Ten Things I’d Change About BAPCPA-Part Seven

27 Dec Ten Things I’d Change About BAPCPA-Part Seven

There are parts of BAPCPA that are clearly anti-consumer, and parts of the law that changed things that were working fine already.  Some of the law’s worst provisions, however, are not bad ideas, but are just poorly executed.  It is one such provision that I would offer as one of the most important things to change.

Current law requires a debtor to file with the court copies of pay stubs for the 60 days prior to the bankruptcy filing.  That’s not so bad on it’s face.  You can certainly see why courts and trustees and creditors would want a way to verify the debtor’s income, and 60 days isn’t such a long time.  The problem is the rigidity of the provision, and the consequences of failure to file those paystubs.  The law also says a case “shall” be dismissed if a debtor fails to meet the requirement.  Now, you might think that if a pay stub was lost, and the amount of the pay didn’t differ, and if the debtor made a sincere effort to comply, that a judge would be understanding and let one missing pay stub slide.  Some might, but not every judge believes he has the ability to overlook such a technicality.

Judge Stephen D. Gerling, chief bankruptcy judge for the Northern District of New York, recently dismissed a case where the debtor filed all but one of his pay advices.  In the Chapter 7 case of Anthony J. Scalise, the debtor’s pay was the exactly the same for each pay period.  Mr. Scalise was not able to find the one pay stub he received immediately before he filed his petition, but he filed all of the others, which were all the same.

Judge Gerling found that Mr. Scalise made a reasonable effort to comply with the requirement that he file 60 days of pay advices.  Nonetheless, he found that he had no discretion under the current bankruptcy law to accept anything less than complete compliance, and he dismissed the case.  “While dismissal of this case may seem to be a harsh result, it is one that is mandated by the statute”.

It is a harsh result, and one that doesn’t make much sense.  Congress could fix this one easily enough, either by stating that the debtor may provide some substitute for the missing information, or even more easily, by giving judges the discretion to handle such situations by modifying the statutory language to read “may” instead of “shall.”

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