Summary of a Recent
Judicial
Development in
Bankruptcy
Family Farmers are Subject to Credit Counseling
Requirements of 11 U.S.C. § 109(h)
Walt McCarterNational AgLaw Center Research Associate
Summary of Decision
In Bogedain v. Eisen, No. 06-11831, 2006 U.S. Dist. LEXIS 59926 (E.D. Mich. Aug. 24, 2006), the United States Bankruptcy Court for the Eastern District of Michigan held that the credit counseling requirements of 11 U.S.C. § 109(h) were applicable to family farmers, and ordered the Chapter 12 debtor to obtain credit counseling prior to filing his petition.
Background
Debtor filed his Chapter 12 petition in March 2006, and subsequently filed a motion to waive credit counseling due to exigent circumstances. Id. at *2. He argued in his motion that family farmers were not required to obtain credit counseling, and that there were no approved credit counselors capable of providing services to him. Id. The court ordered him to investigate approved credit counselors and find out whether they could offer him the required services, and if so, his motion would be denied. Id. at *2-3. Several agencies he contacted replied that they could offer him effective credit counseling, and so the court denied his motion and he appealed. Id. at *3.
Arguments
Debtor argued that credit counseling was not an eligibility requirement for a family farmer under 11 U.S.C. § 109(h), and that there were no approved credit counselors capable of providing counseling to a family farmer. Id. at *2.
Analysis and Holdings
Under 11 U.S.C. § 109(f)-(h)(1), to be exempted from credit counseling, a debtor must submit certification that describes exigent circumstances that merit a waiver, and show that he requested but was unable to obtain effective credit counseling services. Id. at *6. The Debtor argued that family farmers are exempt from the requirements of § 109(h)(1) because the provision does not specifically include the term "family farmer." Id. at *7. The court rejected the argument because the term is included in § 109(g), which the court interpreted as reflecting Congress's intent for the entire section to be applicable to family farmers. Id. Thus the court held that the Debtor was required to obtain credit counseling prior to filing his bankruptcy petition. Id.
The case was decided on August 24, 2006.