United States Court of Appeals

For the First Circuit

No. 07-2736

In Re IVÁN ACOSTA-RIVERA AND AÑA A. BALSEIRO-CHACÓN,

Debtors,

___________

WILFREDO SEGARRA-MIRANDA, CHAPTER 7 TRUSTEE,

Appellant,

v.

IVÁN ACOSTA-RIVERA ET AL., 

Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Gustavo A. Gelpí, U.S. District Judge]

[Hon. Sara E. De Jesús, U.S. Bankruptcy Judge]

Before

 Lipez, Selya, and Howard, 

Circuit Judges.

Noemi Landrau Rivera and Landrau Rivera & Associates on brief

for appellant.

Iván Acosta-Rivera and Aña A. Balseiro-Chacón on brief pro se.

February 19, 2009
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SELYA, Circuit Judge. This appeal, which requires us to

decide an issue of first impression at the federal appellate level,

turns on the construction of a provision of the Bankruptcy Abuse

Prevention and Consumer Protection Act of 2005 (BAPCPA or the Act),

Pub. L. 109-8, 119 Stat. 23 (2005). Writ large, the provision in

question expands the debtor's duties of financial disclosure to the

extent that he or she must now file with the bankruptcy court,

"unless the court orders otherwise," six traunches of financial

information (including payment advices and an itemized statement of

monthly net income). 11 U.S.C. § 521(a)(1)(B)(iv),(v). The issue

centers on whether the bankruptcy court may enter an order excusing

non-disclosure after the time for filing the required information

has expired. The bankruptcy court thought that it had the

authority to enter such an order. It proceeded to exercise that

power, thus avoiding dismissal of the debtors' petition under

section 521(i)(1) (BAPCPA's so-called "automatic dismissal"

provision). The district court construed the "orders otherwise"

provision differently. Consequently, it determined that the order

excusing the failure to file was beyond the scope of the bankruptcy

court's authority. See Rivera v. Miranda, 376 B.R. 382, 386

(D.P.R. 2007).

We conclude that the bankruptcy court acted in consonance

with the statutory scheme and within the realm of its discretion.
In brief, a Chapter 13 bankruptcy allows individuals who 1

have a regular source of income to submit to the bankruptcy court

a plan to repay all or part of their debts over a three to five

year period. During the repayment period creditors are stayed from

starting or continuing collection efforts. See 11 U.S.C. §§ 1321-

1330. Chapter 7 is a liquidation. See 11 U.S.C. §§ 701-784. A

bankruptcy trustee collects and sells the debtor's non-exempt

assets and uses those proceeds to pay creditors. 

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Accordingly, we reverse the district court's order and remand for

further proceedings.

The procedural background is uncomplicated. The debtors,

Iván Acosta-Rivera and Aña Balseiro-Chacón, are married to each

other. They originally filed a joint Chapter 13 petition and later

converted that filing to a Chapter 7 petition. The debtors' 1

estate included an unresolved employment discrimination suit

brought by Acosta-Rivera against his quondam employer. In that

suit, which had been pending for roughly eight years and had twice

been appealed to the Supreme Court of Puerto Rico, Acosta-Rivera

sought reinstatement, backpay, and compensatory damages. 

At this point, the plot thickens. Although this chose in

action was plainly an asset of the debtors' estate, it did not

appear on their original bankruptcy schedules, their first amended

schedules, or their second amended schedules. 

Six months after the filing of the bankruptcy petition,

the debtors revealed the existence of the chose in action, listing

its value as "unknown," in their third amended set of schedules.

Even then, they failed to disclose that the suit demanded pecuniary
 The automatic dismissal deadline can be extended by another 2

forty-five days upon timely request. See 11 U.S.C. § 521(i)(3).

Moreover, the automatic dismissal provision is subject to an

explicit statutory exception: a timely motion by the trustee to

forestall dismissal based on the best interests of the creditors

and the debtors' good-faith efforts to effect the required filing.

Id. § 521(i)(1), (4). That exception does not apply here. 

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relief (e.g., backpay and money damages). After several further

amendments (not material here), the debtors valued the chose in

action at $2,700,000 and claimed an exemption of $350,000.

Eventually, the Chapter 7 trustee moved for leave to

settle the suit for $200,000 (a sum that would have generated

enough cash to pay all allowed claims and produce some surplus

funds for the debtors). Balking at this proposal, the debtors

moved under the automatic dismissal provision, 11 U.S.C. §

521(i)(2), to confirm the dismissal of their petition. In support

of their motion, they claimed not to have filed or otherwise

provided the payment advices and statement of monthly net income

required by BAPCPA. As their attorney acknowledged, the debtors

wanted to dismiss the bankruptcy case so that they could "continue

prosecuting the state court action" for damages. 

We pause at this juncture to discuss the Act's "automatic

dismissal" provision. When a debtor fails to file all the

information required by section 521(a)(1)(B) within the prescribed

period — that is, within forty-five days of the filing date of the

bankruptcy petition — BAPCPA provides that "the case shall be

automatically dismissed." 11 U.S.C. § 521(i)(1). The term 2
 A few courts have conceptualized dismissal under this 3

section as a matter involving only the counting of the days. See,

e.g., In re Fawson, 338 B.R. 505, 510 (Bankr. D. Utah 2006). To

decide this case, we need not resolve that question.

 Although not explicitly mentioned, the court evidently 4

meant to excuse as well the filing of the monthly net income

statement. We proceed on that assumption.

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"automatic dismissal" is something of a misnomer. Typically,

dismissal under this provision takes place at the instance of a

"party in interest." Id. § 521(i)(2); see, e.g., In re Spencer,

388 B.R. 418, 421 (Bankr. D.D.C. 2008). Dismissal is, therefore,

hardly "automatic."3

We return to what transpired below. In due season, the

bankruptcy court denied the debtors' motion to dismiss, finding

that "facts peculiar to this case do not require dismissal under

section 521." In support, the court noted that the debtors' motion

stemmed from their "disagreement with the proposed settlement."

That was significant because the putative settlement would have

satisfied all allowed claims; thus, neither the creditors nor the

trustee needed the missing (undisclosed) information. Based on

that reasoning, the court entered "an order nunc pro tunc . . .

excusing the debtors from filing the payment advices mentioned in

section 521(a)(1)(B)(iv)." In short, the court excused the 4

detailed disclosure by ordering the debtors to do "otherwise" under

section 521(a)(1)(B).
Only the United States Trustee filed an answering brief in 5

the district court. That court, however, designated both the

United States Trustee and the Chapter 7 trustee as appellees. The

Chapter 7 trustee has taken the instant appeal. We are satisfied

that he has standing to do so. 

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In a subsequent order, the court approved the trustee's

revised recommendation to settle the discrimination case for

$600,000, citing the likelihood of delay from further litigation,

uncertainties surrounding collection, and the fact that AcostaRivera stood to receive nearly $400,000, less mortgage arrearages,

after the allowed claims were paid. 

The debtors appealed the denial of their motion to

dismiss to the district court. The district judge ruled that the

bankruptcy court lacked authority to excuse compliance with the

disclosure requirement more than forty-five days after the debtors

filed their bankruptcy petition. See Rivera, 376 B.R. at 386. In

the judge's view, the strictures of the Act left the bankruptcy

judge "with no discretion to fashion any reasonable or equitable

solution." Id. at 386-87. The judge stated: "'After the

expiration of the specified period set forth in 11 U.S.C. §

521(i)(1), there are no exceptions, no excuses, only dismissal and

the consequences that flow therefrom.'" Id. at 386 (quoting In re

Ott, 343 B.R. 264, 268 (Bankr. D. Colo. 2006)). This timely appeal

followed.5

Some preliminary pruning is in order. The Chapter 7

trustee devotes much of his brief to General Order 05-06 of the
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bankruptcy court, which directs debtors not to file the payment

advices required by section 521(a)(1)(B)(iv), but, rather, to

provide them to the trustee and interested creditors. The general

order further provides that "[f]ailure of debtor to comply with the

requirements of 11 U.S.C. § 521(a)(1)(B)(iv)" — presumably as

adjusted by the general order — "will result in automatic dismissal

under section 521(i)(1)." This general order is standard fare:

bankruptcy courts in numerous districts have adopted comparable

orders. See In re Brickey, 363 B.R. 59, 64 & n.4 (Bankr. N.D.N.Y.

2007).

Neither the bankruptcy court nor the district court

mentioned General Order 05-06. Moreover, even if the debtors had

complied with this general order — a circumstance that the record

does not document and that the debtors deny — the statutory issue

would persist. By its terms, the general order is limited to the

payment advices required by section 521(a)(1)(B)(iv); it does not

mitigate the debtors' duty to file the statement of monthly net

income required by section 521(a)(1)(B)(v).

The trustee has yet another new argument. For the first

time, he suggests that the debtors filed the functional equivalent

of a monthly net income statement in the form of Schedule J. This

is too little and too late.

Schedule J deals with a debtor's current expenditures.

In the process, it responds to a different filing requirement,
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contained in 11 U.S.C. § 521(a)(1)(B)(ii). Although line 20 of

Schedule J is called a "Statement of Monthly Net Income" and the

advisory committee note to the official bankruptcy forms states

that this line was added to Schedule J in 2005 "as required by §

521(a)(1)(B)(v)," there is no reason to think that Schedule J is a

proxy for the statement of current monthly income required by

section 521(a)(1)(B)(v). In fact, the case law suggests the

opposite conclusion. See, e.g., In re Turner, 384 B.R. 852, 856

(Bankr. D. Colo. 2008) (holding that a Chapter 7 debtor's duty to

file a section 521(a)(1)(B)(v) statement of monthly net income "can

only be fulfilled by filing" Form B22A).

We need not probe this point too deeply. Whether

Schedule J can ever serve double duty in a given case is not before

us. Suffice it to say that, in this instance, we will not

entertain the trustee's forfeited argument. See Teamsters Union

Local No. 59 v. Superline Transp. Co., 953 F.2d 17, 21 (1st Cir.

1992) ("If any principle is settled in this circuit, it is that,

absent the most extraordinary circumstances, legal theories not

squarely raised in the lower court cannot be broached for the first

time on appeal.").

Having cleared away the underbrush, what remains is the

question of the bankruptcy court's authority to waive the

disclosure requirement after the expiration of the filing

deadline. The statute provides that the debtor "shall . . . file"
 The pre-BAPCPA version of section 521(1) provided: 6

The Debtor shall . . . 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, and a statement of the debtor's financial

affairs. 

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the required disclosures "unless the court orders otherwise." 11

U.S.C. § 521(a)(1)(B). The grant of judicial power to "order[]

otherwise" predated BAPCPA. In overhauling section 521, Congress 6

left this familiar language intact. We do not regard that as a

mere fortuity. Nor do we think that a slip of the pen accounts

for the fact that the provision does not now contain an explicit

deadline for ordering otherwise. In this context, we have a high

regard for congressional silence.

Sharing this regard, a few courts have held that the

bankruptcy court possesses authority to waive the disclosure

requirement even after the forty-five-day filing deadline has

expired. See, e.g., In re Parker, 351 B.R. 790, 801-02 (Bankr.

N.D. Ga. 2006); In re Jackson, 348 B.R. 487, 499-500 (Bankr. S.D.

Iowa 2006); cf. In re Bonner, 374 B.R. 62, 64-65 (Bankr. W.D.N.Y.

2007) (suggesting that "special circumstances can justify nunc pro

tunc relief" under section 521(i)). Other courts, however, have

taken the view that BAPCPA's new forty-five-day deadline applies

to courts and debtors alike. See, e.g., In re Spencer, 388 B.R.

at 422; Warren v. Wirum, 378 B.R. 640, 647 (N.D. Cal. 2007); In re

Hall, 368 B.R. 595, 599 (Bankr. W.D. Tex. 2007); In re Brickey,
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363 B.R. at 64-65 (Bankr. N.D.N.Y. 2007); In re Calhoun, 359 B.R.

738, 740 (Bankr. E.D. Mo. 2007). That view reads into the filing

deadline a restriction on bankruptcy courts' authority gleaned by

implication from the "automatic dismissal" provision.

Neither reading satisfies both head and heart in equal

measure. The former (more flexible) reading honors the policy

behind the Act by vesting bankruptcy courts with greater

discretion to discourage bankruptcy abuse. Because any party in

interest may request an order of automatic dismissal, debtors with

something to hide are liable to treat dismissal as an escape hatch

to be opened as needed. See Parker, 351 B.R. at 802; see also

Hall, 368 B.R. at 602 (dismissing case on motion of debtor whom

court describes as "the poster child for a bad faith debtor"). In

such cases, the court has no occasion to address non-disclosure

until long after the forty-five-day period has elapsed. That

timetable rubs uneasily against the strictures of an inflexible

reading — and bankruptcy courts are, after all, courts of equity.

But the story has another side. The stricter reading of

the statute, though inflexible, gives sharper teeth to the

automatic dismissal provision. It ensures that dismissal at a

party's request is all but guaranteed once the forty-five days

have passed. Given Congress's concern with "the recent escalation

of consumer bankruptcy filings," H.R. Rep. No. 109-31, at 3-4,

reprinted in 2005 U.S.C.C.A.N. 90, it can be argued that the
By definition, such debtors are unfit for the "good faith" 7

exception in section 521(i)(4). See supra note 2. Moreover, under

11 U.S.C. § 707(a), a chapter 7 debtor has no absolute right to

dismiss his petition but must instead show cause. See In re Smith,

507 F.3d 64, 72 (2d Cir. 2007). 

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stricter reading has some implicit support in the legislative

history. See, e.g., Warren, 378 B.R. at 647; see also Rivera, 376

B.R. at 386 (voicing concern that retroactive relief from the

filing requirement "would render the automatic dismissal provision

in § 521(i) meaningless"). 

This position has a certain superficial appeal. Still,

we must caution against trying to stretch a morsel into a meal.

The amendments to section 521 are part of an abuse-prevention

package. With Congress's core purpose in mind, we are reluctant

to read into the statute by implication a new limit on judicial

discretion that would encourage rather than discourage bankruptcy

abuse. It is safe to say that Congress, in enacting BAPCPA, was

not bent on placing additional weapons in the hands of abusive

debtors.7

In all events, we believe that it is possible to give

effect to all of section 521, preserving the bankruptcy court's

discretion to forgive compliance with disclosure requirements

after the fact while at the same time preserving the authentic

value of automatic dismissal. When a party moves under section

521(i)(2) for the entry of an order dismissing an incomplete

petition, the court can do one of three things: dismiss the case,
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decline to dismiss the case if the good-faith exception for

payment advices applies, see supra note 2; or determine, in its

discretion, that the missing information is not "required under

subsection (a)(1)." 11 U.S.C. §521(i)(1). In the last-mentioned

event, the court can deny the motion to dismiss. Some courts in

"strict" jurisdictions seem to assume that the second and third of

these options cover the same ground. That thinking underlies the

opinions construing the forty-five-day deadline for automatic

dismissal as an implicit temporal limitation upon the court's

authority to order otherwise. See, e.g., Spencer, 388 B.R. at

422; Warren, 378 B.R. at 646; Hall, 368 B.R. at 599; Brickey, 363

B.R. at 64-65; Calhoun, 359 B.R. at 740. 

We find that mechanical reading unwise. While it may be

textually plausible, it fails to harmonize the letter and purpose

of the statute. There is another, equally plausible reading — a

reading that avoids this vice.

The approach that we endorse recognizes that missing

information may or may not be required, in a practical sense,

depending upon what is deemed material by the court many months

(or even years) after the bankruptcy petition has been filed.

This would seem to be a likely reason for Congress to have

entrusted the bankruptcy court with discretion to modify

disclosure requirements on the fly. Where, as here, a previously

hidden asset has more than enough value to cover the entire
 To be sure, the time line for the entry of an order of 8

automatic dismissal suggests an impatience with delay. When a

party in interest requests dismissal and the case is one that falls

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universe of creditors' claims, dollar for dollar, dispensing with

the disclosure of statements reflecting payment advices and/or

monthly net income is both pragmatic and reasonable. Common sense

suggests that Congress never intended to strip the bankruptcy

court of the flexibility needed to respond intelligently to the

emergence of such a circumstance after the forty-five-day filing

deadline has expired.

This intuition is reinforced by our certain knowledge

that this degree of flexibility existed in the Bankruptcy Code

prior to BAPCPA's passage. As we have said, BAPCPA did not

expressly curtail this aspect of the bankruptcy court's authority

and, given the practical realities, we are reluctant to step in

where Congress has elected not to tread. Automatic dismissal may

be a new twist, but the importance of the judiciary's ability to

assess needs and respond to exigencies free of artificial

constraints has not changed. In our view, Congress must have

recognized that bankruptcy courts would still need a meaningful

opportunity to gauge whether missing information is "required" in

a particular case. We conclude, therefore, that when the missing

information has become irrelevant or extraneous and the court, in

lieu of dismissal on that account, "order[s] otherwise," section

521(i) does not compel dismissal of the case.8
within section 521(i)(1), "the court shall enter an order of

dismissal not later than 5 days after such request." 11 U.S.C. §

521(i)(2). Nothing in our holding today diminishes this mandate.

 It would serve no useful purpose for us to attempt to sketch 9

the full range of circumstances that might justify the exercise of

this discretion.

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On the same reasoning, we also reject the assertion that

the exceptions to automatic dismissal contained in section 521(i),

see supra note 2, were meant to supplant the bankruptcy court's

discretion to order otherwise more than forty-five days after the

filing date. Those exceptions apply when the court does not

choose to waive the disclosure requirement either ex ante or ex

post; they do not apply when the court does so elect. So

understood, the exceptions operate within their own statutory

ambit and do not cabin the bankruptcy court's discretion in other

areas.

Let us be perfectly clear. We do not decide today

whether bankruptcy courts possess unfettered discretion to waive

the disclosure requirements ex post. Where, however, there is no

continuing need for the information or a waiver is needed to

prevent automatic dismissal from furthering a debtor's abusive

conduct, the court has discretion to take such an action. This

case is of that genre.9

To sum up, the great divide in section 521 is between

information that is required and information that is not. The Act
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allows courts to do the sifting suggested by that divide without

rigid adherence to the forty-five-day deadline. 

We need go no further. In this case the bankruptcy

court, acting with care and restraint, was faithful to the

evolving statutory scheme. Its order was, therefore, within the

compass of its discretion.

The judgment of the district court is reversed and the

matter is remanded for further proceedings consistent with this

opinion.