Rushen Grumbkow

UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 13
:
RUSHEN GRUMBKOW, 	: 	Bankruptcy No. 06-13921DWS
:
Debtor. 	:
MEMORANDUM OPINION
BY: 	DIANE WEISS SIGMUND, Chief Bankruptcy Judge
On September 27, 2006 I entered an order (“Order on Appeal”) dismissing the
above-captioned Chapter 13 pro se bankruptcy case for the Debtor’s failure to file any of
the documents required by § 521 of the Bankruptcy Code as implemented by Federal Rule
of Bankruptcy Procedure 1007 and Local Bankruptcy Rule 1007. Specifically the Order
on Appeal noted that the missing documents were the certificate of credit counseling,
the Chapter 13 plan, the statement of monthly income, all schedules and the statement of
financial affairs. The Order further stated that “[a]s this is debtor’s 5 th bankruptcy case, any
future petition shall be accompanied by all required documents or it shall be dismissed.” On
October 25, 2006 the Debtor filed a letter seeking to appeal “the dismissal of the above
referenced case.” Doc. No. 10.
Orders dismissing cases for documentary deficiencies are routinely entered by
the bankruptcy court without much elaboration. 	The Order on Appeal is no exception.
Local Bankruptcy Rule 8001-1 provides the bankruptcy judge an opportunity to explain the
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1 Amplification of the ruling may not be necessary as it appears that the notice of appeal is
untimely. Fed.R.Bankr.P. 8002(a). The Order was entered on the docket on September 28, 2006.
The ten-day appeal period ended on October 10, 2006 (giving effect to the weekend and public
holiday); the notice was filed October 26, 2006. Moreover, it also appears from the docket that the
filing fee has not been paid.
2 For example, without the Schedules and Statement of Affairs, the Chapter 13 trustee
cannot conduct the mandatory § 341 meeting. Absent the filing of a plan, the debtor’s duty to begin
payments to the Chapter 13 trustee cannot be administered. Most significantly, absent the certificate
of credit counseling, a debtor has not established her eligibility to be a debtor. Absent the creditor
matrix, creditors receive no notice of the filing.
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basis of her ruling when an order is the subject of an appeal by filing a written opinion in
support of the order. This memorandum is pursuant to that rule. 1
DISCUSSION
Section 521 of the Bankruptcy Code, which sets forth the debtor’s duties, mandates
that the debtor file a list of creditors and unless the court orders otherwise, a schedule of
assets and liabilities, a schedule of current income and current expenditures; a statement of
financial affairs, copies of all payment advices received within 60 days of the filing of the
petition, and a statement of monthly net income. 11 U.S.C. § 521(a)(1). Additionally an
individual debtor shall file a certification of compliance with § 109(h), i.e., a certificate of
credit counseling evidencing that such counseling was secured prior to filing the petition or
her entitlement to a waiver or extension of the requirement. Id. § 521(b). The documents
may be filed with the petition or within the proscribed extension set forth in the statute and/or
rules. The documents are essential to administer the bankruptcy case. 2 The failure to timely
file the required documents constitutes “cause” for dismissal of the bankruptcy case.
11 U.S.C. § 1307(c)(9) and (10).
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3 Interim Federal Bankruptcy Rule 1007(c) requires the Certificate of Credit Counseling to
be filed with the petition but appears to allow the court discretion to relax the timing by ordering
otherwise. 	This Court’s order provides a seven day grace period as a matter of due process.
However, credit counseling is an eligibility requirement imposed by the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005 and absent prompt evidence of compliance,
the case is dismissed.
4 This is not to suggest that such relief would have been granted.
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Pursuant to this Court’s routine practice, an order (the “Initial Order”) was generated
from the case management system immediately after the petition was filed on September 8,
2006 advising the Debtor of what documents were missing and the dates that they were due.
Doc. No. 3. 	Specifically she was advised that her Certificate of Credit Counseling or
Request for a Waiver of the Credit Counseling Requirement was due seven days of the filing
of the petition, i.e., September 15, 2006, absent which the case may be dismissed without
additional notice or hearing after that date.3 The other required documents (Schedules A-J,
Statement of Financial Affairs, Statement of Current Monthly Income and Chapter 13 Plan)
were due in 15 days or by September 25, 2006 unless an extension was sought and granted
prior to the expiration of the 15 days. Fed.R.Bankr.P. 1007(c). The Initial Order made clear
that upon failure to comply the case may be dismissed without additional notice or hearing.
No application for an extension of these dates was ever filed. Accordingly, on September 27,
2006 the case was dismissed. Debtor never sought relief from the Order by proferring the
documents upon receipt of the dismissal order and does not do so with her letter notice.4
As noted, the Order on Appeal dismissing the case requires the Debtor to file all these
required documents with the petition as a condition to the initiation of a new bankruptcy
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5 A corporate entity was also named as a joint debtor contrary to the jurisdictional
requirements of section 109(e) that restricts Chapter 13 to individual debtors.
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case. The Debtor’s bankruptcy history justifies this filing condition. When the case was
flagged as having documental deficiencies, I recognized the Debtor’s name as a serial filer,
and took judicial notice of the Debtor’s bankruptcy history by examining the dockets in
her prior cases. Fed.R.Evid. 201 incorporated in these proceedings by Fed.R.Bankr.P. 9017.
See Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.2d 1194, 1200 n.3 (3d Cir. 1991);
Levine v. Egidi, 1993 WL 69146, at *2 (N.D. Ill. 1993); In re Paolino, 1991 WL 284107, at
*12 n. 19 (Bankr. E.D. Pa. 1991); see generally In re Indian Palms Associates, Ltd., 61 F.3d
197 (3d Cir. 1995). I learned that this was Debtor’s fifth unsuccessful bankruptcy case.
A review of the dockets in those cases reveals the following. The first case, 00-15212,
a joint pro se Chapter 13 petition with her husband,5 was dismissed for failure to file the
required documents. Less than one month after the dismissal, a pro se Chapter 11 petition
was filed for the same debtors. That case was dismissed less than three months later upon
motion of the United States trustee for failure to file the required documents after an
extension was afforded. 	The dismissal order contained the same condition of refiling
imposed in the Order on Appeal, i.e., any further petition shall be accompanied by all the
required documents which if not filed, would result in the dismissal of the case without
further notice. 	In the third case, a joint Chapter 13 petition by Debtor and her husband,
02-33115, dismissal was granted on motion of the mortgagee after two months of protection.
The dismissal order contained a 180 day bar on refiling. 	That order was appealed to the
district and circuit courts which both affirmed. Notably the appellate proceedings were not
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concluded until April 7, 2005 at which time Debtor had already filed and had dismissed her
fourth case, 03-38626. In this case filed on December 26, 2003, she neither filed the required
documents nor paid the first installment of the filing fee. Dismissal on January 24, 2004
followed one month of bankruptcy protection without performing any of her duties under the
statute and rules.
Over the course of five cases Debtor has repeatedly been made aware through multiple
notices of the requirements of the Bankruptcy Code and Rules. She has also learned that
dismissal of her case is the consequence of her failure to perform these mandatory duties
without which the court and trustee cannot administer her bankruptcy case. In none of the
five times she and her husband have received bankruptcy protection have they disclosed their
assets and liabilities, their income and expenses, offered a plan for reorganization, paid the
filing fee or the Chapter 13 trustee. Debtor’s refusal to timely file the required documents
once again or seek an extension for cause undermines the presumption of good faith that
accompanies a bankruptcy petition. 	The automatic stay of § 362(a) which acts as an
injunction against creditor action without any showing by the debtor is a powerful
remedy subject to abuse. Requiring the debtor to prove she is serious about her bankruptcy
case by filing the all the required documents with the petition is a fair accommodation
between the interests of the Debtor for further bankruptcy relief and the creditors not to be
stayed by a bad faith filing.
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6 In Dami, the debtor had filed four unsuccessful bankruptcy cases over 3-1/2 years each on
the eve of a mortgage foreclosure proceeding, thereby securing the benefit of the automatic stay to
obstruct the mortgagee. His Schedules were replete with not only omissions but false statements
about his assets and liabilities, income and expenditures, and his excuses for the state of his
documents were found to be “lame and incredible.” Importantly, I found that:
this is the precise type of bankruptcy recidivism that mocks the bankruptcy system.
There can be no question that Debtor's conduct is a flagrant abuse of the automatic
stay provisions of the Bankruptcy Code, interposed for the sole purpose of
harassment and delay and intended to cause Movant great cost and expense.
Id. at 11.
7 As the Court in In re Jones, 117 B.R. 415, 420 (Bankr. N.D. Ind. 1990) stated:
[W]here a debtor files a petition in bankruptcy with no intention of obtaining the
benefits or the goals for which the proceeding was designed or with no intention of
pursuing those proceeding[s] to their natural conclusion, the bankruptcy code is
being abused and bankruptcy rule 9011 is being violated.
See also In re Narod, 138 B.R. 478, 482 (E.D. Pa. 1992) (sanctions imposed under Rule 9011 are
not limited to expenses or fees).
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In appropriate circumstances where the facts evidence an abuse of the provisions,
purposes and spirit of Chapter 13, this Court has joined other bankruptcy courts that find
that more than dismissal is warranted. In re Dami, 172 B.R. 6, 11 (Bankr. E.D. Pa. 1994). 6
In such a case, Bankruptcy Rule 9011, incorporating Fed.R.Civ.P.11, has been utilized to
bar future filings without leave of court.7 Indeed such a sanction was imposed on debtor and
her husband in an earlier case. 	The Court's ability to impose this sanction in appropriate
cases is necessary to maintain the integrity of the bankruptcy process and avoid burdening
the court's docket with frivolous cases, thereby depleting valuable and limited court resources
which could be channeled to meritorious cases. Notably I did not bar further bankruptcy
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In re Rushen Grumbkow - Bankruptcy No. 06-13921DWS
8 It is not uncommon where evidence of serial filings is apparent for the Chapter 13 trustee
or United States trustee to file a motion for such a bar on refiling. Such sanction would only be
considered on notice and actual hearing held. Such a motion was filed and granted in Debtor’s
second case. However, this case was dismissed before a motion could be filed or heard.
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relief8 but only required Debtor to do what she is required to do under the statute and rules
as a quid pro quo of the privileges attendant to bankruptcy protection. The Order on Appeal
was a proper exercise of this Court’s discretion to prevent abuse of the federal bankruptcy
laws which are intended to provide the honest but unfortunate debtor with an opportunity for
a fresh financial start. For over six years Debtor and her husband have been in and out of
bankruptcy and through repeated cases which have presumably stayed creditor action, have
never utilized bankruptcy for this legitimate purpose. 	This case was properly dismissed
and the condition of refiling an appropriate prophylactic measure to address prospective
bankruptcy abuse.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
Dated: November 13, 2006
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