Soto v. Doral Bank (In re Soto)

BAP NO. PR 12-075
The Bankruptcy Appellate Panel for the First Circuit ("B.A.P.") affirmed the Bankruptcy Court of Puerto Rico's decision to dismiss the debtors' Chapter 13 petition because the debtors did not comply with 521(a) of the code. 521(a) requires debtors to submit their tax returns and payment advices to the trustee.
Procedural context:
Debtors filed a Chapter 13 petition with the Bankruptcy Court for the District of Puerto Rico. At a plan confirmation hearing, Doral Bank ("Doral"), a creditor, moved to dismiss the case because the debtors had not submitted their payment advices pursuant to 521(a) of the code. Debtors appealed to the B.A.P.
Debtors, who are married, filed a Chapter 13 petition. At a confirmation hearing, Doral moved orally to dismiss the petition because the debtors have not submitted their payment advices pursuant to 521(a). The trustee substantiated that claim and the debtors refused to testify as such. The Bankruptcy Court dismissed the petition. On appeal, the debtors sought a reversal, claiming that 1307(c) trumps 521(a), thereby requiring notice and a hearing. The B.A.P. affirmed the ruling, holding that 1307(c) does not trump 521(a). When 521(a) applies there is no requirement for notice and a hearing and no need to show cause. Per contra, when only 1307(c) applies, e.g. filing schedule by day 15 of a case, there is a requirement for notice and a hearing and cause must be shown.
Haines, Feeney, Hoffman

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