A pawn agreement requiring the borrower to affirm that she was not in bankruptcy and did not intend to file for bankruptcy was not unenforceable as against public policy because the agreement did not commit the borrower to an agreement not to file for bankruptcy at a later date. TitleMax v. Roby, No. 21-630 (M.D. Ala. Sept. 19, 2022). Read More
Tag Archive: good faith
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Pawn Contract Disavowing Bankruptcy Intent Is Enforceable
Posted by NCBRC - November 14th, 2022
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Divorcing Debtor’s Plan Proposed in Good Faith
Posted by NCBRC - June 8th, 2022
The below-median debtor was entitled to confirmation of his chapter 13 plan where he proposed his plan in good faith and committed all of his disposable income to it despite the fact that he was in the middle of a divorce and his income and expenses were in a state of flux. In re Szafraniec, No. 21-10216 (Bankr. N.D. Ill. May 27, 2022). Read More
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Debtor’s Post-Discharge Pre-Closure Motion to Convert Denied
Posted by NCBRC - December 16th, 2020
The debtor was not permitted to convert from chapter 7 to chapter 13 post-discharge but prior to administrative closure of his case where the court found the attempted conversion to be an abuse of process and his conduct in his chapter 7 case to indicate bad faith. In re Chamoun, No. 20-5069 (C.D. Cal. Dec. 2, 2020). Read More
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Social Security Benefits May Be Considered for Abuse under 707 and Good Faith under 1325
Posted by NCBRC - August 26th, 2020
A debtor’s social security income is a proper factor to consider in an abuse analysis under section 707(b)(3)(B) and in a good faith analysis under section 1325(a)(3). Meehean v. Vara (In re Meehean), No. 20-10380 (E.D. Mich. Aug. 18, 2020).
When they filed their chapter 7 petition, debtors listed $5,842 in monthly income ($4,007 in Social Security benefits and $1,835 in pension income) and $4,446 in monthly expenses. They had $142,871 in secured mortgage debt and $43,100 in unsecured non-priority debt. The trustee moved to dismiss the petition as an abuse of bankruptcy, arguing that, if the debtors committed their social security income to a chapter 13 plan, they could pay off their unsecured debt over five years. The bankruptcy court agreed and granted the trustee’s motion. In re Meehean, 611 B.R. 574 (Bankr. E.D. Mich. 2020).
The debtors appealed to the district court arguing that the bankruptcy court erred by considering social security income as a factor in a totality of circumstances test for abuse of bankruptcy under section 707(b)(3)(B). Read More
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No Bad Faith in Filing Second Chapter 13 Petition while First Still Pending
Posted by NCBRC - April 16th, 2020
The bankruptcy court declined to attribute bad faith to the debtors when they voluntarily dismissed one chapter 13 case after a motion for relief from stay had been filed by the mortgage creditor, and filed a second chapter 13 petition while the first was still pending. 21st Mortgage Corp. v. Wilkinson, No. 19-3021 (Bankr. M.D. Pa. Nov. 26, 2019).
The debtors’ first chapter 13 was filed by counsel, and when the debtors failed to respond to the mortgage creditor’s motion for relief from stay, the court granted default judgment in the creditor’s favor. Five months later, through new counsel, the debtors filed another chapter 13 petition. The following day, they voluntarily dismissed their prior case. Relying on section 109(g)(2), the mortgage creditor filed a motion to dismiss the second petition as being filed in bad faith to avoid the consequences of its motion for relief from stay. Read More
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Court May Not Deny Amendment to Exemptions Based on Bad Faith
Posted by NCBRC - December 6th, 2019
Based on Law v. Siegel the bankruptcy court properly overruled the trustee’s objection to the debtor’s amendment to his exemptions without regard to whether the debtor concealed assets in bad faith. Rucker v. Belew (In re Belew), No. 18-3045 (8th Cir. Nov. 26, 2019).
In his bankruptcy schedules, the debtor initially failed to disclose that he had $30,000 in cash in a home safe. When the trustee learned of the cash, the debtor sought to amend his exemptions to exempt the money. The trustee objected on the grounds that the debtor had intentionally concealed the asset and was therefore precluded from amending on the basis of bad faith. The bankruptcy court overruled the objection and the BAP affirmed. Read More
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Bankruptcy Court Abused Discretion in Failing to Confirm Plan
Posted by NCBRC - February 26th, 2019
In a terse opinion, the Fifth Circuit balanced the evidence relied on by the bankruptcy court against various additional factors and concluded that the bankruptcy court abused its discretion when it denied the debtors’ chapter 13 plan for lack of good faith under section 1325(a)(3). Booker v. Johns (In re Booker), No. 18-30526 (5th Cir. Feb. 11, 2019) (unpublished).
In holding that the debtors’ plan was proposed in bad faith, the bankruptcy court relied on the fact that the debtors proposed to pay unsecured creditors at 4% while retaining their 1998 fishing boat, motor and trailer. The debtors proposed a new plan that was less favorable to them which the bankruptcy court confirmed. The debtors appealed, and the district court affirmed. Read More
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Debtors Entitled to Discharge Despite Bad Faith Conduct
Posted by NCBRC - November 9th, 2018
The debtors were entitled to discharge once they completed their payments under the plan notwithstanding the fact that they “gamed the system” and conducted their bankruptcy in bad faith. Davis v. Holman (In re Holman), No. 17-1118 (D. Kans. Oct. 31, 2018).
During the course of their chapter 13 bankruptcy, debtors, Shala and Nathan Holman, failed to disclose assets and debts, employment status, post-petition debts, and other relevant information. They modified their chapter 13 plan numerous times and responded to challenges by the trustee based on bad faith. In one challenge, addressing the entirety of their misconduct to date, the court held a hearing and the parties reached a stipulated agreement resolving the issues. In July, 2016, the trustee again sought dismissal of their case based on bad faith. While that litigation was pending, the debtors successfully completed their payments in accordance with their confirmed plan. After trial on the motion, the bankruptcy court found that while the debtors’ conduct indeed constituted bad faith, the court was precluded from dismissing the case because the debtors’ successful completion of their plan payments entitled them to discharge. Read More
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Fee-Only (almost) Plan Not Bad Faith
Posted by NCBRC - July 17th, 2018
“In this Court’s view, attorney fees, which are governed by 11 U.S.C. § 328, should not be intertwined with § 1325(b)(1)’s requirement that debtors pay either 100% of general unsecured claims or all of their disposable income.” In re Jones, No. 17-40497, 2018 Bankr. LEXIS 1244 (Bankr. S.D. Ill. April 26, 2018).
Chapter 13 debtor, Gary Jones, proposed to pay secured creditors directly, and pay into the plan $100.00 per month with that amount going first to pay his attorney’s and the trustee’s fees in full, and then to pay 7.4% to his general unsecured creditors. Despite the fact that the attorney’s fees were below the court-approved no-look fee and that Mr. Jones could not afford to pay more into the plan, the trustee objected to confirmation on the basis that the plan was not filed in good faith.
Applying a totality of the circumstances inquiry into the issue of good faith, the court overruled the trustee’s objection. Read More
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Court Refuses to Discard Totality of Circumstances Test for Good Faith
Posted by NCBRC - May 9th, 2018
A chapter 13 plan must still be proposed in good faith under the totality of circumstances test even if it complies with Code provisions for confirmation. Booker v. Johns (In re Booker), No. 16-1604 (W.D. La. April 17, 2018).
Although the trustee did not challenge Webster and Lillie Bookers’ first chapter 13 plan, which proposed to keep their boat and various other secured items and paid only 4% to unsecured creditors, the bankruptcy court held a hearing and found the plan was not proposed in good faith. After filing a successful plan, the Bookers appealed the denial of confirmation of the first plan to the district court. Read More
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HAVEN Act Guide
The Honoring American Veterans in Extreme Need Act of 2019 (“HAVEN Act”) excludes certain benefits paid to veterans or their family members from the definition of current monthly income (“CMI”) found in the Bankruptcy Code. The HAVEN Act amends § 101(10A) of the Bankruptcy Code and supplements the 2005 amendments to the Code that excluded other government benefits, such as social security income.
This Guide provides an overview of the HAVEN Act identifies benefits that are excluded, and answers frequently asked questions.
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