The opinion of the court was delivered by: Conti, District Judge
(Appeal related to Bankruptcy Case No. 06-20607)
The matter pending before the court is an appeal from two orders entered by the bankruptcy court in Bankruptcy Case No. 06-20607. The bankruptcy court had denied Philip N. Lauro and Fearna C. Lauro (the "Lauros" or "appellants"), the debtors in that case, a discharge and closed their bankruptcy case because the Lauros failed to file a certification of completion of their post-petition credit counseling within the forty-five-day deadline as specified under Interim Federal Rule of Bankruptcy Procedure 1007(c). Specifically, the Lauros appealed the bankruptcy court's order entered February 20, 2007 (the "February 20, 2007 Order"), which denied the Lauros' motion to reopen their bankruptcy case, and the order entered April 3, 2007 (the "April 3, 2007 Order"), which denied the Lauros' motion for reconsideration of the February 20, 2007 Order. In the appeal the Lauros argue that the bankruptcy court abused its discretion in denying the Lauros' motion to reopen their chapter 7 bankruptcy case because their failure to file the certification was the result excusable neglect.
The equitable factors set forth in Pioneer Investment Service Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380 (1993), must be weighed by the court to determine whether the Lauros met their burden to prove excusable neglect. The bankruptcy court abused its discretion in not explaining how it weighed those factors. This court concludes that the Lauros met the requisite burden and finds that their delay in completing their post-petition credit counseling and filing their certification of completion resulted from excusable neglect. By reason of that finding, the orders of the bankruptcy court will be reversed, the Lauros' bankruptcy case will be reopened and this matter will be remanded to the bankruptcy court.
II. Factual and Procedural Background
On February 20, 2006, the Lauros filed a petition for relief under chapter 7 of the Bankruptcy Code, 11 U.S.C. §§ 101 et seq. The Lauros fulfilled the financial education requirements mandated by 11 U.S.C § 109(h) and 727(a)(11) under the 2005 amendments to the Bankruptcy Code. See Pub. L. No. 109-8, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The Lauros, however, failed to file a statement regarding completion of a post-petition course in personal financial management within the forty-five-day time period following the first date of the meeting of creditors (the "Section 341 meeting") in violation of Interim Federal Rule of Bankruptcy Procedure 1007(c). The Lauros completed this program on June 12, 2006 and filed their statement of completion on June 22, 2006, approximately two months after the deadline imposed by Rule 1007(c). The Lauros mistakenly believed that they had six months to complete the course and file the statement, and their attorney did not inform them otherwise.
On November 2, 2006, the bankruptcy court pursuant to 11 U.S.C. § 727(a)(11) denied their discharge and closed the Lauros' chapter 7 case by reason of their failure to file a certificate regarding completion of the course within the forty-five-day period specified by Rule 1007(c). On January 16, 2007, the Lauros filed a motion to reopen seeking to have the bankruptcy court reopen their case. They argued that their failure to comply with Rule 1007(c) constituted excusable neglect because they were mistaken about the required time window and the bankruptcy court's notice of the Section 341 meeting contained no mention of the forty-five-day deadline.
At the hearing on the motion to reopen held on February 20, 2007, the Lauros' counsel proffered that the Lauros erroneously believed the deadline was six months due to their own internet research, notwithstanding a letter from their lawyer's firm. (Feb. 20, 2007 Tr. at 2.) In addition, the Lauros' counsel proffered that the clerk's notice of the Section 341 meeting sent to them did not include any notice about the forty-five-day time period in which to file a certification of completion of the personal financial management course. (Id.)*fn1 The Lauros' counsel maintained that the Lauros paid their "toll," the filing fee to reopen of $220, and that a discharge would not prejudice creditors or the bankruptcy court. The bankruptcy court and the Lauros' counsel engaged in the following colloquy on the record:
Bankruptcy Court: And just how long do I have to do this, like if somebody does the same thing a year after the 45 days, do I have to do it then, too?
Counsel: Your Honor, I certainly understand the Court's concern, and that's one of the reasons that I think that the clerk's office has added the third page, to basically say to debtors, there's no more excuse at this point. You have in your notice of 341 meeting that, hey, you have to have these things filed within 45 days. There's no excuses at this point. But, at the time that the debtors filed this bankruptcy, that third page was not part of the 341 meeting notice. So I can't say after this -- at this time that any further excuses is [sic] excusable for that matter.
Bankruptcy Court: When did they file this case?
Counsel: They filed this case on February 20th, 2006. Your honor, I did bring with me a copy of the notice to creditors if you'd like to see a copy of it? Bankruptcy Court: That doesn't do anything for me.
Counsel: I also brought a copy of the notice to creditors that's sent out to debtors.
Bankruptcy Court: I've been letting these things go when the debtors got the counseling within the 45 days, and the lawyers screwed up and they pay the filing fee. This is one where they ...