Forgiving Our Debtors (Unless They Are Prisoners)

Posted by NCBRC - September 30, 2012

Through various provisions in the Bankruptcy Code, Congress has identified debts that should not be forgiven.  These include, for example, debts for certain taxes, debts for money obtain through fraud, debts for domestic support obligations, and debts incurred from drunk driving (think, personal injury or wrongful death judgments).  Congress has also identified debtors that will be denied a fresh start because they acted badly and contrary to the bankruptcy process.  This usually happens when the debtor is not honest and makes false disclosures with respect to assets and property.

Nowhere in the Bankruptcy Code does Congress prohibit prisoners from filing bankruptcy.

While Congress has not precluded prisoners from being debtors, a bankruptcy court in the recent decision In re Moore, 2012 Bankr. LEXIS 3897 (Aug. 24, 2012) has effectively done just that.  If you are a prisoner, your case will be dismissed.  Why?  Because as a prisoner, you are not at liberty to personally attend the meeting of creditors (also known as the 341 meeting).  Section 343 of the Bankruptcy Code and Federal Rule of Bankruptcy Procedure 4002 require the debtor’s presence at the meeting of creditors.  However, the Moore court acknowledged that it had discretion to waive debtor’s presence at the meeting of creditors for the physically disabled, gravely ill, or deployed military personnel.  But the court concluded that “incarceration did not constitute a good and sufficient reason to waive the debtor’s attendance.”  Since issuing its opinion, the court has issued a show cause order why the debtor’s case should not be dismissed for failing to attend the 341 meeting.

So much for forgiving our debtors…


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