Opinion
Case No. 01-02555.
3-26-2010
In re: KATJA S. SCHOLZ, Chapter 7, Debtor.
The debtor has filed with the court a letter asking the court to expunge her bankruptcy case from the public record in order to facilitate her receiving a loan to open a birthing and wellness center (Dkt. No. 14, filed March 18, 2010).
Cases addressing whether a bankruptcy court has the authority to expunge, nullify, or void a bankruptcy case are scarce. At least one court has declined to find that a bankruptcy court has the authority to expunge, nullify, or void a bankruptcy case because there is no "statutory anchor" for such authority in the Bankruptcy Code. In re Woods, No. 05-32207, 2007 WL 130634427, *1 (Bankr. W.D. Mo. May 1, 2007).
Other courts have found the authority to expunge bankruptcy cases in 11 U.S.C. § 105 but only in extraordinary circumstances. In re Storay, 364 B.R. 194, 196 (Bankr. D.S.C. 2006)(holding that cause exists to expunge a case pursuant to 11 U.S.C. § 105 where the debtor did not authorize the filing of the petition); In re Buppelmann, 269 B.R. 341 (Bankr. M.D. Pa. 2001)(denying the debtors' motion to expunge but stating that "the expungement of bankruptcy cases appears to be a rare event exercised with the greatest of prudence by bankruptcy judges under the equitable powers implied under 11 U.S.C. § 105").
The court does not believe that it has authority under 11 U.S.C. § 105 to enter an order expunging the debtor's bankruptcy case. Lenders are entitled to inquire whether the debtor ever filed a prior bankruptcy case if they fear that is a sign that the debtor is a poor credit risk. Nothing in the Bankruptcy Code suggests that the court should expunge a bankruptcy filing so that lenders are deprived of that information (unless the filing was a fraudulent filing, one not authorized by the debtor). The debtor knowingly commenced this case, and, unfortunately, despite the court's sympathy for her plight, must suffer the consequence of a poor credit record arising from the filing. It is thus
ORDERED that the debtor's motion to expunge her bankruptcy case from the public record is DENIED.