Karen T. Chilson

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re:
KAREN T. CHILSON, 	No. 14-12946 ta7
Debtor.
MEMORANDUM OPINION
Before the Court is whether the Bankruptcy Code and Rules permit the Debtor to add her
husband as a joint debtor more than three months after she filed her individual bankruptcy
petition. The Court concludes that the answer is no; Debtor’s husband must file his own case if
he needs bankruptcy relief.
I. 	FACTS
The Court finds the following facts:1
Debtor filed this individual Chapter 7 case on October 1, 2014. 	Her initial papers
included a voluntary petition, all required bankruptcy schedules, a Statement of Financial
Affairs, and a Statement Disclosing Non-Filing Spouse.
A case trustee was appointed (Linda Bloom) and a § 3412 meeting was scheduled for
November 3, 2014.
1 In making these findings, the Court took judicial notice of the docket. 	See St. Louis Baptist
Temple, Inc. v. Fed. Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir.1979) (holding that a
court may, sua sponte, take judicial notice of its docket); In re Mailman Steam Carpet Cleaning
Corp., 196 F.3d 1, 8 (1st Cir.1999) (citing Fed. R. Evid. 201 and concluding that “[t]he
bankruptcy court appropriately took judicial notice of its own docket”); In re Quade, 496 B.R.
520, 524 (Bankr.N.D.Ill.2013), affirmed, 498 B.R. 852 (N.D. Ill. 2013) (a “bankruptcy court [is
authorized] ... to take judicial notice of its own docket”).
2 Unless otherwise indicated, all statutory references are to 11 U.S.C.
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Ms. Bloom held the § 341 meeting as scheduled. The Debtor appeared with her counsel
and answered questions. 	Later that day Ms. Bloom filed a Chapter 7 Trustee’s Report of No
Distribution.
Debtor completed her personal financial management course on November 6, 2014.
The deadline to object to Debtor’s exemptions expired December 3, 2014. The deadline
to object to Debtor’s discharge, or to the dischargeability of certain debts, expired January 2,
2015.
On January 8, 2015, Debtor filed an Amended Voluntary Petition, purporting to add her
husband Clifford N. Chilson as a joint debtor.3
According to Debtor’s counsel, the amended petition was prompted by a lawsuit against
Mr. Chilson brought by an Alabama creditor, Redstone Federal Credit Union. Debtor’s counsel
is concerned that the community discharge may not protect Mr. Chilson or the couple’s
community property, since they had lived in Alabama when the debt was incurred and Alabama
is not a community property state.
II. 	DISCUSSION
A. 	Relevant Bankruptcy Code and Rules Provisions.
Section 302 provides:
(a) A joint case under a chapter of this title is commenced by the filing with the
bankruptcy court of a single petition under such chapter by an individual that may
be a debtor under such chapter and such individual's spouse. The commencement
of a joint case under a chapter of this title constitutes an order for relief under
such chapter.
(b) After the commencement of a joint case, the court shall determine the extent,
if any, to which the debtors' estates shall be consolidated.
3 Debtor signed the amended petition as attorney in fact for her husband, who is suffering from
dementia. 	The Court does not question whether the Debtor has the power to proceed on her
husband’s behalf.
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Fed. R. Bankr. P. 1009(a) provides:
(a) General Right to Amend. 	A voluntary petition, list, schedule, or statement
may be amended by the debtor as a matter of course at any time before the case is
closed. The debtor shall give notice of the amendment to the trustee and to any
entity affected thereby. On motion of a party in interest, after notice and a
hearing, the court may order any voluntary petition, list, schedule, or statement to
be amended and the clerk shall give notice of the amendment to entities
designated by the court.
1. 	Construing § 302(a). 	Section 302(a) seems to require that both spouses
sign a single petition at the beginning of the case: “A joint case . . . is commenced by the filing .
. . of a single petition . . . by an individual . . . and such individual's spouse.” § 302(a). While
the language could be interpreted to allow a later, amended petition signed by both spouses,
which theoretically would then “commence” the “joint case” (as opposed to the single case
before the amendment), such a reading seems artificial and strained. 	Use of the terms “joint,”
“commenced,” and “single petition” together in the sentence strongly imply the intention to
require that a single petition, signed by both debtors, be filed at the beginning of the case,
resulting in one petition date and one order for relief.
2. 	Construing Fed. R. Bankr. P. 1009(a). 	On its face, Fed. R. Bankr. P.
1009(a) allows a debtor to amend her petition to add a non-filing spouse: “A voluntary petition .
. . may be amended by the debtor as a matter of course at any time . . . .” This apparently open-
ended language is not without limits, however. 	For example, courts agree that Rule 1009(a)
cannot be read to allow a change in the identity of the debtor. 	See, e.g., In re Lary, 2009 WL
6498526 (Bankr. N.D. Ga. 2009) (Rule 1009 does not permit a bankruptcy petition to be
amended to change the identity of a debtor); In re Clinton, 166 B.R. 195, 200 (Bankr. N.D. Ga.
1994) (same). Furthermore, it is axiomatic that in the event of a conflict between the Code and
the Rules, the Code wins. 	In re Calder, 973 F.2d 862, 867 (10th Cir. 1992) (“We agree with
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Calder's statement that the Bankruptcy Rules cannot override the absolute statutory right to
convert pursuant to § 706(a)”); In re Crawford, 135 B.R. 128, 133 (D. Kan. 1991) (citing United
States v. Cardinal Mine Supply, Inc., 916 F.2d 1087 (6th Cir. 1990), the district court held that
the bankruptcy rules could not contradict § 726 of the Bankruptcy Code). 	To the extent Rule
1009(a) could be interpreted to allow Debtor to add Mr. Chilson to this case, such an
interpretation is impermissible if it conflicts with § 302(a).
B. 	Problems with Adding a Joint Debtor Post-Petition.
The fundamental problem with adding a spouse to an individual case post-petition is that
it disrupts the Code’s and Rules’ elaborate schedule for administering the case from start to
finish. 	Here, Mr. Chilson would be added about 100 days after the Debtor’s petition date. 	If
permitted, the late addition of a joint debtor would raise the following issues:
1. 	The petition date. 	Mr. Chilson could not have a separate petition date
from his wife, because there can only be a “single petition.” § 302(a). See also In re Buerman,
295 B.R. 876, 877 (Bankr. W.D. Ark. 2003) (Rule 1009(a) should not be read to permit a “single
petition” to include an amendment adding a spouse). Which date would be used for the petition
date? 	Similarly, there can only be one order for relief in a bankruptcy case. 	See In re Clinton,
166 B.R. at 199 (“It is axiomatic that in a case there can be only one order for relief. . . .”).
Would the order be deemed entered on October 1, 2014 or January 8, 2015?
2. 	§ 341 meeting. 	The Debtor’s § 341 meeting was held about 70 days
before Mr. Chilson was added as a debtor. 	Would the trustee have to hold a second § 341
meeting? 	Would she be paid for that additional work? 	Would the Debtor have to attend the
second meeting?
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3. 	Discharge 	of 	pre-petition 	debts. 	Pre-petition 	debts 	are 	subject 	to
discharge; post-petition debts are not. Debts incurred in the “gap” period between the wife’s and
husband’s filing dates might be pre-petition, or might be post-petition. See In re Austin, 46 B.R.
358, 359 (Bankr. E.D. Wis. 1985) (court did not allow debtor’s attempt to amend petition two
weeks after filing to add wife because, inter alia, it is important to have a single filing date to
know what debts can be discharged).
4. 	Deadline to object to exemptions. 	Objections to Debtor’s exemptions
were due December 3, 2014. 	Fed. R. Bankr. P. 4003(b)(1). 	If Mr. Chilson has separate
creditors, would they lose the opportunity to object to exemptions? Similarly, if Debtor and Mr.
Chilson amended Schedule C, the new deadline to object would be 30 days after the amendment.
Id. Would that deadline apply to Mr. Chilson’s separate creditors only, or to all creditors?
5. 	Deadline to object to discharge and dischargeability. The deadline in this
case to file §§ 523(c) and 727 actions was January 2, 2015, i.e., 60 days after the first date set for
the § 341 meeting. Fed. R. Bankr. P. 4004(a) and 4007(c). Surely there would have to be a new
deadline because Mr. Chilson was added as a joint debtor. Would the new deadline apply to the
Debtor also? 	For § 523(c) complaints, would it make a difference whether the debt was a
community debt or a separate debt?
6. 	Preference actions and fraudulent transfer actions. 	The “look-back”
periods 	for 	preferential 	and 	fraudulent 	transfer 	actions 	are 	tied 	to 	the 	petition 	date.
§ 547(b)(4)(A); § 548(a)(1). Would there be two “look back” periods, one for Mr. Chilson and
one for Debtor, or a single period? 	If there were a single period, would the normal 90-day
preference period be 190 days in this case?
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7. 	Deadline to assume leases. 	A trustee has 60 days after entry of the order
for relief to assume or reject executory contracts and unexpired leases of residential property.
§ 365(d)(1). If Mr. Chilson had a valuable, separate property lease, what would the deadline be?
8. 	Pre-petition credit counseling. 	A debtor must take credit counseling
within 180 days of the filing of the petition. 	§ 109(h)(1). 	What would Mr. Chilson’s deadline
be?
9. 	Short year income tax election. 	26 U.S.C. § 1398(d)(2)(A)) allows a
debtor to make a short-year tax election, with the short year ending on the petition date. 	What
would the short year be in this case?
10. 	Bar date. If a bar date had been set in the Debtor’s case, wouldn’t a new
one have to be set? Would it be for all creditors or only newly added ones?
11. 	Eligibility for subsequent bankruptcy relief. 	The Debtor will be eligible
for another chapter 7 discharge on October 1, 2022. 	§ 727(a)(8). 	Would the addition of Mr.
Chilson change that? What would the eligibility date be for Mr. Chilson?
12. 	Property of the estate. 	Property acquired post-petition generally does not
go into the Chapter 7 estate. 	§ 541(a)(1). 	What about property acquired between the petition
date and January 8, 2015?
The list of potential problems goes on and on. 	It is clear that the drafters of the Code
intended for joint debtors to have a single petition, order for relief, and petition date. Shifting the
date from the original petition date to the date the spouse signs and files an amended petition is
not a satisfactory solution, because it would, inter alia, extend the protection of the automatic
stay by the “gap period.” 	That could be a long time. See, e.g., In re Kirkus, 97 B.R. 675 (Bankr.
N.D. Ga. 1987) (husband sought to add his wife as a joint debtor two and a half years after the
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petition date). Furthermore, such a shift would raise issues for debts incurred and assets obtained
during the gap period.
C. 	Case Law.
Given all of the problems caused by adding a spouse after an individual debtor files a
bankruptcy case, it is little wonder the case law uniformly holds that the procedure is prohibited.
The court in In re Clinton, after citing a number of cases holding that a petition cannot be
amended to add a non-filing spouse, stated:
It should therefore be clear that the problem with amending her section 301
petition to add her spouse has not so much to do with the authority to file the
amendment as it does with the fact that Mrs. Clinton already has an estate and
already has an order for relief. The “single petition” that would commence the
joint case and create Mr. Clinton's estate has the unavoidable consequence of
giving Mrs. Clinton a second commencement date and a second order for relief.
As explained above, she cannot have two such dates and two such orders. There is
only one to a customer per case. [reference omitted] Therefore, Mr. Clinton may
not be added by amendment as a debtor.
Though permitting an amendment might be economical for the Debtor, her spouse
and creditors in this case, it would create a wasteful allocation of scarce judicial
resources. To permit one retroactive filing is to invite another and another. Each
such filing would require a detailed analysis, as the court has done here, to
determine whether the amendment would harm creditors. 	The costs associated
with determining whether creditors are prejudiced far outweigh the meager cost
savings an amendment would provide, particularly where the spouse has the
alternative of filing a second petition and moving for administrative or substantive
consolidation.
166 B.R. at 200. The following observation from In re Austin is also pertinent:
Historically, the date on which the bankruptcy petition is filed has been of ‘pivotal
importance.’ 1 Collier on Bankruptcy (14th ed.) p. 86. In fact, over the years, the
bankruptcy petition has been one of the few documents filed in federal court on
which the hour and minute of filing are noted by the clerk. 	Debts incurred prior
thereto, if not otherwise nondischargeable, will be discharged, and debts and
obligations incurred after that moment in time, regardless of their character, will
not under any circumstances be discharged. The filing of the petition activates the
automatic stay of § 362(a). 	It is the moment which marks the line of cleavage
between bankruptcy and nonbankruptcy assets—what the trustee takes for the
creditors and what the debtor retains for his ‘fresh start.’ ... 	It constitutes the
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terminal point of time for reckoning lien and preference avoidance periods (§
547(b)(4)), and whether a lease or executory contract remains existent for a
trustee or debtor-in-possession to assume or reject.
46 B.R. at 359 (quoting In re Ahrendt, 28 B.R. 329, 331 (Bankr. E.D. Wis. 1983)). Finally, from
In re Sobin, 99 B.R. 483 (Bankr. M.D. Fla. 1989):
The Court finds further that the filing date of the bankruptcy petition is of
fundamental importance to the case since a number of rights, obligations, and
deadlines are determined by that date. This includes such matters as the property
included in the bankruptcy estate; the debts to be discharged; the scheduling of a
creditors' meeting under § 341(a); the imposition of the automatic stay; the
deadlines for filing dischargeability, lien avoidance, and preference avoidance
complaints; and the time for assuming or rejecting executory contracts.
99 B.R. at 484. 	See also In re Olson, 253 B.R. 73 (9th Cir. BAP 2000); In re Daly, 2008 WL
276538 (Bankr. D. Kan. 2008); In re Kilgore, 2004 WL 5848036 (Bankr. N.D. Ga. 2004); In re
Buerman, 295 B.R. 876 (Bankr. W.D. Ark. 2003) (plain language of § 302 prohibits amending a
petition to add non-filing spouse); In re Walker, 169 B.R. 391 (Bankr. W.D. Tenn. 1994); In re
Woodell, 96 B.R. 614 (Bankr. E.D. Va. 1988); In re Perkins, 51 B.R. 272 (Bankr. D.D.C. 1984)
(allowing the amendment would be tantamount to a nunc pro tunc filing that might interfere with
the intervening rights of third parties). See also In re Lary, 2009 WL 6498526 (Bankr. N.D. Ga.
2009) (citing with approval the line of cases holding that a debtor may not amend her petition to
add spouse as a joint debtor); In re Kirkus, 97 B.R. 675 (Bankr. N.D. Ga. 1987) (court denied
motion to amend petition to add spouse, but held that the issues should be addressed on a case-
by-case basis).
D. 	Treatises.
The learned treatises are in agreement with the case law. 	See Norton, Bankruptcy Law
and Practice, § 141:2 (“Once a debtor files separately, he cannot amend the petition to include
his spouse as a co-petitioner”); Collier on Bankruptcy, § 302.02[3] (“Courts generally have not
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permitted the filing of a petition by one spouse and the subsequent amendment of that petition to
add the second spouse”); Bankr. Service § 13:61 (to the same effect); Bankruptcy Desk Guide, §
8:96 (“A debtor may not amend his voluntary petition to add the debtor’s spouse as a codebtor
and transform a single debtor case into a joint debtor case”); Ginsberg & Martin on Bankruptcy,
§2.02 (“Although the information in the petition may be amended, most courts have held that an
amendment may not be used to add a spouse, and thereby convert a petition to a joint petition”).
E. 	Alternative of Second Case Filing and Joint Administration.
An alternative to amending an individual debtor’s petition to add a spouse is for the
spouse to file his own bankruptcy case and then seek joint administration. 	Fed. R. Bankr. P.
1015(b) provides in part:
(b) Cases involving two or more related debtors
If a joint petition or two or more petitions are pending in the same court by or
against . . . a husband and wife . . . the court may order a joint administration of
the estates. 	Prior to entering an order the court shall give consideration to
protecting creditors of different estates against potential conflicts of interest.
Courts 	addressing the issue find 	that 	the alternative offered 	by Rule 1015(b) 	is
reasonable, even though it requires a second filing fee. 	See Daly, 2008 WL 276538, at *2
(husband should file his own case and then seek joint administration); Kilgore, 2004 WL
5848036, at *1 (same); Buerman, 295 B.R. at 877 (same); Olson, 253 B.R. at 75 (same); Walker,
169 B.R. at 393 (same); Sobin, 99 B.R. at 484 (same); Kirkus, 97 B.R. at 675-76 (same); Perkins,
51 B.R. at 272 (same).
Given the myriad problems caused by amending a petition to add a spouse, Mr. Chilson
should be required to file his own individual case. 	He may then invoke Fed. R. Bankr. P.
1015(b) if Debtor’s case is still pending and he thinks joint administration would be beneficial.
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III. 	CONCLUSION
Section 302(a) prohibits Debtor from amending her petition to add Mr. Chilson as a joint
debtor. If Mr. Chilson needs bankruptcy relief he must file his own petition, with the option of
asking for joint administration of the two cases.
A separate order consistent with this opinion will be entered.
__________________________________
Hon. David T. Thuma
United States Bankruptcy Judge
Entered: February 4, 2015
Copies to:
Albert W. Schimmel, III
P.O. Box 8
Albuquerque, NM 87103
Linda S. Bloom
13170 Central Avenue SE, Ste. B #318
Albuquerque, NM 87123
U.S. Trustee’s Office
P.O. Box 608
Albuquerque, NM 87103
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