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
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
Posted by NCBRC - March 6th, 2018
Where the debtor lived with his mother and they shared all income and expenses, he correctly included her expenses and excluded her social security benefits in his projected disposable income calculation. In re Palcher, 2018 WL 481863, No. 7:17-bk-3938 (Bankr. D. S.C. Jan. 16, 2018).
Above-median debtor, Michael Palcher, proposed a chapter 13 plan to pay his mortgage directly and pay approximately 6.7% to unsecured creditors through the plan. The trustee objected to confirmation arguing that, because Mr. Palcher did not include his mother’s social security in his projected disposable income, the plan did not comply with section 1325(b) and was proposed in bad faith. Read More
Posted by NCBRC - February 23rd, 2018
Filing bankruptcy for the primary purpose of discharging one debt is not, in itself, bad faith, and the bankruptcy court did not abuse its discretion when weighing several factors in denying the creditor’s motion to dismiss for cause under section 707(a). Janvey v. Romero (In re Romero), No. 17-1197 (4th Cir. Feb. 21, 2018).
Peter Romero was found liable to victims of a Ponzi scheme in which he was involved. Pursuant to that judgment, he owed $1.275 million to Ralph Janvey, the court-appointed Receiver in the Ponzi litigation. Mr. Janvey rejected without counteroffers Mr. Romero’s attempts to settle and Mr. Romero filed for chapter 7 bankruptcy. The bankruptcy court denied Mr. Janvey’s motion to dismiss and granted Mr. Romero’s discharge. In re Romero, 557 B.R. 875 (Bankr. D. Md. 2016). The district court affirmed. Read More
Posted by NCBRC - September 1st, 2017
Where the debtor’s plan proposed terms that were within bankruptcy and social security parameters, and there was no evidence of misconduct or bad faith, the bankruptcy court erred in declining to confirm his plan due to his failure to voluntarily contribute some of his social security funds. In re Manzo, No. 16-7218 (N.D. Ill. Aug. 25, 2017). Read More
Posted by NCBRC - February 29th, 2016
Although the debtor’s chapter 13 plan effectively paid nothing to the debtor’s single creditor, it was filed in good faith. In re Banks, No. 15-9819 (Bankr. N.D. Ill. Feb. 8, 2016).
Mr. Banks had no assets and only one debt: $5,080 in city parking tickets. His chapter 13 plan contemplated paying his entire $120 disposable income for 36 months for a total of $4,320, $4,000 of which would go to his bankruptcy attorney, and $285.12 to the bankruptcy trustee. The trustee challenged the plan as not having been filed in good faith under section 1325(a)(7). Read More
Posted by NCBRC - January 22nd, 2016
Failure to tell the debtor that a down payment toward mortgage arrears was essential to loan modification rendered the loan servicer’s loss mitigation negotiations in bad faith. Rushmore Loan Management Services v. Hosking, No. 15-3999 (S.D. N.Y. Jan. 11, 2016). Read More
Posted by NCBRC - January 5th, 2015
Absent a statutory basis for doing so, a bankruptcy court may not deny a debtor’s homestead exemption based on bad faith or prejudice to creditors. Elliott v. Weil (In re Elliott), No. 14-1050, 14-1059 (consolidated) (B.A.P. 9th Cir. Dec. 10, 2014). Read More
Posted by NCBRC - October 3rd, 2014
A Colorado Bankruptcy Court found that a debtor whose only non-social security income was generated through the marijuana industry could not avail himself of bankruptcy relief. In re Arenas, — B.R. —-, 2014 WL 4288991 (Bankr. D. Colo. Aug. 28, 2014). The chapter 7 debtors’ income sources were $4,265.16 from Mr. Arenas’ marijuana growing business for which he was licensed under Colorado law, a lease with a marijuana dispensary, and $3,000.00 from his co-debtor wife’s social security disability benefits. Mr. Arenas’ marijuana-related business interests were legal under state law and illegal under the federal Controlled Substances Act. Read More
Posted by NCBRC - December 16th, 2013
Two recent cases deal with the determination good faith in the context of a chapter 13 plan modification. In re Martin, No. 10-64790 (Bankr. N.D. Ohio November 27, 2013) and In re Maxwell, No. 11-17873 (Bankr. E.D. Cal. Nov. 8, 2013). Read More