individual has, during the 180-day period preceding the date of filing of the petition by such individual, received from an approved nonprofit budget and credit counseling agency ... an individual or group briefing (including a briefing conducted by telephone or on the Internet) that outlined the opportunities for available credit counseling and assisted such individual in performing a related budget analysis.

11 U.S.C. § 109(h)(1). There are certain statutory exceptions to the credit counseling requirement. Hubel seeks refuge in: (1) the exception for debtors who face "exigent circumstances" that merit a temporary waiver of the credit counseling requirement, not to exceed 45 days from the date the petition is filed, see 11 U.S.C. §§ 109(h)(3)*fn1 ; and (2) the exception for debtors who are "unable to complete [credit counseling] because of incapacity, disability, or active military duty in a military combat zone," see 11 U.S.C. § 109(h)(4).

Turning first to the "exigent circumstances" exception, the Bankruptcy Court correctly held that this exception is of no practical assistance to Hubel. It is true that at least one court has held that a debtor's incarceration may qualify as exigent circumstances. See In re Walton, No. 07-41086, 2007 WL 980430, at *2 (Bankr. E.D. Mo. Mar. 5, 2007).

However, even if the bankruptcy court had held that Hubel's incarceration amounted to exigent circumstances, this would have entitled him only to a 45-day extension of time in which to comply with the credit counseling requirement. See 11 U.S.C. ยง 109(h)(3)(B). At the time he filed his petition in bankruptcy, Hubel's earliest possible release date was approximately nine months in the future. Thus, a temporary exemption for exigent circumstances would have served no purpose. See In re Rendler, 368 B.R. 1, 4 (Bankr. D. Minn. 2007) ("Given counsel's statement that the conditions of the Debtor's incarceration leave 'no way' for him to ...

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