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Prison Time Does No Exempt Bankruptcy Requirements

Posted By admin || 25-Oct-2009

In the bankruptcy case of Denger, Angela and Heath; In re the bankruptcy court denied a debtor's request to waive the financial management class.

The details of the bankruptcy case:

"The Chapter 7 debtor was in prison. He asked that the financial management course be waived because prison officials told him that it was impossible for him to take the course while incarcerated. The court noted that Section 109(h)(4) states that debtors may receive

a waiver of the requirement that they complete a personal financial management course prior to receiving their discharges due to their incapacity, disability, or active military service in a combat zone. Therefore the debtor requested a waiver; however the bankruptcy court did not consider incarceration a qualifying circumstance."

The bankruptcy court said:

"Incapacity" means impaired by reason of mental illness or mental deficiency so that the debtor is incapable of realizing and making rational decisions regarding his financial responsibilities. "Disability" means being physically impaired so as to be unable to participate in a financial management class. "In straightforward terms, a debtor's incarceration, standing on its own, cannot be equated with a 'disability' for purposes of Section 109(h)(4). Section 109(h)(4)'s narrow definition of 'disability' in this regard specifically requires a physical impairment, the concept of which implies a condition inherent to a person, not one which is imposed by external conditions the alleviation of which would relieve the disability. Consequently, while incarceration may erect physical barriers to a debtor seeking to complete the financial management course, a person's incarceration, being a condition imposed by the state, cannot be equated with a physical impairment because it is not an injury, defect, or characteristic of the debtor's physical makeup that prevents him from doing what is necessary to complete

the management course."

The court also stated that the debtor could reopen his bankruptcy case after being released from prison This is a has huge impact on incarcerated debtors if other judges choose to follow this court's lead. Debtors serving prison time are dependant upon the permission of their warden to fulfill the requirements of bankruptcy. If they refuse to cooperate that may be unable to fulfill certain bankruptcy requirements. Furthermore, if the bankruptcy court does not consider the prison official's refusal to cooperate as a barrier which should be considered it could force prison debtors to file bankruptcy after their period of imprisonment has ended.

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