Jimmie Merino Arellano and Martha Mendoza Arellano

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
JIMMY ARELLANO and
MARTHA ARELLANO,
Debtors. 	No. 13-06-11966 SL
MEMORANDUM OPINION
This matter is before the Court on briefs submitted by the
parties in response to the Court’s sua sponte question whether
this case should be dismissed because it was filed before the
Debtors’ previous chapter 7 case was closed. 	This is a core
proceeding. 	28 U.S.C. § 157(b)(2)(A).
FACTS
On May 9, 2006 Debtors filed a joint voluntary Chapter 7
case in the District of New Mexico as case 7-06-10741-SL. 	The
Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, and
Deadlines (“341 notice”) set the first meeting of creditors for
June 20, 2006 and fixed deadlines for filing complaints objecting
to discharge or dischargeability of debts as August 21, 2006.
The schedules indicated that Debtors had approximately $128,000
of secured debt and approximately $33,000 of unsecured debt.
The Debtors are individuals. 	No complaints objecting to
discharge were filed. 	Debtors did not file a waiver of discharge
under §727(a)(10). 	No motions to dismiss the case under §707
were filed. 	No motions for extension of time to file a complaint
objecting to discharge were filed. 	No motions for extension of
time to file a motion to dismiss the case under Rule 1017(e) were
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filed. 	The filing fee was paid in full with the petition. 	On
November 20, 2006, the Clerk entered the Debtors’ discharge (doc
34). 	On August 22, 2006 creditor Bank One, National Association
obtained an Order Granting its Motion for Relief from Stay (doc
23) concerning the Debtors’ home. 	Following some further
skirmishing in the bankruptcy case, the Bank scheduled a
foreclosure sale of the home for November 1, 2006.
On October 25, 2006 Debtors filed this current Chapter 13
proceeding in the District of New Mexico as case 13-06-11966-SL.
The only debts listed on the schedules are the secured debts that
would remain after the Chapter 7. 	On November 7, 2006, the Court
sua sponte set a status conference for November 20, 2006 on the
issue of the propriety of having two bankruptcy cases pending at
the same time, and at that hearing ordered the parties to brief
the issue.
CONCLUSIONS OF LAW
In Davis v. Mather (In re Davis), 239 B.R. 573, 575 n.2
(10 th Cir. BAP 1999) the Tenth Circuit Bankruptcy Appellate Panel
stated:
We note that the Debtor filed his Chapter 13 petition
after he received his Chapter 7 discharge but before
the Chapter 7 proceedings were closed. 	A debtor who
has been granted a discharge under one chapter under
Title 11 may file a subsequent petition under another
chapter even though the first case remains open, as
long as the debtor meets the requirements for filing
the second petition. 	Grimes v. United States (In re
Grimes), 117 B.R. 531, 536 (9th Cir. BAP 1990).
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In this case the issue is whether debtors, who are entitled to
entry of their discharge under chapter 7 may file a subsequent
chapter 13 case even through the first case remains open and the
debts not formally discharged.
Bankruptcy Code Section 727(a) provides that the Court shall
grant the Debtor a discharge unless certain conditions are met.
This statute is implemented by Bankruptcy Rule 4004, which
states, in relevant part:
(c) Grant of discharge
(1) In a chapter 7 case, on expiration of the time
fixed for filing a complaint objecting to discharge and
the time fixed for filing a motion to dismiss the case
under Rule 1017(e), the court shall forthwith grant the
discharge unless:
(A) the debtor is not an individual,
(B) a complaint objecting to the discharge has been
filed,
(C) the debtor has filed a waiver under § 727(a)(10),
(D) a motion to dismiss the case under § 707 is
pending,
(E) a motion to extend the time for filing a complaint
objecting to the discharge is pending,
(F) a motion to extend the time for filing a motion to
dismiss the case under Rule 1017(e) is pending, or
(G) the debtor has not paid in full the filing fee
prescribed by 28 U.S.C. § 1930(a) and any other fee
prescribed by the Judicial Conference of the United
States under 28 U.S.C. § 1930(b) that is payable to the
clerk upon the commencement of a case under the Code.
(2) Notwithstanding Rule 4004(c)(1), on motion of the
debtor, the court may defer the entry of an order
granting a discharge for 30 days and, on motion within
that period, the court may defer entry of the order to
a date certain.
(Emphasis added.)
Black’s Law Dictionary (8 th ed. 2004) defines “forthwith” as
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“1. Immediately; without delay. 2. Directly; promptly; within a
reasonable time under the circumstances.”
In chapter 7, a creditor must file its objection to
discharge not later than 60 days following the first date set for
the meeting of creditors. 	Bankruptcy Rule 4004(a). 	Under the
facts of this case, on August 22, 2006 Debtors were entitled to
their Chapter 7 discharge “forthwith.” 	In re Nelkin, 150 B.R.
65, 67 (Bankr. D. Kan. 1993). 	See also In re Morgan, 290 B.R.
246, 248 (Bankr. D. Del. 2003)(If none of the exceptions met, the
Court is “compelled” to enter discharge pursuant to Rule
4004(c).) And cf. Ross v. Mitchell (In re Dietz), 914 F.2d 161,
164 (9 th Cir. 1990):
By “deem[ing the discharge] to have been entered” on
February 15, 1985, the court acted consistently with
the spirit of the bankruptcy rules, which contemplate
that discharge is effective immediately upon expiration
of the 60-day period following the creditors' meeting,
so long as no objections are filed. 	See Bankr. Rule
4004(c); B. Weintraub and A. Resnick, Bankruptcy Law
Manual, ¶ 3.04[1] at 3-19 (rev. ed. 1986) (noting that
in the absence of timely objections discharge is
“automatic” and “a matter of course”).
(Holding that creditor may seek revocation of discharge before
its actual entry.)
The entry of discharge is an administrative matter under the
control of the Clerk. 	Debtors have no control over the process.
The Court finds that it would be unfair to punish the debtors in
this case by dismissing the Chapter 13 case because the Clerk did
not enter the Chapter 7 discharge “forthwith.” 	The Court finds
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that, in this case, the filing of the second petition was
permissible.
Creditor Bank One argued that the per se rule of Freshman v.
Atkins, 269 U.S. 121 (1925) should be applied and the second case
should be dismissed. 	The case of In re Cowan, 235 B.R. 912, 915-
18 (Bankr. W.D. Mo. 1999) contains an extensive discussion of the
“Per Se Prohibition Against Simultaneous Petitions.”
Although the language in Atkins might support an
across-the-board prohibition against simultaneous
filings, the actual holding and circumstances of the
case do not. 	We find a more accurate and succinct
statement of Atkins' holding in Transamerica Credit
Corporation v. Bullock (In re Bullock), 206 B.R. 389,
392-93 (Bankr. E.D. Va. 1997):
It bears repeating that the Court in Atkins
dismissed neither the debtor's second
petition nor his second application for a
discharge. In fact, the Court affirmed the
district court's decision to discharge all
those debts listed in the second application
which had been incurred after the debtor had
filed his first voluntary petition. In this
light, and in the context of the present
Code, Atkins does not preclude a debtor from
maintaining two cases at the same time. At
most, Atkins could be interpreted as stating
that two cases which seek to discharge the
same debt cannot be pending simultaneously, a
principle which this case does not violate.
Unlike in Atkins, the Debtors’ two cases are not seeking to
discharge the same debts; the Chapter 13 is dealing only with
remaining secured claims.
Bank One also argues that the case should be dismissed
because it was filed in bad faith. 	Bad faith will obviously be
an issue at confirmation of this Chapter 13 Plan. 	See 11 U.S.C.
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§ 1325(a)(3) (Requirement of finding of good faith.) 	But, use of
serial filings “is not, by itself, conclusive evidence of bad
faith.” 	Davis, 239 B.R. at 578.
CONCLUSION
The Court finds that this Chapter 13 case should not be
dismissed but should continue to confirmation.
Honorable James S. Starzynski
United States Bankruptcy Judge
copies to:
Gerald R Velarde
2531 Wyoming Blvd NE
Albuquerque, NM 87112-1027
Karen H Bradley
PO Box 3509
Albuquerque, NM 87190-3509
Kelley L. Skehen
625 Silver Avenue SW
Suite 350
Albuquerque, NM 87102-3111
James C Jacobsen
111 Lomas NW Ste 300
Albuquerque, NM 87102-2368
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
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