           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)
                            ____________________
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


      1
        The Honorable Robert J. Kressel, United States Bankruptcy Judge for the
District of Minnesota.
                                           2
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.

                                        ***


      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
               (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 so-
called 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


      4
          11 U.S.C. § 109(h).
      5
          See In re Dixon, 338 B.R. 383, 386 (B.A.P. 8th Cir. 2006).
                                             4
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


      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
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


       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).

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

omitted).
                                            6
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



      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
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




      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
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.
                            _________________________




      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
