United States Bankruptcy Appellate Panel

FOR THE EIGHTH CIRCUIT

__________________

06-6007MN

__________________

In re: Kevin Mark Hedquist and *

Terri Lynn Hedquist *

*

Debtors *

*

Kevin Mark Hedquist *

*

Debtor - Appellant *

* Appeal from the United States

v. * Bankruptcy Court for the

* District of Minnesota

Habbo G. Fokkena *

*

U.S. Trustee - Appellee *

*

Minnesota Department of Revenue; *

Internal Revenue Service; *

Securities and Exchange Commission; *

TDS Telecom; *

Option One Mortgage Corporation; *

Wilshire Credit Corporation; and *

Mid-Minnesota Credit Union *

*

Interested Parties - Appellees *

____________________

Submitted: April 10, 2006

Filed: April 21, 2006 (Corrected April 24, 2006)

____________________
1 The Honorable Robert J. Kressel, United States Bankruptcy Judge for the

District of Minnesota.

2

Before FEDERMAN, VENTERS, and McDONALD, Bankruptcy Judges

FEDERMAN, Bankruptcy Judge

This is an appeal from an Order of the Bankruptcy Court1

 entered January 20,

2006, in which the Court dismissed the Debtors’ Chapter 11 bankruptcy case for

failure to comply with 11 U.S.C. § 109(h). We affirm.

On January 20, 2006, Debtors Kevin Mark Hedquist and Terri Lynne Hedquist,

pro se, filed a joint voluntary Chapter 11 bankruptcy petition. Along with their

Petition, they filed an Affidavit, signed by Mr. Hedquist only, in which he said, in

effect, that he and his wife did not go to a credit counseling service because they had

been attempting to negotiate a settlement of mortgage arrearages, but that they were

unable to reach a resolution that would prevent the foreclosure sale. It appears from

the Affidavit and e-mails attached to it that the foreclosure sale was scheduled the day

they filed their bankruptcy Petition. 

That same day, the Bankruptcy Court entered an Order of Dismissal, finding

that, because the Debtors are individuals, they must comply with section 109(h) of the

Bankruptcy Code to be eligible to file a petition. That section requires that the

Debtors have either received a briefing from an approved credit counseling agency

prior to filing the petition, or have filed a certificate of exigent circumstances that

meets three requirements set forth in the statute.

The Court found that the Debtors’ Affidavit did not meet the requirements

because it did not indicate that the Debtors ever sought credit counseling, much less

that they were unable to receive it within five days of requesting it. The Court also

found unsatisfactory their explanation that they hoped, or assumed, they would be
2 Gourley v. Usery (In re Usery), 123 F.3d 1089, 1093 (8th Cir. 1997);

O'Neal v. Southwest Mo. Bank (In re Broadview Lumber Co., Inc.), 118 F.3d 1246,

1250 (8th Cir. 1997) (citing First Nat’l Bank of Olathe, Kansas v. Pontow (In re

Pontow), 111 F.3d 604, 609 (8th Cir. 1997)). Fed. R. Bankr. P. 8013.

3 First Nat’l Bank of Olathe, Kansas v. Pontow (In re Pontow), 111 F.3d

604, 609 (8th Cir. 1997); Sholdan v. Dietz (In re Sholdan), 108 F.3d 886, 888 (8th

Cir. 1997).

3

successful in negotiating a resolution to the mortgage problem, while doing nothing

about satisfying the prerequisites for filing a bankruptcy case until it was too late.

Therefore, the Court found, the Hedquists were ineligible to file a bankruptcy case

and, thus, the case had to be dismissed. Debtor Kevin Hedquist appeals, pro se.

STANDARD OF REVIEW

A bankruptcy appellate panel shall not set aside findings of fact unless clearly

erroneous.2

 We review the legal conclusions of the bankruptcy court de novo.3

DISCUSSION

Section 109(h) of the Bankruptcy Code provides, in relevant part:

(h)(1) Subject to paragraphs (2) and (3), and notwithstanding any other

provision of this section, an individual may not be a debtor under this

title unless such individual has, during the 180-day period preceding the

date of filing of the petition by such individual, received from an

approved nonprofit budget and credit counseling agency described in

section 111(a) an individual or group briefing (including a briefing

conducted by telephone or on the Internet) that outlined the opportunities

for available credit counseling and assisted such individual in performing

a related budget analysis. 

* * * 
4 11 U.S.C. § 109(h).

5 See In re Dixon, 338 B.R. 383, 386 (B.A.P. 8th Cir. 2006).

4

(3)(A) Subject to subparagraph (B), the requirements of

paragraph (1) shall not apply with respect to a debtor who

submits to the court a certification that – 

(i) describes exigent circumstances that merit

a waiver of the requirements of paragraph (1);

(ii) states that the debtor requested credit

counseling services from an approved

nonprofit budget and credit counseling

agency, but was unable to obtain the services

referred to in paragraph (1) during the 5-day

period beginning on the date on which the

debtor made that request; and

(iii) is satisfactory to the court.

(B) With respect to a debtor, an exemption under

subparagraph (A) shall cease to apply to that debtor on the

date on which the debtor meets the requirements of

paragraph (1), but in no case may the exemption apply to

that debtor after the date that is 30 days after the debtor

files a petition, except that the court, for cause, may order

an additional 15 days.4

Thus, as the Bankruptcy Court held, there are three requirements for obtaining a socalled thirty-day exemption from the prebankruptcy briefing requirement: First, the

certificate must describe exigent circumstances that merit a waiver of the briefing

requirement; second, the certificate must state that the debtors requested credit

counseling services from an approved agency but were unable to obtain the services

within five days; and third, the certificate must be satisfactory to the court. With

certain limited exceptions not applicable here,5

 the requirements of section 109(h) are
6 In re Watson, 332 B.R. 740, 745-46 (Bankr. E.D. Va. 2005).

7

 In re Dixon, 338 B.R. at 388.

5

mandatory: failure to meet them is a “fatal flaw” rendering an individual debtor

ineligible for bankruptcy relief.6

First, we note that the Bankruptcy Court found Mr. Hedquist’s explanation of

exigent circumstances to be unsatisfactory. Although Mr. Hedquist does not complain

about that finding specifically, we have previously held that a bankruptcy court does

not abuse its discretion in finding that a debtor’s waiting to file a bankruptcy petition

until the eve of a foreclosure, when the debtor has had ample notice of the foreclosure,

does not constitute exigent circumstances meriting a waiver of the prebankruptcy

briefing requirement.7

Mr. Hedquist asserts instead that, under subsection (3)(B), he is granted thirty

days after filing his petition in which to fulfill the requirements of section 109(h)(1).

He is correct that debtors have thirty days after filing the petition in which to obtain

the required credit counseling, but only if the debtor has already properly obtained an

exemption under subparagraph (A) by filing the certification in compliance with the

statute. In other words, a debtor does not receive the additional thirty days unless the

debtor certifies, to the satisfaction of the court, that there are exigent circumstances

meriting a waiver and that the debtor attempted to obtain the credit counseling but was

unable to do so. Consequently, because the Debtors in this case did not meet the

requirements for obtaining the exemption in the first place, they are not entitled to the

additional thirty days under section 109(h)(3)(B).

Second, Mr. Hedquist asserts that the Bankruptcy Court erred in issuing a final

order, rather than making proposed findings for the District Court. In so doing, he

argues that the issue decided by the Bankruptcy Court, i.e., the dismissal of the case,

was a non-core issue. To the contrary, the dismissal of a bankruptcy case for failing
8

 28 U.S.C. § 157(b)(1), (b)(2)(A) and (b)(2)(O). Accord In re Pier, 310

B.R. 347, 352 (Bankr. N.D. Ohio 2004); In re Cadiz Properties, Inc., 278 B.R.

744, 745 (Bankr. N.D. Tex. 2002); In re Kaiser, 204 B.R. 697, 698 (Bankr. W.D.

Tex. 1996). 

9

 501 U.S. 157, 111 S.Ct. 2197, 115 L.Ed.2d 145 (1991).

10 Anderson v. Cass County, 367 F.3d 741, 747-48 (8th Cir. 2004) (citations

and internal quotation marks omitted).

11 Martin v. City of Brentwood, 200 F.3d 1205, 1206 (8th Cir. 2000) (citation

omitted).

6

to meet the requirements for filing the petition is a core issue: the issue arises under

title 11; it arises in a case under title 11; it concerns the administration of the estate;

and it affects the adjustment of the debtor-creditor relationship.8

Next, Mr. Hedquist asserts that by requiring individuals to seek credit

counseling before filing a bankruptcy petition, when corporations are not required to

do so, the Bankruptcy Code violates individuals’ Fourteenth Amendment rights to

equal access to the courts. He relies on Toibb v. Radloff 9

 for the proposition that

individuals, as well as corporations, are entitled to relief under Chapter 11 of the

Bankruptcy Code. Mr. Hedquist is correct on that point: there is no question that

individuals may file for relief under Chapter 11 of the Bankruptcy Code. However,

individuals seeking relief under any chapter of the Bankruptcy Code must still comply

with the applicable rules and requirements in order to be eligible for that relief. Toibb

v. Radloff does not hold otherwise. 

“Generally, the Equal Protection Clause requires the government to treat

similarly situated people alike. Yet, different treatment of dissimilarly situated

persons does not violate the equal protection clause.”10 And, unequal treatment is not

enough to show a violation of the equal protection clause, absent proof of an unlawful

intent to discriminate against the person for an invalid reason.11 First, we do not
12 In re Tomco, 339 B.R. 145, 157 (Bankr. W.D. Pa. 2006).

13 Bolling v. Sharpe, 347 U.S. 497, 499, 74. S.Ct. 693, 694, 94 L.Ed. 884

(1954).

14 In re Watson, 332 B.R. at 746 (citations and internal quotation marks

omitted). In In re Watson, the court addressed the constitutionality of section

109(h) under the Fifth Amendment, but noted that “[t]he Supreme Court’s

approach to Fifth Amendment equal protection claims is precisely the same as to

equal protection claims under the Fourteenth Amendment.” Id. at 746 n. 3 (citing

Weinberger v. Wiesenfeld, 420 U.S. 636, 638 n. 2, 95 S.Ct. 1225, 43 L.Ed.2d 514

(1975)).

7

consider individuals and corporations similarly situated. Moreover, Congress’ intent

in requiring consumers to receive credit counseling was, as one court has phrased it,

to force them to “obtain education and counseling regarding both the consequences

of filing for bankruptcy and the non-bankruptcy alternatives available to the debtor

to rebuild his or her financial health.”12 This does not evidence an unlawful intent to

discriminate against individuals, as opposed to corporations, for an invalid reason. 

Nor does section 109(h) violate the Fifth Amendment’s right to due process.

“[T]he concepts of equal protection and due process, both stemming from our

American ideal of fairness, are not mutually exclusive.”13 Although they are not

always interchangeable phrases, discrimination “may be so unjustifiable as to be

violative of due process.”

Unless a statute employs a classification that is inherently inviduous or

that impinges on fundamental rights, areas in which the judiciary then

has a duty to intervene in the democratic process, courts properly

exercise only a limited review power over Congress. At the minimum

level, the Supreme Court has required that legislation classify the

persons it affects in a manner rationally related to legitimate

governmental objectives.14 
15 Id.

16 See id.

17 Id. at 747 (quoting U.S. v. Kras, 409 U.S. 434, 446, 93 S.Ct. 631, 34

L.Ed.2d 626 (1973) (the Supreme Court holding that certain bankruptcy filing fee

requirements were not unconstitutional)).

18 Id. at 747. Accord In re Tomco, 339 B.R. at 156-57.

8

As the court in In re Watson found, there is no basis for application of a heightened

standard for review of section 109(h) of the Bankruptcy Code.15 Individuals, as

compared to corporations or limited liability companies, are not a “suspect” class.16

In addition, the credit counseling requirement as an element for an individual to be

eligible for bankruptcy relief does not burden a fundamental right: “There is no

constitutional right to obtain a discharge of one’s debts in bankruptcy.”17 

An examination of the rational basis for the requirement by Congress for

individuals (including those who operate businesses as sole

proprietorships) to receive credit counseling as a condition of eligibility

for relief under the Bankruptcy Code suggests the classification is well

within the policy judgment of the legislature. . . . Congress simply has

mandated that any natural person (as opposed to an artificial entity such

as a partnership, corporation, or limited liability corporation) who seeks

bankruptcy relief must either receive credit counseling or exemption

therefrom, regardless of the extent of business or personal assets which

such an individual may own or whether such an individual operates a

business. In applying the credit counseling requirement to all natural

persons who seek bankruptcy protection and not requiring it as a

condition of eligibility for artificial legal entities who file, this Court

cannot find that this “line-drawing” of the conditions of eligibility to

receive the benefit of bankruptcy relief is so devoid of rational

justification that this Court should substitute “its personal notions of

good public policy” for that of Congress.18
19 See Haines v. Kerner 404 U.S. 519, 520, 92 S.Ct. 594, 595-96, 30 L.Ed.2d

652 (1972).

20 See e.g., In re Rodriguez, 336 B.R. 462, 472 (Bankr. D. Idaho 2005); In re

Talib, 335 B.R. 417, 424 (Bankr. W.D. Mo. 2005); In re Watson, 332 B.R. at 745

(the plain meaning of section 109(h)(3) may produce unpopular and burdensome

results, but the court is not the forum in which to seek a remedy; “the proper venue

instead lies with Congress.”).

9

Accordingly, the court found, section 109(h) does not violate the Constitution. We

agree. 

Finally, Mr. Hedquist points out that courts are to afford pro se litigants

leniency with regard to their pleadings.19 Regardless, the requirements under section

109(h) are plain and mandatory, and Mr. Hedquist’s Affidavit clearly does not meet

those requirements. Whether represented or not, debtors are required to comply with

section 109(h), and the Hedquists did not do so.

As several courts have commented, the new requirements in section 109(h) can,

in some circumstances, create harsh results.20 But because those requirements are

mandatory, bankruptcy courts have no discretion but to dismiss the case when the

debtor fails to file a certification in compliance with its provisions. Because the

Debtors in this case did not file a correct certification, and did not meet any of the

other exceptions to section 109(h), the Bankruptcy Court had no choice but to dismiss

the case. Accordingly, the Order of Dismissal is AFFIRMED.

_________________________