Tujuana Deneen Hawkins

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
TUJUANA D. HAWKINS,
Debtor.
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Case No. 06-00057
(Chapter 7)
DECISION REGARDING DEBTOR’S RESPONSE TO ORDER TO SHOW CAUSE
On March 21, 2006, the court entered an order denying the
debtor’s request for a temporary exemption from the pre-petition
date credit counseling requirement set forth in 11 U.S.C.
§ 109(h) (D.E. No. 12). 	Based on the debtor’s apparent failure
to fulfill the requirement set forth in § 109(h), the court
ordered the debtor to show cause why her case ought not be
dismissed by March 28, 2006. 	The debtor has filed a belated
response to that order in which she asserts that certain
“regular” credit counseling obtained by the debtor prior to the
petition date satisfies the requirements of § 109(h), that she
has now obtained and filed the credit counseling certificate
The decision below is hereby signed. Dated: April
20, 2006.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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1 	The certificate, however, reflected post-petition credit
counseling. 	Such counseling does not satisfy § 109(h).
2
required by 11 U.S.C. § 521(b), 1 and that it would be manifestly
unjust to dismiss her case given the circumstances of her case.
The substance of the debtor’s reply, as well as the court’s
further reflections on the nature and scope of the court’s duty
to ensure that the debtor has complied with § 109(h), lead this
court to conclude that dismissal of the debtor’s case is not
appropriate at this time.
I
The first task for the court is to decide whether it can
permit the parties in interest in this case to waive the § 109(h)
credit counseling requirement or is instead required to determine
whether the debtor is eligible for bankruptcy relief on its own
initiative. 	This issue turns on whether compliance with § 109(h)
is a jurisdictional prerequisite as well as an “eligibility”
requirement. 	If § 109(h) is just an “eligibility” requirement,
the court could conceivably permit the debtor’s creditors, the
chapter 7 trustee, and the United States Trustee to waive it, but
if fulfillment of the requirement also determines whether the
court can assert subject matter jurisdiction, the court has a sua
sponte duty to determine whether the requirement has been met.
Doe by Fein v. District of Columbia, 93 F.3d 861, 871 (D.C. Cir.
1996).
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3
This is not the first time that the court has had occasion
to comment on the nature of one of the provisions of § 109. 	In
the case of In re Hollberg, 208 B.R. 755 (Bankr. D.D.C. 1997),
this court was presented with the issue of whether dismissal of a
debtor’s case with prejudice under § 109(g) would prevent the
automatic stay imposed by 11 U.S.C. § 362 from arising should the
debtor file a new case notwithstanding the bar of § 109(g). 	Id.
at 755-56. 	The court concluded that the automatic stay would not
arise if a debtor ineligible for bankruptcy relief under § 109(g)
filed a new bankruptcy petition because (1) the stay only arises
upon the commencement of a case under title 11 and (2) a title 11
case cannot be commenced by a person ineligible to be a debtor
under the plain language of 11 U.S.C. § 301. 	Id. at 756.
The court explained the rationale for its decision as
follows:
In the case of § 301, “A voluntary case under
a chapter of this title is commenced by the
filing with the bankruptcy court of a
petition under such chapter by an entity that
may be a debtor under such chapter.”
[(]Emphasis added.[)] Sections 302 (joint
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2 	Unlike §§ 301 and 302, § 303 provides that an involuntary
bankruptcy petition may not be filed against a farmer. 	The
Eighth and Fifth Circuits have held that this provision in § 303
is an affirmative defense that may be waived rather than a
prerequisite to subject matter jurisdiction. 	See Marlar v.
Williams (In re Marlar), 432 F.3d 813, 814-15 (8th Cir. 2005);
McCloy v. Silverthorne (In re McCloy), 296 F.3d 370, 375 (5th
Cir. 2002). 	These courts reason that § 303(h), which states that
a court “shall order relief against the debtor . . . [i]f the
petition is not timely controverted,” implies that the debtor
must raise the defense that she is a farmer or she will lose it.
This court sees nothing in § 303(h) that necessarily leads to
such a conclusion; rather, to this court’s eye, the statute
permits a court to enter the equivalent of a default judgment
against the debtor with respect to the debtor’s eligibility under
§ 303. 	Such an order would, like the entry of a default
judgment, be immune from collateral attack on the basis of
subject matter jurisdiction under the doctrine of res judicata,
Ins. Co. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee,
456 U.S. 654, 702 n.9 (1982), but it would also be vulnerable to
attacks on the court’s subject matter jurisdiction on direct
appeal. 	Practical Concepts, Inc. v. Republic of Bolivia, 811
F.2d 1543, 1547-48 (D.C. Cir. 1987).
4
cases) and 303 (involuntary cases) [2] impose
the same requirement that for the case to be
commenced, the debtor must be an entity that
may be a debtor under the chapter under which
the case is commenced.
To determine whether an individual may be a
debtor, you next turn to § 109 (entitled “Who
may be a debtor”). . . . [Because] a § 109(g)
dismissal . . . precludes a case from being
commenced regarding the debtor during the 180
days following dismissal[,] . . . any
document labeled “petition” that such a
debtor files during the 180-day bar of a
§ 109(g) dismissal is not the filing of a
petition as defined in [11 U.S.C.] § 101(42)
and thus gives rise to no automatic stay
under § 362(a).
Id. 	In other words, the court construed § 109(g) as operating as
a jurisdictional bar to the filing of a petition to commence a
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3 	E.g., compare Hamilton Creek Metro. Dist. v. Bondholders
Colorado Bondshares (In re Hamilton Creek Metropolitan District),
143 F.3d 1381, 1385 n.2 (10th Cir. 1998) (“none of the § 109(c)
criterial is jurisdictional in nature”); Promenade Nat’l Bank v.
Phillips (In re Phillips), 844 F.2d 230, 235 n.2 (5th Cir. 1988)
(“The Bank had argued that eligibility under § 109(g) raised an
issue of subject matter jurisdiction. 	We disagree.”); Bank of
America, N.T. & S.A. v. Communication & Studies Int’l, Ltd. (In
re Bank of America, N.T. & S.A.), 23 B.R. 1015, 1020 (N.D. Ga.
1982) (“Section 109(a) is a rule of eligibility only.”); and In
re Estrella, 257 B.R. 114, 117 (Bankr. D.P.R. 2000) (“Section 109
of the Bankruptcy Code establishes the eligibility of a debtor to
file a bankruptcy petition, but does not determine the
jurisdiction of the bankruptcy court to act.”) with McKay v.
Alliance Mortgage Corp. (In re McKay), 268 B.R. 908, 911 (Bankr.
W.D. Va. 2001) (“[A]n entity, ineligible under § 109(g), cannot
commence a voluntary case under § 301 by filing a purported
petition, nor can the entity avail itself of the protection
provided by 11 U.S.C. § 362(a)”); Stoner v. LTV Corp. (In re
Chateaugay Corp.), 153 B.R. 409, 412 (Bankr. S.D.N.Y. 1993) (“The
parties filing an involuntary petition have the ultimate burden
to establish that this Court has jurisdiction because the alleged
debtor is an eligible debtor under the Code.”); and In re Colo.
Indus. Bank of Fort Collins, 84 B.R. 735, 737 (Bankr. D. Colo.
1988) (“The determination of the Court’s jurisdiction over the
debtor revolves around the construction of the highlighted
language of Section 109(b)(2).”).
5
new bankruptcy case, which would therefore prevent the automatic
stay from arising as a result of the filing of such a petition
(as the petition would not be “a petition filed under section
301, 302, or 303 of this title” within the meaning of § 362(a)).
The court’s opinion in Hollberg expressed what was then a
minority opinion (though by no means an isolated one) with
respect to § 109(g). 	See In re Ross, 338 B.R. 134, 135-139
(Bankr. N.D. Ga. 2006) (collecting and analyzing cases agreeing
and disagreeing with the position taken by the court in
Hollberg). 3 	Since the decision was announced, Congress has
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4 	As explained at greater length below, when an individual
purports to commence a case pursuant to §§ 301, 302, or 303, the
reviewing court necessarily has limited jurisdiction to determine
whether it has subject matter jurisdiction over the merits of the
case itself. 	The mere filing of what purports to be a petition
gives rise to the automatic stay under § 362(a) despite the bar
of § 109 until the court concludes that it lacks subject matter
jurisdiction and dismisses the case.
6
altered § 362 to provide that the automatic stay does not arise
with respect to an act to enforce a lien against or a security
interest in real property “if the debtor is ineligible under
section 109(g) to be a debtor in a case under this title.” 	11
U.S.C. § 362(b)(21)(A).
Because Congress singled out § 109(g) for exemption from the
automatic stay only with respect to liens or security interests
in real property, the court must infer that bankruptcy cases
commenced in violation of the other sub-parts of § 109 or cases
commenced in violation of § 109(g) that do not involve liens or
security interests in real property give rise to the automatic
stay. 	Section 362(b)(21)(A) could therefore be read as
suggesting that debtor “eligibility” is not a jurisdictional
requirement at all. 	See In re Ross, 338 B.R. at 138-39 (“If such
a filing were void ab initio and did not result in an automatic
stay under existing law, such an amendment would not have been
necessary.”). 4 	It is this latter extrapolation of
§ 362(b)(21)(A) that the court rejects today.
There are many reasons why Congress might have amended § 362
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5 	There are other sub-parts of § 109 that arguably should
give rise to the automatic stay even under this court’s analysis
in Hollberg. 	Section 109(e) is the most obvious example. 	That
sub-section provides that an individual must have unsecured debts
totaling less than $307,675.00 and secured debts totaling less
than $922,975.00 to “be a debtor under chapter 13 of this title.”
(Emphasis added). 	A debtor in chapter 7 is not subject to this
restriction. 	Consequently, a chapter 13 debtor with debts
exceeding the § 109(e) cap could simply convert her case to
chapter 7 (or have the case converted against her will, as the
case may be), and still have a valid petition giving rise to the
automatic stay. 	See Jones v. United States (In re Jones), 134
B.R. 274, 280-81 (N.D. Ill. 1991) (“Congress intended subject
matter jurisdiction to attach when a case is filed under the
umbrella of title 11 as opposed to when it is filed under a
particular chapter within title 11”). 	Section 109 is not a
“jurisdictional” statute in and of itself, but rather sets forth
certain criteria for debtor eligibility that may determine
whether a case over which a court has subject matter jurisdiction
ever commences. 	If a debt-limitation ineligible chapter 13 case
can be converted to a proper chapter 7 case, there is necessarily
a case pending under title 11 despite the erroneous chapter in
which the case is pending. 	It is therefore conceivable that
ineligibility of a certain type might implicate the subject
matter jurisdiction of a court whereas ineligibility of another
type might not.
7
in the way that it did. 	Congress may have focused on § 109(g)
because courts were split with respect to the effect of that
specific sub-part of the statute at the time of the congressional
amendment. 	In other words, it may be the case that § 109(g)--and
only § 109(g)--was on Congress’s mind when it revised § 362. 	It
is therefore no mystery why Congress would amend § 362 to refer
to § 109(g) specifically rather than to § 109 as a whole. 5
More importantly, there is nothing in § 362 as amended by
Congress that contradicts directly the plain language of 28
U.S.C. § 1334 and § 301 of the Bankruptcy Code, which set forth
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8
the statutory framework for the district court’s jurisdiction
over bankruptcy cases. 	Section 1334 states that “the district
courts shall have original and exclusive jurisdiction of all
cases under title 11,” 11 U.S.C. § 1334(a) (emphasis added), and
“original but not exclusive jurisdiction of all civil proceedings
arising under title 11, or arising in or related to cases under
title 11.” 	Id. at § 1334(b) (emphasis added).
A title 11 case must commence for a court to assert
jurisdiction under § 1334. 	And, as noted above, § 301 of the
Bankruptcy Code sets forth the only basis for commencing a case
under title 11: “[a] voluntary case under a chapter of [title 11]
is commenced by the filing with the bankruptcy court of a
petition under such chapter by an entity that may be a debtor
under such chapter.” 	11 U.S.C. § 301(a) (emphasis added). 	With
exceptions of no relevance here, an individual who fails to
obtain pre-petition credit counseling of the kind described in
§ 109(h) “may not be a debtor under this title.” 	11 U.S.C.
§ 109(h)(1). 	Ergo, a petition filed by an individual who has
failed to obtain pre-petition credit counseling does not
“commence[]” a title 11 case, which means that there is no case
conferring subject matter jurisdiction on the district court or
on the bankruptcy court through a referral of jurisdiction
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6 	Section 157 allows the district courts to “provide that
any or all cases under title 11 and any or all proceedings
arising under title 11 or arising in or related to a case under
title 11 shall be referred to the bankruptcy judges for the
district.” 	28 U.S.C. § 157(a) (emphasis added). 	The
jurisdiction that the bankruptcy court exercises, therefore, is
the jurisdiction of the district court.
7 	Numerous courts that have declared § 109 to be “non-
jurisdictional” have mentioned the supposedly inequitable and
impractical results that will obtain if debtor eligibility is
treated as a prerequisite to subject matter jurisdiction. 	See,
e.g., In re Phillips, 844 F.2d at 235 n.2; In re Ross, 338 B.R.
at 139-40. 	These courts make very good arguments for why
district and bankruptcy courts should be able to assert subject
matter jurisdiction even when the purported debtor is ineligible
under § 109, but they are irrelevant in deciding whether the
court actually has jurisdiction in such circumstances under the
Bankruptcy Code as it is currently written. 	The court cannot
simply will itself to have whatever jurisdiction it thinks is
appropriate to carry out its functions; the source of its
jurisdiction comes from Congress and from Congress alone.
9
pursuant to 28 U.S.C. § 157. 6
The logic of this plain reading of the Bankruptcy Code and
title 28 of the U.S. Code is inescapable. 	See Hartford
Underwriters Ins. Co. v. Union Planters Bank (In re Hen House
Interstate, Inc.), 530 U.S. 1, 6 (2000) (“Congress ‘says in a
statute what it means and means in a statute what it says
there . . . .’”) (quoting Conn. Nat’l Bank v. Germain, 503 U.S.
249, 254 (1992)). 	However unpalatable or impractical it might
be, 7 the court cannot ignore the words in the statute before it
to achieve a more desirable result, nor can it mangle the meaning
of those words based on what it thinks § 362 might imply.
Indeed, as already noted, it is easy enough to interpret 11
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8 	That is why, for purposes of 11 U.S.C. §§ 362(c)(3) and
(c)(4), a prior case dismissed on § 109(h) grounds nevertheless
ought to be treated as a prior case, particularly in light of the
case having given rise to an automatic stay.
10
U.S.C. § 362 in a manner that is consistent with the plain
language of 28 U.S.C. § 1334 and 11 U.S.C. § 301. 	Every federal
court necessarily has the jurisdiction to determine whether it
has subject matter jurisdiction over the case or controversy
before it. 	Chicot County Drainage Dist. v. Baxter State Bank,
308 U.S. 371, 376 (1940). 	Once the court makes a threshold
determination that it lacks jurisdiction, it must dismiss the
case before it at that point. 8
Section 362(b)(21) must be read as implying that the
automatic stay is in effect while the court makes this threshold
determination of jurisdiction. 	A petition by an ineligible
debtor gives rise to a case in this limited sense and to an
automatic stay until the case is dismissed. 	In other words,
§ 362 must be read as giving rise to an automatic stay when a
petition is asserted to be filed under §§ 301, 302, or 303.
This effectively overrules the court’s precise holding in
Hollberg, but it does not invalidate the point made in Hollberg
that a case cannot commence on its merits unless the debtor is
eligible for title 11 relief any more than a district court’s
ruling in a diversity case that the amount in dispute was not
large enough to trigger diversity jurisdiction implies that the
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11
court really has subject matter jurisdiction over the case and
the requirements for diversity jurisdiction are just
“eligibility” requirements subject to waiver by the parties.
Indeed, one struggles in vain to ascertain from the likes of
Phillips and Ross just what the difference is between an
“eligibility” requirement and a “jurisdictional” requirement
other than that it is supposedly less burdensome for those courts
to deal with “eligibility” requirements. 	Doubtless, many
district courts would like to waive the “eligibility”
requirements set forth in 28 U.S.C. § 1332 when a motion to
dismiss for lack of jurisdiction is filed months or years into
the adjudication of a diversity case as well. 	But they are
bound, just as this court is bound, to limit their assertion of
jurisdiction to those matters allocated to them by Congress.
II
Having determined that the pre-petition credit counseling
described in § 109(h) is a prerequisite to the court’s assertion
of subject matter jurisdiction, the court must now decide whether
the debtor has satisfied her burden of demonstrating that she has
received such counseling. 	In making its decision, the court is
mindful of the traditional deference accorded to parties who
claim that a federal court has subject matter jurisdiction in a
case. 	Unless the claim is “wholly insubstantial,” Kudjodi v.
Wells Fargo Bank, 181 F. Supp. 2d 1, 2 (D.D.C. 2001) (internal
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12
quotation omitted), the court will not dismiss the case before it
for lack of subject matter jurisdiction.
Section 109(h) provides in pertinent 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 the
filing of the petition by such individual,
received from an approved nonprofit budget
and credit counseling agency . . . an
individual or group briefing . . . 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).
Without question, the debtor obtained counseling prior to
the petition date from “an approved nonprofit budget and credit
counseling agency[.]” 	It is less clear, however, whether that
agency “outlined the opportunities for available credit
counseling and assisted such individual in performing a related
budget analysis.” 	Congress did not explain what it meant by
“available credit counseling” and “a related budget analysis” in
either the text or the legislative history of § 109(h), leaving
the court to guess as to what must be addressed specifically in a
credit counseling session for that session to count for purposes
of § 109(h).
The debtor argues that the counseling she received from
Consumer Credit Counseling Service (“CCCS”) on January 26, 2006,
outlined various credit counseling options and involved an
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13
analysis of the debtor’s budget. 	In support of her position, the
debtor has submitted a letter from a CCCS counselor describing
the services performed by the counselor in response to the
conversation between the counselor and the debtor. 	According to
the counselor’s letter, he provided:
1. 	A Personal Financial Summary reviewing
what [the debtor] earn[s] and where it
goes[;]
2. 	A Net Worth Analysis displaying what
[the debtor] own[s] and what [the
debtor] owe[s;]
3. 	A Debt Summary displaying the individual
creditors [the debtor] owe[s;]
4. 	A Debt Analysis displaying the benefits
of repaying [the debtor’s] debt through
[CCCS’] program[; and]
5. 	An Action Plan highlighting [the
counselor’s] recommendations for [the
debtor.]
(Debtor’s Response at Ex. A) (emphasis in original).
Some of the services provided by CCCS would appear to fall
within the rubric of “outlin[ing] the opportunities for available
credit counseling” or “assist[ing] [the debtor] in performing a
related budget analysis.” 	Specifically, the CCCS counselor’s
“Debt Analysis” and “Action Plan” could be construed as outlining
credit counseling alternatives, while the “Personal Financial
Summary,” “Net Worth Analysis,” and “Debt Summary” all sound like
components of a budget analysis to the court. 	Without more
evidence, the court cannot dismiss the debtor’s argument on this
point out of hand.
It may well be the case that an evidentiary hearing on this
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14
issue would reveal that the counseling provided by CCCS on
January 26 does not in fact satisfy the requirements of § 109(h).
But that is putting the cart before the horse. 	For purposes of
this court’s limited inquiry into the basis for its subject
matter jurisdiction, the debtor need only make a colorable
argument for her case to proceed.
Whatever the ultimate merits of the debtor’s contention that
she has received credit counseling for purposes of § 109(h) may
be, her argument is not “so insubstantial, implausible,
foreclosed by prior decisions . . . or otherwise completely
devoid of merit as not to involve a federal controversy within
the jurisdiction of the [bankruptcy] [c]ourt . . . .” 	Oneida
Indian Nation v. County of Oneida, 414 U.S. 661, 666 (1974). 	For
that reason, the court will not dismiss her case for lack of
subject matter jurisdiction at this time. 	If a party in interest
to this case wants to put the debtor’s claim to the test, it can
do so by filing a motion to dismiss the debtor’s case.
III
For the foregoing reasons, the court will discharge its
prior order to show cause entered in this case. 	The debtor
should not, however, misconstrue this decision as an adjudication
of the ultimate merits of her claim. 	The only thing that the
court has considered today is the nature and scope of its
independent duty to investigate whether a debtor has received the
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15	O:\Andrew Fausett\Hawkins_109(h)_OTSC response_decision_v5.wpd
counseling described in § 109(h) for purposes of ascertaining
whether the debtor has commenced a case over which the court may
assert subject matter jurisdiction. 	The court’s conclusion is
that a debtor need only make a colorable claim that she has
received such counseling for the court to assert jurisdiction.
But if a party in interest were to file a motion to dismiss the
debtor’s case for failure to comply with § 109(h), the court
would then need to decide as a factual and legal matter whether
the debtor actually received such counseling.
Fortunately for the debtor, that issue is not before the
court today. 	The debtor has presented a colorable claim that she
received pre-petition credit counseling, and the court sees no
need to pursue this matter further on its own initiative. 	The
order to show cause will be discharged.
An order follows.
[Signed and dated above.]
Copies to: Debtor; debtor’s counsel; chapter 7 trustee
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