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BURTON v. ILLINOIS STUDENT ASSISTANCE COMMISSION

November 4, 2004.

ANNIE BURTON, Appellant,
v.
ILLINOIS STUDENT ASSISTANCE COMMISSION, Appellee.



The opinion of the court was delivered by: JOHN GRADY, Senior District Judge

MEMORANDUM OPINION

This case is before us on appeal from two orders of the bankruptcy court: (1) the order of June 24, 2003, granting the appellee Illinois Student Assistance Commission's motion to vacate the order of May 21, 2003; and (2) the order of July 29, 2003, denying appellant Annie Burton's motion to vacate the order of June 24, 2003 and to file a Chapter 13 petition. For the reasons explained below, the bankruptcy court's orders are affirmed.

BACKGROUND

  In 1994, appellant Annie Burton filed for bankruptcy relief under Chapter 13 of the Bankruptcy Code; later that year, the petition was converted to a Chapter 7 proceeding. Burton received a discharge of her debts in that proceeding in December 1994. Burton has a history of filing multiple bankruptcy petitions. According to the Bankruptcy Court docket, Burton has filed nine petitions for bankruptcy since 1993, and she received a discharge of debts in two of those proceedings (a 1994 case and a 2001 case). Six of the petitions were dismissed, and one is currently pending.

  In 1996, appellee Illinois Student Assistance Commission ("ISAC") filed suit against Burton in the Circuit Court of Cook County for defaulted student loans. On November 5, 1997, judgment was entered against Burton in the amount of $25,042.11 plus costs. In February 1998 and March 2002, ISAC instituted wage garnishment proceedings in state court that were dismissed pursuant to bankruptcy petitions that Burton filed before any wage garnishment orders were entered. ISAC tried again in April 2003; this time, a wage deduction order was entered by the state court on April 23, 2003.

  Shortly thereafter, on May 2, 2003, Burton filed a motion in federal bankruptcy court to reopen the 1994 bankruptcy proceeding, 94 B 02838. On May 14, 2003, Burton filed an emergency motion to reopen the case. She asserted that ISAC was harassing her by garnishing her wages for student loan debt that had been discharged in bankruptcy. On May 21, the bankruptcy court heard the motion; counsel for ISAC did not appear. The bankruptcy court entered an order granting Burton's motion to reopen the case.

  On June 5, 2003, ISAC filed a motion to vacate the May 21 order. ISAC asserted that it had not received proper notice of the motion to reopen the case and that the student loans had not been discharged. Burton failed to appear for the hearing on the motion on June 24, 2003 (later citing a family crisis). In an order signed on June 24 and entered on the docket on July 14, 2003 (the "June 24 Order"),*fn1 the bankruptcy court granted ISAC's motion and stated as follows:
THIS MATTER coming on to be heard, pursuant to Notice and Motion of Illinois Student Assistance Commission ("ISAC") seeking to vacate the Order of May 21, 2003, reopening this matter, due notice having been given to the Debtor, and the Debtor not appearing, the Court does find and order:
1. The Motion of Annie Burton, which reopened this cause was presented with insufficient Notice to ISAC;
2. The Order of May 21, 2003 is vacated and held for naught and this case remains closed under its original closing date;
3. The Court further finds that Annie Burton has abused the process of this Court by the filing of seven (7) bankruptcies under various Chapters since 1993, and that said conduct warrants the imposition of the sanctions sought by ISAC;
4. The Debtor, Annie Burton, is barred from filing any further bankruptcies, under any Chapter, or any Motions in any of the prior filed and closed bankruptcies, unless the Debtor first serves an Application for leave to file the aforesaid pleadings before this Court and serves Notice upon Teller, Levit & Silvertrust, P.C., as attorneys for ISAC. Said bar shall be in effect for twelve (12) months.
(June 24 Order.)

  On June 26, 2003, Burton filed an emergency motion to vacate the June 24 order. The motion was denied. On July 18, 2003, Burton filed a motion for leave to file a motion to vacate the June 24 order. That motion was stricken.

  On July 25, 2003, Burton again filed a motion to vacate the June 24 order and also moved for leave to file another Chapter 13 petition. Burton argued that the wage garnishment inflicted undue hardship on her because she was behind in paying rent and could not afford her son's school tuition or food and clothing for him.

  On July 29, 2003, the bankruptcy court heard oral argument on Burton's motion. When the court asked about the grounds for the motion, Burton replied that her car was impounded by the City of Chicago. Burton also stated that she was experiencing "[a]bject poverty" due to the wage garnishment. When questioned about the amount owed to ISAC, counsel for ISAC explained its calculation, which included several years of accrued interest, and also pointed out that Burton's salary is approximately $48,000.*fn2 After it became evident that the parties could not work out any payment arrangement except for the wage garnishment, the bankruptcy court stated that she would deny Burton's motion "because there are no grounds." (Tr. of Proceedings of July 29, 2003 at 10.) In a written order signed on July 29, 2003 and entered on August 4, 2003 (the "July 29 Order"), the bankruptcy court denied the motion for leave to file a Chapter 13 petition and to vacate the June 24 order, "[f]or the reasons stated in open court." (July 29 Order.)

  Burton now appeals the June 24 Order and the July 29 Order.

  DISCUSSION

  We review the bankruptcy court's factual findings for clear error and its conclusions of law de novo. See In re Smith, 286 F.3d 461, 464-65 (7th Cir. 2002); Fed.R. Bankr. P. 8013. The Bankruptcy Code provides that "[a] case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350(b). The reopening of a closed bankruptcy case is a discretionary matter and is reviewed for an abuse of discretion. See In re Shondel, 950 F.2d 1301, 1304 (7th Cir. 1991) (citing Hawkins v. Landmark Fin. Co., 727 F.2d 324, 326-27 (4th Cir. 1984)).

  Burton raises the following issues for review:
1. Whether the court abused its discretion in granting [ISAC] an order to bar [Burton] from filing any motions or bankruptcy cases simply because [Burton] reopened the 1994 bankruptcy case to verify that [Burton's] student loan had been in fact discharged. [Burton] never received any automatic stays, or any stays as a result of reopening the 1994 case; and
2. Whether the court abused its discretion by entering orders against [Burton] in 1994 case without substantiated evidence from [ISAC]. [Burton's] 1994 Chapter 7 discharges all or some of [Burton's] loans to [sic] [ISAC] pursuant to 11 U.S.C. § 523, a student loan or grant liability was discharged by entry of a general order. (If bankruptcy case was filed between May 28, 1991 and October 7, 1998). In 1994, [Burton] filed a Chapter 7 Bankruptcy Case. The 1994 Chapter 7 case discharged [Burton's] student loan debt; and
3. Whether the court abused its discretion by permitting ISAC without substantiate [sic] facts to intentionally and knowingly pursue [Burton] for an unsubstantiated debt. Since reopening this bankruptcy case, [Burton] has received correspondence from ISAC stating that [Burton] borrowed a total of $12,500 at 7% interest. However, [ISAC] has submitted a wage assignment to [Burton's] employer requesting $36,881.55. [Burton] would like to know how [ISAC] calculated the $36,881.55. [ISAC] has avoided answering [Burton] directly but ...

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