Karen Veronica Jacobs

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
KAREN V. JACOBS,
Debtor.
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Case No. 05-01744
(Chapter 7)
ORDER DENYING REQUEST FOR HEARING TO BAR ENTRY OF
DISCHARGE AND DIRECTING THE CLERK OF THE COURT TO ENTER DISCHARGE
On January 24, 2006, the court entered its Order and Notice
re Opportunity to Request Hearing under 11 U.S.C. Section
727(a)(12) to Bar Entry of Discharge (D.E. No. 17), which gave
notice to any party in interest to the debtor’s case that a
request for a hearing to consider barring the entry of the
debtor’s discharge needed to be filed within twenty-one days of
the entry of the court’s order. 	The court has received one such
request from the debtor’s landlord. 	Consequently, the court must
decide whether a hearing is necessary based on the substance of
the request before it can enter a valid discharge pursuant to 11
The order below is hereby signed.
Signed: March 09, 2006.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 	The court erroneously entered an order discharging the
debtor without having considered the landlord’s request on
February 28, 2006 (D.E. No. 20). 	That order was vacated by the
court on March 7, 2006.
2
U.S.C. § 727. 1
The court concludes that the landlord’s request should be
denied. 	Section 727 of the Bankruptcy Code provides that
(a) 	The court shall grant the debtor a discharge,
unless –
(12) the court after notice and a hearing held not
more than 10 days before the date of the
entry of the order granting the discharge
finds that there is reasonable cause to
believe that –
(A) 	section 522(q)(1) may be applicable to
the debtor; and
(B) 	there is pending any proceeding in which
the debtor may be found guilty of a
felony of the kind described in section
522(q)(1)(A) or liable for a debt of the
kind described in section 522(q)(1)(B).
11 U.S.C. § 727(a)(12) (emphasis added).
Section 522(q)(1) of the Bankruptcy Code, in turn, provides
that
(q)(1) 	As a result of electing under subsection
(b)(3)(A) to exempt property under State or
local law, a debtor may not exempt any amount
of an interest in property described in
subparagraphs (A), (B), (C) and (D) of
subsection (p)(1) which exceeds in the
aggregate $125,000 if –
(A) 	the court determines, after notice and a
hearing, that the debtor has been
convicted of a felony (as defined in
section 3156 of title 18), which under
the circumstances, demonstrates that the
filing of the case was an abuse of the
provisions of this title; or
(B) 	the debtor owes a debt arising from –
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(i) any violation of the Federal
securities laws (as defined in section
3(a)(47) of the Securities Exchange Act
of 1934), any State securities laws, or
any regulation or order issued under
Federal securities laws or State
securities laws;
(ii) fraud, deceit, or manipulation in a
fiduciary capacity or in connection with
the purchase or sale of any security
registered under section 12 or 15(d) of
the Securities Exchange Act of 1934 or
under section 6 of the Securities Act of
1933;
(iii) any civil remedy under section
1964 of title 18; or
(iv) any criminal act, intentional tort,
or willful or reckless misconduct that
caused serious physical injury or death
to another individual in the preceding 5
years.
11 U.S.C. § 522(q)(1) (emphasis added).
It would strain the faculties of the layperson and the
lawyer alike to try to understand why Congress linked these
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2 	The House Report preceding the passage of § 330 of the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,
Pub. L. 109-8 (2005), states that § 727(a)(12) was designed
to require the court to withhold the entry of a
debtor’s discharge order if the court, after notice and
a hearing, finds that there is reasonable cause to
believe that there is a pending proceeding in which the
debtor may be found guilty of a felony of the kind
described in Bankruptcy Code section 522(q)(1) or
liable for a debt of the kind described in Bankruptcy
Code section 522(q)(2).
H.R. Rep. No. 31, 109th Cong., 1st Sess. 330 (2005).
This language explains the existence of § 727(a)(12)(B), but
it does not account for § 727(a)(12)(A), which sets forth the
threshold requirement that the debtor elect to use state or local
exemptions rather than the exemptions provided by § 522(d).
Without any legislative history suggesting an alternative meaning
for this provision, the court must interpret sub-section (A)
according to its plain meaning.
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statutes together in the manner provided by § 727(a)(12). 2
Nevertheless, the gist of the provision is that a debtor will not
receive a discharge if (1) the debtor is subject to § 522(q)(1)
(i.e., has elected to exempt property under state or local law
rather than under the federal exemptions contained in § 522(d))
and (2) the debtor has (a) been convicted of a type of felony
that suggests that her bankruptcy filing is abusive, (b) violated
certain federal securities laws, or (c) engaged in criminal,
intentional, or reckless misconduct leading to the serious
physical injury or death of another person in the previous five
years.
The debtor in this case has elected to use the federal
exemptions provided by § 522(d) rather than the applicable state
or local exemptions. 	Consequently, she is not subject to §
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5	O:\Andrew Fausett Temp Docs\order_discharge_hearing_denial_Jacobs.wpd
522(q)(1) and, by extension, § 727(a)(12). 	The debtor’s request
that the court bar the entry of the discharge pursuant to that
same provision must fail. 	For that reason, it is
ORDERED that the sole request for a hearing to bar entry of
the discharge filed in this case (D.E. No. 19) is DENIED; and it
is further
ORDERED that the clerk of the court enter a discharge of the
debtor’s debts pursuant to 11 U.S.C. § 727 upon the entry of this
order.
[Signed and dated above.]
Copies to: All entities on the BNC mailing list
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