APPENDIX F

GOOD-FAITH CASES,
ORGANIZED BY CIRCUIT

A. First Circuit

Massachusetts

Berliner v. Pappalardo (In re Buck), 509 B.R. 737, 741 (D. Mass. Apr. 2, 2014) (Saylor) (Proper standard is set forth in Berliner v. Pappalardo (In re Puffer), 674 F.3d 78 (1st Cir. Mar. 22, 2012) (Selya, Souter, Lipez): "[F]ee-only plans are not bad faith per se. Instead, such plans may be justified in 'special circumstances,' and whether the debtor and her attorney acted in good faith must be evaluated based on a 'totality of the circumstances.'"), 432 B.R. 13, 22 n.14 (Bankr. D. Mass. July 9, 2010) (Boroff) (Plans lacked good faith when 94% of payments would go to attorney fees and debtors were eligible for Chapter 7. "[O]verwhelming majority of courts that have addressed this question agree that Attorney Fee-Only Chapter 13 Plans fail to meet the good faith requirement of § 1325(a)(3).").

Berliner v. Pappalardo (In re Buck), 509 B.R. 737, 741 (D. Mass. Apr. 2, 2014) (Saylor) (Proper standard is set forth in Berliner v. Pappalardo (In re Puffer), 674 F.3d 78 (1st Cir. Mar. 22, 2012) (Selya, Souter, Lipez): "[F]ee-only plans are not bad faith per se. Instead, such plans may be justified in 'special circumstances,' and whether the debtor and her attorney acted in good faith must be evaluated based on a 'totality of the circumstances.'"), vacating and remanding 432 B.R. 13 (Bankr. D. Mass. July 9, 2010) (Boroff) (Attorney fee-only cases filed by debtors eligible for Chapter 7 relief were not filed in good faith under § 1325(a)(7).).

Berliner v. Pappalardo (In re Puffer), 494 B.R. 1, 5-8 (D. Mass. May 6, 2013) (Stearns) (On remand, no special circumstances justified fee-only Chapter 13 plan, but bankruptcy court inappropriately punished debtor's attorney for trying by denying fees. "This court agrees with the Bankruptcy Court that Puffer has failed to shoulder the exceptional burden identified by the Court of Appeals. . . . Puffer has not demonstrated a compelling need for the immediate filing of a bankruptcy petition, such as the imminence of wage garnishment, repossession of an essential means of transportation, foreclosure of a home, or loss of access to basic care. . . . Berliner's experiment with a fee-first plan was not indefensible. . . . [S]ome courts have approved fee-only plans under what the First Circuit might deem 'special circumstances,' others have required no such showing. . . . Nor was Puffer's filing marred by the 'plus' factors that have led courts to find a fee-only plan to have been filed in bad faith. . . . [T]he bankruptcy bar would be well advised to file future fee-only plans in only the most extraordinary and compelling of cases. Berliner's conduct, however, should not be viewed through the prism of hindsight nor should he be sanctioned for doing something that fell comfortably within the range of what many bankruptcy lawyers (and judges) at the time would have thought reasonable. . . . Berliner should have his fee."), aff'g in part, rev'g in part 480 B.R. 451 (Bankr. D. Mass. Oct. 25, 2012) (Boroff), on remand from No. 10-CV-30225-MAP, 2012 WL 1455091 (D. Mass. Apr. 25, 2012) (unpublished) (Ponsor), on remand from 674 F.3d 78 (1st Cir. Mar. 22, 2012) (Selya, Souter, Lipez) ("Fee-only" Chapter 13 plan is not per se bad faith. "We believe that the totality of the circumstances approach to adjudicating good faith should apply equally to inquiries under section 1325. . . . The totality of the circumstances test cannot be reduced to a mechanical checklist . . . . But we, like other courts, are reluctant to read per se limitations into section 1325's good faith calculus. . . . [W]e reject the bankruptcy court's holding that fee-only Chapter 13 plans are per se in bad faith. . . . [F]ee-only arrangements may be vulnerable to abuse by attorneys. . . . Notwithstanding these shortcomings, endorsing a blanket rule that fee-only Chapter 13 plans are per se submitted in bad faith would be to throw out the baby with the bathwater. While fee-only plans should not be used as a matter of course, there may be special circumstances, albeit relatively rare, in which this type of odd arrangement is justified. Given this possibility, prudence dictates that we hew to the overarching principle that the presence or absence of good faith should be ascertained case by case. . . . This opinion should by no means be read as a paean to fee-only Chapter 13 plans. The dangers of such plans are manifest, and a debtor who submits such a plan carries a heavy burden of demonstrating special circumstances that justify its submission."), rev'g and remanding 453 B.R. 14, 19, 21-22 (D. Mass. July 8, 2011) (Ponsor) (Attorney-fee-only plans lack good faith. Plan would pay $100 monthly for 36 months, with only $300 to creditors other than attorney. Bankruptcy court denied allowance of all attorney fees and expenses, other than filing fee, finding "sole reason Debtor chose Chapter 13 over Chapter 7 was the three months needed to save funds to pay [attorney's] Chapter 7 fee in advance." "Debtors who need the services of bankruptcy attorneys will often, almost ex hypothesis, lack funds to pay them. Bankruptcy counsel, including Appellant here, deserve praise for choosing to work in this difficult arena and for taking on the uncertain cases of frequently desperate people. The existence of risk and difficulty with the Chapter 7 process after BAPCPA does not, however, justify distorting the law to cobble together an ersatz solution under Chapter 13. In any event, the bankruptcy judge certainly did not commit any error of law, or abuse his discretion, in refusing to award any fee for doing this. The problem with fee-only chapter 13 plans was well expressed by the bankruptcy judge in [In re Buck, 432 B.R. 13 (Bankr. D. Mass. July 9, 2010) (Boroff)]. If fee-only plans were permitted, the trustee's sole purpose would be to assure that the attorney were [sic] paid. As the court wrote, '[t]o require [the trustee] to administer cases simply to make monthly payments to the Debtors' attorney and no other creditor defies both logic and the intent of Congress.' In re Buck, 432 B.R. at 21.").

Berliner v. Pappalardo (In re Puffer), 494 B.R. 1 (D. Mass. May 6, 2013) (Stearns) (On remand, no special circumstances justified fee-only Chapter 13 plan, but bankruptcy court inappropriately punished debtor's attorney for trying by denying fees.), aff'g in part, rev'g in part 480 B.R. 451 (Bankr. D. Mass. Oct. 25, 2012) (Boroff), on remand from No. 10-CV-30225-MAP, 2012 WL 1455091 (D. Mass. Apr. 25, 2012) (unpublished) (Ponsor), on remand from 674 F.3d 78 (1st Cir. Mar. 22, 2012) (Selya, Souter, Lipez) ("Fee-only" Chapter 13 plan is not per se filed in bad faith.).

Berliner v. Pappalardo (In re Puffer), 494 B.R. 1, 4-8 (D. Mass. May 6, 2013) (Stearns) (On remand, no special circumstances justified fee-only Chapter 13 plan, but bankruptcy court inappropriately punished debtor's attorney for trying by denying fees. "The First Circuit did not define any of the 'special circumstances' that might justify a fee-only Chapter 13 plan. . . . Such plans, in the Court's estimation, would satisfy the good faith requirement only in 'relatively rare' instances. . . . This court agrees with the Bankruptcy Court that Puffer has failed to shoulder the exceptional burden identified by the Court of Appeals. . . . Puffer has not demonstrated a compelling need for the immediate filing of a bankruptcy petition, such as the imminence of wage garnishment, repossession of an essential means of transportation, foreclosure of a home, or loss of access to basic care. . . . [I]t is not so clear that Puffer's Chapter 13 plan was 'doomed from the outset' . . . . Berliner's experiment with a fee-first plan was not indefensible. . . . [S]ome courts have approved fee-only plans under what the First Circuit might deem 'special circumstances,' others have required no such showing. . . . Nor was Puffer's filing marred by the 'plus' factors that have led courts to find a fee-only plan to have been filed in bad faith. . . . [T]he bankruptcy bar would be well advised to file future fee-only plans in only the most extraordinary and compelling of cases. Berliner's conduct, however, should not be viewed through the prism of hindsight nor should he be sanctioned for doing something that fell comfortably within the range of what many bankruptcy lawyers (and judges) at the time would have thought reasonable. . . . Berliner should have his fee."), aff'g in part, rev'g in part 480 B.R. 451 (Bankr. D. Mass. Oct. 25, 2012) (Boroff), on remand from No. 10-CV-30225-MAP, 2012 WL 1455091 (D. Mass. Apr. 25, 2012) (unpublished) (Ponsor), on remand from 674 F.3d 78, 82-83 (1st Cir. Mar. 22, 2012) (Selya, Souter, Lipez) ("Fee-only" Chapter 13 plan is not per se bad faith. "We believe that the totality of the circumstances approach to adjudicating good faith should apply equally to inquiries under section 1325. . . . The totality of the circumstances test cannot be reduced to a mechanical checklist . . . . But we, like other courts, are reluctant to read per se limitations into section 1325's good faith calculus. . . . [W]e reject the bankruptcy court's holding that fee-only Chapter 13 plans are per se in bad faith. . . . [F]ee-only arrangements may be vulnerable to abuse by attorneys. . . . Notwithstanding these shortcomings, endorsing a blanket rule that fee-only Chapter 13 plans are per se submitted in bad faith would be to throw out the baby with the bathwater. While fee-only plans should not be used as a matter of course, there may be special circumstances, albeit relatively rare, in which this type of odd arrangement is justified. Given this possibility, prudence dictates that we hew to the overarching principle that the presence or absence of good faith should be ascertained case by case. . . . This opinion should by no means be read as a paean to fee-only Chapter 13 plans. The dangers of such plans are manifest, and a debtor who submits such a plan carries a heavy burden of demonstrating special circumstances that justify its submission.").

Hovey v. Vale Realty Trust (In re Hovey), No. 12-1244, 2012 WL 6543737 (Bankr. D. Mass. Dec. 14, 2012) (Feeney) (Fifth bankruptcy case to stop eviction was not filed in bad faith when there was a legitimate dispute about terms of lease.).

In re Klaven, No. 11-41677-MSH, 2012 WL 2930865 (Bankr. D. Mass. July 18, 2012) (Hoffman) (Plan not filed in good faith that proposed zero percent dividend while retaining Disney World timeshare valued at $29,250. $480 monthly payment was unnecessary luxury.).

In re Waechter, 439 B.R. 253 (Bankr. D. Mass. Oct. 22, 2010) (Hoffman) (Plan in which debtor would pay disproportionate share of nonfiling spouse's household expenses was not proposed in good faith. Premarital agreement provided that couple would keep property and financial obligations separate throughout marriage but did not address day-to-day expenses. Court lacked authority to require nonfiling spouse to pay his share of marital expenses but, under totality of circumstances, trustee's good-faith objection to confirmation was sustained.).

In re Waechter, 439 B.R. 253 (Bankr. D. Mass. Oct. 22, 2010) (Hoffman) (Plan in which debtor would pay disproportionately large share of nonfiling spouse's household expenses was not proposed in good faith. Premarital agreement provided that couple would keep property and financial obligations separate throughout marriage but was silent with respect to day-to-day expenses. Court lacked authority in wife's Chapter 13 case to require husband to pay his share of marital expenses, but under totality of circumstances, trustee's objection to confirmation was sustained.).

In re Ellis, 388 B.R. 456, 460 (Bankr. D. Mass. June 10, 2008) (Feeney) (Without reaching good-faith objection to confirmation, debtor with gross monthly income of $12,870 whose expenses exceed income, leaving no disposable income or monthly net income, has insufficient income to make payments under a plan as required by § 101(30) and cannot confirm a plan that pays nothing to any creditor. "The amalgam of Chapter 13 provisions, together with the definition of 'current monthly income' set forth in section 101(10A) and the definition of the term 'individual with regular income' set forth in section 101(30), when read together, compel the conclusion that a zero payment plan under which a debtor makes no payments to the Trustee for distribution to any class of creditors provided for under the plan cannot be confirmed. To confirm a Chapter 13 plan which should more appropriately be a Chapter 7 case, contravenes the express provisions of Chapter 13 and its overall purpose of providing a structure for repayment of debt.").

In re Mati, 390 B.R. 11, 17-18 (Bankr. D. Mass. June 9, 2008) (Feeney) (Exclusion of 401(k) contributions from property of the estate and from disposable income changes good-faith analysis under § 1325(a)(3); 401(k) contribution of 10% of gross income is not bad faith when plan pays more than 50% to unsecured creditors. "[T]he Debtor's 401(k) contributions do not evidence bad faith under the totality of the circumstances in this case. The Debtor is merely taking advantage of what the law allows. . . . Congress has implemented a policy of protecting and encouraging retirement savings. . . . BAPCPA's amendments to section 1325(b) alter the good faith inquiry under section 1325(a)(3) by narrowing the scope of judicial discretion and excluding certain sources of income that do not need to be committed to Chapter 13 plans. In particular, debtors, pursuant to section 541(b)(7), may shelter contributions to certain qualified employee benefit plans. . . . In this case, the dividend to unsecured creditors most likely will be in excess of 50% . . . . [U]nder appropriate circumstances, particularly if the debtor's contributions exceed those legally permitted, a good faith inquiry may be warranted. This is not such a case.").

In re Phillips, 382 B.R. 153, 172-73 (Bankr. D. Mass. Feb. 7, 2008) (Feeney) (Arguably in dicta: "Although the Trustee has failed . . . with respect to her 'best efforts test' objection, the Court's ruling is without prejudice to the filing of an objection to confirmation . . . under 11 U.S.C. § 1325(a)(3). In view of the extraordinary disparity in required plan payments resulting from the financial portraits produced by Form [B]22C and Schedules I and J, an examination of the Debtor's subjective intent to repay her creditor is warranted. This case may be one of those times 'when a debtor commits so little income to creditors, relative to his true ability . . . to make payment to them based on his actual expenses, that his proffered plan suggests a subjective intent not to make a good faith effort at repayment at all.'").

In re Hague, 334 B.R. 486 (Bankr. D. Mass. July 1, 2005) (Totality of circumstances, including both pre- and postpetition conduct of debtors, is relevant to § 1325(a)(3) good-faith inquiry; good faith in First Circuit had been expanded since Keach v. Boyajian (In re Keach), 243 B.R. 851, 868 (B.A.P. 1st Cir. 2000), advocated limiting the inquiry to postpetition conduct. Finding that motive for filing was to defeat state-court litigation in two-party dispute, lack of good faith required denial of confirmation.).

In re Haque, 334 B.R. 486, 489, 490 (Bankr. D. Mass. July 1, 2005) (Chapter 13 petition filed immediately after Chapter 7 petition, when 99.98% of the debt was one claim secured by a judicial lien, was not proposed in good faith. "[T]he most appropriate means by which to determine good faith is through an examination of the totality of the circumstances. . . . [T]he Court may examine the Debtors' prepetition and postpetition conduct and consider factors such as, inter alia, the Debtors' history of filings, whether the Debtors only intended to defeat state court litigation, whether the Debtors' sole motivation was to avoid payment of a single debt and whether egregious behavior was present. . . . The Court finds that this is simply a two-party dispute and that the Debtors' sole motivation in filing their Chapter 13 plan was to defeat the state court litigation and avoid payment of this single debt.").

In re Hague, 334 B.R. 486, 490 (Bankr. D. Mass. July 1, 2005) (Debtors received Chapter 7 discharge without attempting to avoid judicial lien of creditor now objecting to confirmation; court found lack of good faith required denial of confirmation. Case is two-party dispute, in which debtors' "sole motivation . . . was to defeat the state court litigation and avoid payment of this single debt." A further hearing is set to determine why the case should not be dismissed.).

New Hampshire

In re Smolin, No. 13-10464-JMD, 2014 WL 1089800 (Bankr. D.N.H. Mar. 17, 2014) (unpublished) (Deasy) (Five-year plan of below-median-income Chapter 20 debtor not proposed in good faith when only objective served was to delay payments on nondischargeable unsecured claim.).

In re Dolinak, 497 B.R. 15 (Bankr. D.N.H. June 28, 2013) (Deasy) (Not bad faith to strip off junior lien in Chapter 20 case when Chapter 13 was filed three years after prior Chapter 7 discharge, debtors accumulated some unsecured debt in interim that will be paid in full and there is no evidence of manipulation of Bankruptcy Code.).

In re Richall, 470 B.R. 245, 250-51 (Bankr. D.N.H. May 11, 2012) (Deasy) (Plan that pays unsecured creditors in full using less than all projected disposable income does not lack good faith when other good-faith factors favor debtors. Schedules I and J showed monthly net income of $886.42, and Form B22C showed monthly disposable income of $1,756.21. Plan proposed monthly payment of $855 that would pay unsecured creditors in full in 60 months. "Since Congress specifically addresses a debtor's ability to pay and the commitment of disposable income in § 1325(b), a 'good faith' analysis under § 1325(a)(3) need not require consideration of the amount of a debtor's payments unless the proposed payments otherwise contribute to a finding of serious misconduct or abuse or unfair manipulation of the Code. . . . Although the Court understands the Trustee's concerns regarding the time value of money and the risks to creditors in a stretched out plan, Congress has not indicated that such factors be considered under a § 1325(a)(3) 'good faith' analysis.").

In re Culcasi, No. 10-14735-JMD, 2011 WL 4005451, at *6 (Bankr. D.N.H. Sept. 7, 2011) (Deasy) (Debtors manipulated Bankruptcy Code by impermissibly borrowing from a 401(k) plan after the petition without court approval to pay off a student loan, but that manipulation was not unfair because debtors disclosed the postpetition loan in their plan. "The Court agrees that the Debtors attempted to manipulate the Code. Instead of proposing a plan from the beginning in which the Debtors paid their student loan debt outside the plan, the Debtors impermissibly took out a postpetition loan from Mrs. Culcasi's 401(k) plan. . . . While the Court does not look kindly on manipulation of the Code, the Debtors did not 'unfairly' manipulate the Code as they did disclose, in an addendum to their Current Plan, that they took out a postpetition loan against Mrs. Culcasi's 401(k) to pay off their student loan obligation. Therefore, the Court concludes the Current Plan is filed in good faith.").

Puerto Rico

In re Marquez, No. 10-03882, 2011 WL 4543226 (Bankr. D.P.R. Sept. 28, 2011) (Lamoutte) (Confirmation was a finding that plan was proposed in good faith, and confirmation order barred subsequent litigation of good faith.).

In re Marquez, No. 10-03882, 2011 WL 4543226 (Bankr. D.P.R. Sept. 28, 2011) (Lamoutte) (Good faith in filing petition was condition for confirmation, and confirmation order barred subsequent litigation of good faith.).

In re O'Neill Miranda, 449 B.R. 182, 195 (Bankr. D.P.R. Mar. 9, 2011) (Lamoutte) ("[F]or a plan to be filed in good faith the debtor does not need to contribute any more funds to pay unsecured creditors than required by Section 1325(b)(1).").

Rhode Island

In re Cobb, 485 B.R. 264, 266 (Bankr. D.R.I. Jan. 24, 2013) (Finkle) ("[T]his Court declines to adopt a per se rule that a 100% creditor payment plan has not been proposed in good faith solely on the basis that the debtor can satisfy creditor claims sooner." The plan provided 100% payment of unsecured claims over five years using less than all of the debtor's monthly disposable income. The applicable commitment period was five years. Trustee contended that the plan failed good faith under § 1325(a)(3) because debtors could pay 100% of unsecured debt more quickly than five years.).

In re Salisbury, No. 11-14161, 2012 WL 8169885 (Bankr. D.R.I. Aug. 16, 2012) (Hillman) (5% to unsecured creditors while stripping off two wholly unsecured mortgages did not satisfy good-faith test.).

B. Second Circuit

New York

Eastern District of New York

In re Renz, 476 B.R. 382, 390 (Bankr. E.D.N.Y. Aug. 1, 2012) (Trust) (Bad faith that debtors, not eligible for discharge because of § 1328(f), filed claim on behalf of wholly unsecured junior lienholder, stripped off and voided lien in an adversary proceeding, then withdrew the claim and proposed plan that provided no payment to stripped-off lienholder. "Debtors filed the Chase Claim and the Adversary on June 21, 2011, purportedly because Debtors wished to reclassify the claim as unsecured and pay the Chase Mortgage through the Plan. Debtors prevailed in the Adversary and obtained a Judgment which explicitly called for treatment of the Chase Claim as unsecured and for voiding of the Chase Mortgage upon plan completion. Thereafter, Debtors executed maneuvers designed to propose a plan which called for no distribution of any kind to Chase. That conduct is antithetical to the exercise of good faith required of a debtor proposing a Chapter 13 plan.").

Northern District of New York

In re Powers, 554 B.R. 41 (Bankr. N.D.N.Y. July 13, 2016) (Davis) (Good-faith analysis under § 1325(a)(7) is different than under § 1325(a)(3): that plan lacked good faith did not require finding that case was filed in bad faith, and “ongoing matrimonial and familial dispute” justified filing of case notwithstanding that plan was not proposed in good faith. “[C]ourts generally agree that the good faith standard of § 1325(a)(7) is analyzed using a totality of the circumstances test. . . . [T]he Fourth Circuit has suggested that courts conduct the same good faith analysis under § 1325(a)(7) as they do under § 1325(a)(3) . . . . [T]his Court does not favor the application of either the § 1325(a)(3) or § 1307(c) tests for the reason that these are three independent statutory provisions, and each section serves a separate and distinct purpose. . . . [T]he Court will look to traditional good faith factors most pertinent to Debtor’s ‘action . . . in filing the petition[.]’ . . . These factors include, but are not limited to, the motivation of the debtor and his or her sincerity in seeking Chapter 13 relief, the debtor’s degree of effort, the frequency with which the debtor has sought relief under the Code, and the circumstances under which the debtor has contracted his or her debts and has demonstrated good faith in dealing with creditors. . . . [Section] 1325(a)(7) provides no additional authority to dismiss a petition. . . . The familial nature of this dispute therefore influences the Court and, absent additional evidence, tends to support a finding that Debtor is not abusing the provisions, purposes or spirit of bankruptcy law, but rather, attempting to claw away from her emotional and tumultuous past in the hopes of obtaining a fresh start.”).

In re Powers, 554 B.R. 41 (Bankr. N.D.N.Y. July 13, 2016) (Davis) (In a Chapter 13 case dominated by matrimonial problems and vindictive former in-laws, evidence of a lack of good faith in proposing the plan included that debtor did not acknowledge or account for significant tax refunds, some expenses were exaggerated or nonexistent and multiple amendments to schedules failed to clarify true financial picture.).

Wheeler v. Wheeler (In re Wheeler), 511 B.R. 240, 249 (Bankr. N.D.N.Y. June 9, 2014) (Cangilos-Ruiz) (Case filed in bad faith under § 1325(a)(7) as a "dilatory tactic to interrupt the final stage of . . . lengthy litigation" in which debtor had fabricated evidence, disregarded state court orders and been repeatedly sanctioned. Attorney fees awarded as sanction under Bankruptcy Rule 9011(c).).

In re Burnett, No. 10-31788, 2011 WL 204907, at *4 (Bankr. N.D.N.Y. Jan. 21, 2011) (Cangilos-Ruiz) (It is not "per se bad faith" for Chapter 13 debtors to exclude Social Security benefits from projected disposable income. "This court respectfully disagrees with the holding of [In re Cranmer, 433 B.R. 391 (Bankr. D. Utah June 28, 2010) (Thurman),] and believes such interpretation is inconsistent with the holding of [Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 177 L. Ed. 2d 23 (June 7, 2010)]. If Congress specifically excluded social security income from the definition of current monthly income and, therefore, disposable income pursuant to Code § 1325(b)(2), then even under the flexible approach articulated by Justice Alito who wrote the majority opinion, 'projected' disposable income would also exclude social security income absent a debtor's voluntary commission of social security income into a plan. Furthermore, . . . the anti-assignment provision of 42 U.S.C. § 407 was not invoked in the BAPCPA amendments as mandated by statute to warrant such an interpretation nor does the social security income represent a 'change' in future income of the debtor as contemplated in Hamilton.").

In re Paley, 390 B.R. 53, 58-60 (Bankr. N.D.N.Y. June 3, 2008) (Littlefield) (Short-duration Chapter 13 plans that pay attorney fees and nothing to unsecured creditors fail good-faith analysis notwithstanding satisfaction of § 1325(b). Consolidated debtors proposed 9-month and 12-month plans that paid attorney fees and trustee commissions but nothing to unsecured creditors. Debtors had CMI less than applicable median family income. "BAPCPA has not ended the good faith/projected disposable income analysis. . . . Congress did not intend to abrogate the good faith requirement of § 1325(a)(3) . . . . Satisfaction of § 1325(b) does not displace the good faith analysis required under § 1325(a)(3). . . . A plan whose duration is tied only to payment of attorney's fees simply is an abuse of the provisions, purpose, and spirit of the Bankruptcy Code. These cases, basically Chapter 7 cases hidden within Chapter 13 petitions, blur the distinction between the chapters into a meaningless haze. To allow them to go forward would, in effect, judicially invalidate § 727(a)(8).").

Western District of New York

In re Meserole, No. 17-11933 MJK, 2018 WL 558471, at *2–*3 (Bankr. W.D.N.Y. Jan. 24, 2018) (Kaplan) (When confirmed plan in prior Chapter 13 case cured mortgage defaults and required debtor to pay $60,000 balloon and debtor failed to make the balloon payment, good-faith requirement and binding effect of confirmation in § 1327(a) prohibit confirmation of plan in subsequent case that would pay the balloon in equal installments over 60 months. “[W]hat is permissible when there is no objection by a creditor who relied upon the binding effect of an earlier plan is not permissible over such objection if the creditor will suffer ‘substantial prejudice’ if the binding effect of the previous confirmed plan is ignored in favor of the plan proposed in the subsequent case. . . . By no means does this Court suggest that this Debtor is not acting in ‘good faith.’ She is simply trying to save her home. But there is a difference between acting in good faith and proposing a ‘good faith’ plan. The latter requires ‘fundamental fairness’ to the objecting creditor, and that is lacking here. . . . [T]his second filing by the Debtor attacks an essential element of the plan that was confirmed in her first case. She had used 11 U.S.C. § 1322(c)(2) to deal with her pre-petition defaults in mortgage payments . . . and counted on speculative prospects to meet the balloon payment. Because she could not afford to amortize the upcoming balloon payment over the life of the Plan, she could not have saved her home from foreclosure but for the use of § 1322(c)(2) to cure the pre-petition arrears over the life of the five-year plan. . . . [T]here was no exceptional, unanticipated change in circumstances that might cause the Court to conclude that the second case was filed in good faith.”).

In re Wrobel, 533 B.R. 863 (Bankr. W.D.N.Y. July 23, 2015) (Kaplan) (In long-running fee dispute between debtor and former divorce counsel, 27% plan is offered in good faith notwithstanding that Chapter 13 case was filed solely to deal with $120,000 fee claim and debtor created an exemption to defeat the claim of former counsel (see 508 B.R. 271 (Bankr. W.D.N.Y. Mar. 28, 2014) (Kaplan).).

In re Wrobel, 525 B.R. 211, 217-18 (Bankr. W.D.N.Y. Feb. 13, 2015) (Kaplan) (10% plan lacked good faith when only creditor—former matrimonial counsel—secured large judgment that debtor immediately used to buy an exempt homestead. "[I]f the Debtor wants a Chapter 13 discharge, she must propose a Plan that treats [former matrimonial counsel] with an honest intention and purpose to pay it fairly . . . . Simply committing all of one's non-exempt assets and meeting the 'projected disposable income' test, does not compel a ruling that a plan . . . meets the 'good faith' test of 11 U.S.C. § 1325(a)(3). Rather, 'honesty of purpose' requires that the Debtor propose a 'fundamentally fair' treatment to her only meaningful creditor despite all of the hostility, emotion and expense that naturally evolved from the events described above[.]").

In re Johnson, 428 B.R. 22, 25 (Bankr. W.D.N.Y. Apr. 21, 2010) (Bucki) (Plan proposing to modify city's real property tax liens on property acquired by debtor 10 days prior to bankruptcy filing was not filed in good faith under § 1325(a)(3). Prior owner of property had not paid real estate taxes for eight years and transferred property to debtor, a tenant, for $1. "[A] bankruptcy petition is not filed in good faith when its primary purpose is to resolve financial problems that the debtor assumed so shortly prior to the order for bankruptcy relief.").

In re Johnson, 428 B.R. 22, 25 (Bankr. W.D.N.Y. Apr. 21, 2010) (Bucki) (Chapter 13 petition was not filed in good faith when 10 days before filing debtor acquired property for $1 and plan proposed to modify liens for taxes that had been unpaid for eight years by prior owner. "[A] bankruptcy petition is not filed in good faith when its primary purpose is to resolve financial problems that the debtor assumed so shortly prior to the order for bankruptcy relief.").

In re Daniel-Sanders, 420 B.R. 102, 105 (Bankr. W.D.N.Y. Dec. 30, 2009) (Bucki) (Unmarried debtor had reasonable need for two cars but failed good-faith analysis when second car was too expensive. Debtor had agreement to provide father of her children a car while she was at work and he took care of kids. Two cars were reasonably necessary for purposes of Local Standards ownership and expense deductions but second car was subject to debt of $27,163. "[P]rojected disposable income will not necessarily constitute a payment sufficient to satisfy the mandate of good faith in section 1325(a)(3). . . . [T]his court finds no lack of good faith in the mere retention of a second car. Rather, the issue of concern is whether the cost of satisfying the outstanding car loans will exceed the limits of reasonableness, to the effect of compromising a good faith distribution to unsecured creditors. . . . In satisfying the requirements of good faith, a Chapter 13 plan may not allow luxury expenses that impact adversely upon the rights of unsecured creditors. . . . In the context of current market conditions, the repayment of an auto loan in the amount of $27,163 would clearly represent a luxury expense. . . . Debtors should appropriately expense the reasonable cost of a serviceable automobile, but not costs that substantially exceed the typical expenditures of others in the community. . . . I have looked to statistics issued by the Research and Innovative Technology Administration of the Bureau of Transportation Statistics. . . . [T]he average cost for the acquisition of a vehicle, whether new or used, was $12,907. In my view, a variance from this amount by as much as twenty percent might be reasonable. . . . For ease of application, I will round this value upward to $16,000. Generally, therefore, I will treat any car loan in excess of this sum as a luxury expense.").

In re LaSota, 351 B.R. 56, 62-63 (Bankr. W.D.N.Y. Sept. 19, 2006) (Kaplan) (Arguably in dicta, debtors with CMI above median income who show disposable income on Schedules I and J but less or none on Form B22C are subject to "rough justice" and must commit larger amount to confirm a plan. "[T]he word 'projected' cannot be meaningless given that the Form 22C computation does not discern between secured debts for necessities and secured debts for luxuries. Rather, 'Projected disposable income,' properly applied, often requires surrender of those luxuries to repossession or foreclosure, if confirmation of a less-than-100% Plan is to be won. Whether it is the application of the word 'projected' alone or the application of the 'good faith' requirement alone that requires such a result is of no practical moment. The flaw in the reasoning of the Courts in the cases to the contrary is in the failure to recognize the profound truth that Chapter 13 always was, and still remains, 'rough justice.' There is no precision in it, and there never was. Any effort to parse its components and reconcile them is, and always was, doomed to failure. . . . [T]he Trustee is the voice of the community, and that fact is why he or she is the 'representative of the estate.' . . . He is not a mere cipher or bureaucrat throwing issues to the Court for deliberation without care. . . . This writer will continue to examine each case on its own merits, using the 'good faith' test and the flexibility of the term 'projected' disposable income to inform the Court's evaluation of the Form 22C calculation of CMI, at the time of confirmation, and only considering the Trustee's recommendation.").

Vermont

Tennessee Commerce Bank v. Hutchins, 409 B.R. 680 (D. Vt. July 31, 2009) (Murtha) (Plan was proposed in good faith notwithstanding that debtor failed to note lienholder on vehicle title; lienholder shared responsibility for failure to properly perfect lien under Vermont law.), aff'g, 400 B.R. 403 (Bankr. D. Vt. Jan. 30, 2009) (Brown) (Debtor's prepetition failure to perfect car lender's security interest was not bad faith for purposes of plan confirmation; under Vermont law, lienholder had responsibility to perfect lien on car title.).

In re Nardini, No. 15-10244, 2015 WL 9438292, at *3 (Bankr. D. Vt. Dec. 23, 2015) (unpublished) (Brown) (Not bad faith under § 1325(a)(3) that plan is dependent on success of mortgage modification process ongoing after confirmation. Plan authorized the debtor to make a reduced payment while the mediation process continued contingent upon the outcome of the mediation. "It is not unreasonable to rely upon a mortgage modification . . . . The Creditor seeks a bad faith finding premised solely on the Debtor's filing of a plan which requires a loan modification in order to be feasible. That is legally insufficient to establish bad faith.").

In re Ladieu, No. 14-10551, 2015 WL 3503941 (Bankr. D. Vt. June 1, 2015) (Brown) (Not bad faith or unfair manipulation of Bankruptcy Code for plan to pay 18% of debt declared nondischargeable under § 523(a)(6) in prior Chapter 7 case. Ten minor discrepancies in schedules and a carefully planned prepetition Disney World vacation did not prove lack of good faith.).

In re Austin, 372 B.R. 668, 683 (Bankr. D. Vt. Aug. 7, 2007) (Brown) (For debtor with CMI greater than applicable median family income, question whether debtor has committed sufficient income to plan is decided by § 1325(b), not by good-faith test in § 1325(a)(3). "[P]ost-BAPCPA, '[t]he disposable income a debtor decides to commit to his plan is not the measure of his good faith in proposing the plan.'").

C. Third Circuit

In re Richmond, No. 08-1888, 2009 WL 2008430 (3d Cir. July 13, 2009) (unpublished) (Barry, Smith, Restani) (Transfer of marital residence to wife for $1.00 two years and three weeks before Chapter 13 filing lacked evidence of actual intent to hinder, delay or defraud creditors when spouse immediately mortgaged property and used $200,000 to pay debtor's gambling debts; casino's claims of bad faith were based on based on “insinuation of impropriety” unsupported by evidence.); aff'g 2008 WL 577294 (D.N.J. Feb. 29, 2008).).

New Jersey

In re Richmond, No. 07-5417 (RMB), 2008 WL 577294, at *5 (D.N.J. Feb. 29, 2008) (unpublished) (Bumb) (Debtor's good faith is demonstrated by proposal to pay creditors for full 60 months, with persuasive evidence that debtor had made proposed plan payments for prior 12 months.).

In re Richmond, No. 07-5417 (RMB), 2008 WL 577294, at *5 (D.N.J. Feb. 29, 2008) (unpublished) (Bumb) (Plan funded by voluntary payments from debtor's spouse, with payments in excess of what is required under Form B22C, reflects debtor's good faith and sincerity.).

In re Konowicz, 470 B.R. 725, 730 (Bankr. D.N.J. May 17, 2012) (Kaplan) (Good faith is independent basis to consider economic components notwithstanding compliance with disposable income test; plan that retains 6,100-square-foot home at cost of $5,857.13 per month while paying only $17,810 to unsecured creditors over 60 months is not filed in good faith. "'This court agrees with those decisions holding that § 1325(a)(3)'s good faith test is an independent authority for examining economic components of a proposed plan, even where the disposable income test is satisfied.'").

In re Scotto-DiClemente, 459 B.R. 558, 569-70 (Bankr. D.N.J. Nov. 18, 2011) (Kaplan) (Although debtor is eligible to file Chapter 13 notwithstanding ineligibility for discharge because of § 1328(f), good faith requires purpose other than simply stripping off wholly unsecured junior liens; debtor was ineligible for Chapter 13 because in rem claims remaining after Chapter 7 discharge must be added to unsecured debt, causing debtor to exceed debt limit. "What the court cannot abide are 'no discharge' Chapter 13 cases which are filed solely to avoid liens or which undertake to cure recently 'fabricated' arrears incurred as part of a stratagem to sidestep the limitations of [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992)]. An illustration of such a proscribed manipulation would be if a debtor were found to have intentionally ceased paying a first mortgage after the filing of a Chapter 7 (having been current on the mortgage prior to the commencement of the case) in order to create a modest arrearage to be treated in the ensuing Chapter 13 case. That being said, the Court finds that the Debtor in this case is proceeding towards a valid reorganization goal; the submitted plan represents his best efforts to pay creditors, satisfy mortgage arrears and comply with his responsibilities under the Code."), reconsideration denied, 463 B.R. 308 (Bankr. D.N.J. Jan. 25, 2012) (Kaplan).).

In re Gloster, 459 B.R. 200 (Bankr. D.N.J. Oct. 13, 2011) (Winfield) (Debtor ineligible for discharge because of § 1328(f) filed good-faith Chapter 13 case and plan that strips off wholly unsecured junior lien. Plan will cure default on first mortgage, and debtor's financial circumstances improved during five months between prior Chapter 7 case and current Chapter 13 case.).

In re Amos, 452 B.R. 886, 893-94 (Bankr. D.N.J. June 28, 2011) (Lyons) (Although debtors have negative disposable income even if ongoing and arrearage payments on luxury/investment property are disallowed, good-faith test in § 1325(a)(3) denies confirmation when plan would retain luxury/investment property and pay unsecured creditors nothing. "This court agrees with those decisions holding that § 1325(a)(3)'s good faith test is an independent authority for examining economic components of a proposed plan, even where the disposable income test is satisfied. Indeed, the court believes that [Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 177 L. Ed. 2d 23 (June 7, 2010),] supports this conclusion, as it rejected the idea that § 1325 represented an implicit limitation on the preexisting discretion of bankruptcy courts. . . . [D]eductions used in calculating a debtor's projected disposable income, even when those deductions are expressly authorized by statute, are not exempt from a separate good faith analysis. . . . [T]he Amoses propose to obtain a chapter 13 discharge of over $75,000 of debt, without repayment of any portion thereof, while paying more than $2,500 per month, over 60 months, towards non-essential property. The court finds this to be an abuse of chapter 13, which should serve as a repayment tool. . . . The architecture of chapter 13 is essentially a bargain, allowing debtors to keep property only by agreeing to make some meaningful payment to creditors.").

In re Roth, No. 10-13287/JHW, 2010 WL 2485951 (Bankr. D.N.J. June 14, 2010) (unpublished) (Wizmur) (Dismissal of Chapter 13 case for bad faith either under § 1307(c) or because case was not filed in good faith under § 1325(a)(7) requires an evidentiary hearing at which the debtor has the burden of proof.).

In re Nuttall, No. 06-14233 (GMB), 2007 WL 128896, at *6 (Bankr. D.N.J. Jan. 11, 2007) (unpublished) (Plan that would pay 1.5% to victim of aggravated assault is not proposed in good faith. "This Plan proposes a mere pittance—certainly no substantial payments—to be paid to his creditor, the victim of a malicious injury inflicted by the Debtor, an injury for which Mr. Nuttall pled guilty to criminal aggravated assault and is making small restitution payments of $130 per month. . . . Mr. Nuttall filed his Plan with the intention of paying as little as possible on the personal injury claim and receiving the benefit of a discharge of that which he does not wish to pay.").

Pennsylvania

Eastern District of Pennsylvania

City of Philadelphia v. Minor (In re Minor), No. 15-3562, 2016 WL 1256286, at *14 (E.D. Pa. Mar. 30, 2016) (Rufe) (Not bad faith for § 1325(a)(3) and (a)(7) purposes for elderly home owner to use Chapter 13 to redeem home from prepetition tax sale. "Debtor is an elderly man whose income in the year preceding his Chapter 13 petition totaled $5,000, whose home was sold for $12,500 at a tax sale, and who . . . could not afford to pay without a Chapter 13 Plan that permitted him to pay the debt in installments. It is not bad faith for a debtor who is financially distressed to file a Chapter 13 petition in order to take advantage of an applicable provision of the bankruptcy code. . . . [A] debtor's previous poor financial management alone is not bad faith . . . .").

In re Egan, 458 B.R. 836, 850-51 (Bankr. E.D. Pa. Aug. 30, 2011) (Coleman) (Rejecting Burden v. Seafort (In re Seafort), 437 B.R. 204 (B.A.P. 6th Cir. Sept. 14, 2010) (Boswell, McIvor, Shea-Stonum), debtors are not limited to amount of 401(k) contributions at the petition but may increase contributions when 401(k) loans are repaid during the Chapter 13 case, subject to review for good faith. "[W]here the facts of a specific case indicate that a debtor may be attempting to game the system by increasing the amount of pre or post-petition 401(k) contributions, courts should rely on the good faith requirement of § 1325(a)(3) to deny plan confirmation. . . . The Trustee presents no evidence of bad faith other than the Proposed Plan's alleged failure to allocate the entirety of the Debtors' projected disposable income. . . . Having found that § 541(b)(7) contains no basis to adopt a per se rule prohibiting increases in post-petition 401(k) contributions, this Court finds that, absent additional circumstances, bad faith cannot be inferred from the Debtors' decision to increase their post-petition 401(k) plan contributions. . . . Debtors applied the proceeds of the 401(k) loans to existing indebtedness . . . . As a result, the Debtors do not present the case where they used their respective 401(k) loans to incur additional indebtedness or to make additional expenditures that otherwise reduced the pool of funds available to repay their creditors. . . . Debtors are close to retirement age and have few assets set aside to provide for their impending retirements. . . . Also weighing in favor of a finding of good faith, the Debtors, if forced to forego the Proposed Contributions, will be deprived of the benefit of the matching contributions provided by their respective employers.").

In re Manno, No. 08-15588bf, 2009 WL 236844, at *7 n.9 (Bankr. E.D. Pa. Jan. 30, 2009) (Fox) ("[W]ithout now deciding whether § 1325(a)(7) imposes a different good faith standard, or replaces section 1307(c) as a basis for dismissal," court applies In re Lilley, 91 F.3d 491 (3d Cir. 1996), totality-of-circumstances test to find bad faith in serial filing on eve of state court trial that had been pending for three years. Debtor did not argue that § 1325(a)(7) should control and creditor sought dismissal under § 1307(c). Citing In re Torres Martinez, 397 B.R. 158, 165 (B.A.P. 1st Cir. 2008), "[a]t least one court has implied that the obligation of a chapter 13 debtor to commence a chapter 13 case in good faith now resides in section 1325(a)(7) rather than section 1307(c).").

In re Roberts, No. 07-15653DWS, 2008 WL 4279549, at *3 (Bankr. E.D. Pa. Sept. 17, 2008) (unpublished) (Sigmund) (Lack of good faith not implicated when debtors with CMI greater than applicable median family income have monthly disposable income of negative $776 on Form B22C but net monthly income of $384 on Schedules I and J. "Congress's intention in amending the disposable income test was to substitute a more objective standard that would leave little room for judicial discretion. . . . [T]he good faith paradigm has no place in this analysis and a debtor's economic effort must be measured by the above provisions of the Code [§ 1325(b).]".).

Jensen v. Froio (In re Jensen), 369 B.R. 210, 234-35 (Bankr. E.D. Pa. June 11, 2007) (Frank) (Noting that Third Circuit has not yet passed upon meaning of good faith in § 1325(a)(5) but finding guidance in § 1307(c) discussion in In re Lilley, 91 F.3d 491 (3d Cir. 1996), debtor's prepetition undisciplined habits and mismanagement of mother's money "was the result of bad judgment, not bad faith. . . . [F]or a debtor's spending habits to take on bad faith significance, ordinarily there must be some additional aggravating factors at issue, such as the debtor's concealment of assets, falsification of records, transfer of assets beyond the reach of creditors or some other behavior designed to interfere with the 'orderly judicial process for resolution of . . . debt.'").

In re Saleem, No. 05-15898, 2006 WL 6659635 (Bankr. E.D. Pa. Mar. 22, 2006) (Frank) (Plan that sought additional time to complete sale lacked good faith when sale deadline was set in order that conditioned the filing of the current case on sale by missed deadline. Order dismissing prior case barred refiling without court permission. Order allowing current filing was conditioned that sale agreement would be in place within nine months else case would be dismissed. Debtors failed to present agreement of sale and now sought additional time in proposed plan. Attempt to obtain additional time was inconsistent with prior order, and plan lacked good faith.).

Middle District of Pennsylvania

Hackerman v. Demeza, No. 1:17-CV-395, 2017 WL 3601954 (M.D. Pa. Aug. 22, 2017) (Caldwell) (Evidence of good faith included that debtor had mounting tax liabilities in addition to a large potential tort claim for the death of a horse, the debtor’s transfer of an interest in property to a family member was explained and there was no evidence of material misrepresentations or concealment of assets.).

In re Young, No. 1-12-bk-06245 RNO, 2013 WL 6223831 (Bankr. M.D. Pa. Dec. 2, 2013) (Opel) (Not bad faith that filing motivated by former spouse's efforts to collect judgment for breach of Marriage Settlement Agreement. Debtor credibly did not believe transfer of property from herself to joint ownership with her new husband would trigger sale clause in Marriage Settlement Agreement.).

In re Young, No. 1-12-bk-06245 RNO, 2013 WL 6223831 (Bankr. M.D. Pa. Dec. 2, 2013) (Opel) (Same totality-of-circumstances test applies to determine bad faith for purposes of confirmation under § 1325(a)(7) and § 1325(a)(3) or dismissal under § 1307.).

In re Fickel, Nos. 1-07-bk-02822 RNO, 1-07-bk-02824 RNO, 2008 WL 1710102 (Bankr. M.D. Pa. Apr. 10, 2008) (Opel) (Objection to confirmation for lack of good faith shifts burden to debtor to demonstrate good faith; applying In re Lilley, 91 F.3d 491 (3d Cir. 1996), and In re Myers, 491 F.3d 120 (3d Cir. 2007), totality of circumstances demonstrates good faith. That most obligations were business debts from failed venture has slight weight in good-faith determination. No sinister motives were found in filing two months after closing of business.).

In re Fickel, Nos. 1-07-bk-02822 RNO, 1-07-bk-02824 RNO, 2008 WL 1710102 (Bankr. M.D. Pa. Apr. 10, 2008) (Opel) (Prepetition transfers of assets are not per se evidence of bad faith; debtors were forthcoming and did not transfer assets prepetition with motive of harming creditors. Substantial debt resulted from failed business venture.).

In re Porter, 370 B.R. 891, 893 (Bankr. M.D. Pa. June 15, 2007) (On court's own motion, plan lacks good faith that would defer distributions to a mortgage holder for 48 months pending sale or refinance. "No explanation has been tendered by the Debtors why an immediate liquidation of their home would prevent a fresh start or why this residence is necessary for successful reorganization.").

Western District of Pennsylvania

In re McKinney, 507 B.R. 534, 551-52 (Bankr. W.D. Pa. Mar. 18, 2014) (Agresti) (Chapter 13 filed to deal with equitable distribution award that would be nondischargeable in Chapter 7 is not necessarily filed in bad faith; neither is it bad faith that the debtor filed a few days before a large equitable distribution payment was due that would become dischargeable in a Chapter 13 case. "The Third Circuit has expressly rejected 'the question of whether the debt would be non-dischargeable in a Chapter 7 proceeding' as a relevant factor in the determination of whether a Chapter 13 case was filed in good faith. . . . [E]xceptions to a Chapter 13 discharge are narrower than the exceptions to a Chapter 7 discharge and therefore allow a debtor to discharge in Chapter 13 debts that are in the nature of a property settlement.").

In re Young, 467 B.R. 792 (Bankr. W.D. Pa. Mar. 30, 2012) (Deller) (Not bad-faith filing that novel legal arguments failed with respect to avoidance or modification of lien of condominium association. Condominium association lien was security interest that was neither avoidable under § 522(f) nor subject to modification. Debtor must file amended plan, providing for full payment of lien.), rev'd and remanded, Young v. 1200 Buena Vista Condos., 477 B.R. 594 (W.D. Pa. Aug. 27, 2012) (Schwab).).

D. Fourth Circuit

Gorman v. Cantu, 713 F. App'x 200, 203–04 (4th Cir. Dec. 18, 2017) (Diaz, Thacker, Harris) (Converting pension loan repayment into pension contribution is not bad faith when pension contribution is less than maximum allowed amount and debtor had some history of making pension contributions. Showing of good faith is minimum requirement for exclusion of postpetition retirement contributions from disposable income. Over dissent, the Circuit panel does not resolve propriety of pension contributions. “[C]ourts have come to ‘three divergent’ conclusions as to whether debtors may exclude voluntary retirement contributions from disposable income, turning largely on their differing interpretations of 11 U.S.C. § 541(b)(7) . . . . This appeal, however, does not require that we resolve that statutory issue. . . . [T]he Trustee argues . . . that a showing of good faith is a minimum requirement for exclusion of post-petition retirement contributions, and . . . that the bankruptcy court erred in its good-faith determination. . . . The bankruptcy court’s finding of good faith in this case is not clearly wrong. . . . That the Debtor sought to resume making contributions does not demonstrate bad faith. . . . [T]he Debtor’s proposed annual contribution of approximately $3,200 is well below the maximum allowable contribution of $18,000, and the Debtor has no other retirement benefits.”).

Gorman v. Wolf (In re Wolf), No. 14-1346, 2014 WL 5754025 (4th Cir. Nov. 6, 2014) (unpublished) (Wilkinson, Shedd, Floyd) (Applying Milavetz v. United States, 559 U.S. 229, 130 S. Ct. 1324, 176 L. Ed.2d 79 (Mar. 8, 2010), not bad faith that debtor made eve of bankruptcy purchase of car because debtor did not seek to discharge the car loan in the Chapter 13 case.).

Branigan v. Bateman (In re Bateman), 515 F.3d 272, 283 (4th Cir. Feb. 4, 2008) (Williams, Duncan, Bailey) (Not bad faith for purposes of § 1325(a)(7) to file Chapter 13 petition when debtor is not eligible for discharge under § 1328(f). "The availability of a discharge is only one factor relevant in considering whether a plan was proposed in bad faith, and that factor standing alone is insufficient to support a finding of bad faith. . . . Indeed, a Chapter 13 debtor may not always be motivated by the availability of a discharge, so courts would be wrong to impute bad faith to a Chapter 13 petitioner simply because discharge was unavailable. . . . [I]n many Chapter 13 cases, it is the ability to reorganize one's financial life and pay off debts, not the ability to receive a discharge, that is the debtor's 'holy grail.'").

Maryland

Ekweani v. Thomas, 574 B.R. 561, 569-70 (D. Md. June 26, 2017) (Bredar) (“[T]he factor that stands out beyond all others is the repeated bankruptcy filings. Between the Ekweanis, they have filed six different bankruptcy petitions since 2008, and all of them have been dismissed . . . . It is reasonable to infer they are serial filers who have abused the spirit of the bankruptcy laws as well as the automatic stays and co-debtor stays granted by those laws. In addition, the obvious inadequacy of the Plan to protect creditors when it proposed an unrealistic payment schedule and when it clearly did not comply with the bankruptcy laws militates against finding good faith.”).

In re Mulhern, No. 12-20857PM, 2013 WL 3992458, at *1 (Bankr. D. Md. Aug. 2, 2013) (Mannes) (Citing Branigan v. Davis (In re Davis), 716 F.3d 331 (4th Cir. May 10, 2013) (Diaz, Niemeyer, Keenan), Chapter 20 case filed in bad faith "because the sole purpose of the second filing was to enable Debtors to avoid a junior lien on their home.").

In re Davis, 447 B.R. 738, 750-51 (Bankr. D. Md. Mar. 30, 2011) (Lipp) (Plan that strips off wholly unsecured third lien in Chapter 13 case filed 15 months after discharge in Chapter 7 case is proposed in good faith notwithstanding § 1328(f) when debtors are not abusive filers; lien stripping is not dependent on discharge. "This is not a case where the Debtors are attempting to strip off liens and not pay anything to unsecured creditors. The Debtors are applying all of their disposable income . . . . [T]he Debtors have no non-exempt property . . . . [T]he Debtors are not 'serial filers' in the abusive sense of the term. . . . The Debtors filed their Chapter 13 case to deal with their mortgage arrears and other new debt, and to take advantage of the Chapter 13 lien stripping provisions. . . . [T]he fifteen-month period that elapsed between the Debtors' Chapter 7 and Chapter 13 filings does not indicate a lack of good faith. During that time, the Debtors found new employment and also incurred new consumer debt and mortgage arrears. These changed circumstances justify a second filing and the Debtors' increased income indicates that the Debtors will be able to comply with the terms of the Amended Plan."), aff'd, No. 12-1184, 2013 WL 1926407 (4th Cir. May 10, 2013) (Niemeyer, Keenan, Diaz).).

In re Pollard, No. 10-17396PM, 2011 WL 576599, at *2-*3 (Bankr. D. Md. Feb. 9, 2011) (Mannes) (Considering totality of circumstances and nonexclusive factors in Deans v. O'Donnell, 692 F.2d 968 (4th Cir. Sept. 23, 1982) (Winter, Phillips, Murnaghan), and Neufeld v. Freeman, 794 F.2d 149 (4th Cir. June 18, 1986) (Phillips, Sneeden, Sentelle), case was filed in good faith for § 1325(a)(7) purposes eight months after discharge in prior Chapter 7 case notwithstanding that plan will strip off wholly unsecured junior lien that could not be dislodged in the Chapter 7 case because of Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992). "[I]t has been held in this circuit that the filing of a case under Chapter 13 less than thirty days after the closing of a case under Chapter 7, in itself, does not indicate a lack of good faith on the part of a debtor. . . . [A]t the time Debtors filed the bankruptcy case under Chapter 7, they did not do so with the intention of following up with a case under Chapter 13 so as to enable the outcome sought here. Had the same counsel filed both cases, the court might look at the matter differently, but that is not the case here. The court is impressed by the changed financial situation of the parties and finds neither egregious pre-filing conduct on their part nor an attempt to manipulate the bankruptcy system. . . . [T]here was an eight month hiatus between the closing of the first case and the filing of the second case. . . . The two filings accomplished a result often permitted in cases under Chapter 20, and the court does not find that this case works an abuse of the Bankruptcy Code or a manipulation of the bankruptcy system. While this case will not result in the issuance of a discharge, that is of no moment as the Debtors' personal liability on the SunTrust obligations has been discharged, leaving only in rem liability . . . . [T]he party affected by the Debtors' Chapter 20 Plan did not come forward to express the slightest interest in opposing Debtors' efforts. . . . Inasmuch as the senior lien retained by SunTrust Bank is massively undersecured, it appears to the court that SunTrust Bank receives a substantial benefit from keeping these Debtors in the house and by Debtors making payments due under the senior lien that, if foreclosed upon, would not realize anything close to the amount due.").

In re Wick, 421 B.R. 206, 215-16 (Bankr. D. Md. Jan. 5, 2010) (Keir) (Not bad faith that projected disposable income calculation allows debtor to deduct an objectively unreasonable mortgage payment when no other facts suggest fault by debtor. Debtor with monthly net income of $8,756 deducted first mortgage of $4,857 to arrive at projected disposable income. Plan proposed to pay 15% of unsecured claims. Applying Deans v. O'Donnell, 692 F.2d 968 (4th Cir. Sept. 23, 1982) (Winter, Phillips, Murnaghan), and Neufeld v. Freeman, 794 F.2d 149 (4th Cir. June 18, 1986) (Phillips, Sneeden, Sentelle): "The percentage of proposed repayment is not minimal. . . . The duration of the plan is for the maximum permitted by the statute. . . . The real focus is on the Debtor's prepetition conduct in entering into the mortgage debt which put such a heavy burden upon the disposable income. . . . Debtor did not intentionally create the financial situation now presented. At a time when the real estate market was extremely strong Debtor decided to relocate her family's residence and apparently 'trade up' by some amount the size and value of the residence. . . . After incurring the new mortgage . . . the market literally crashed before Debtor could sell the Former Home. This saddled Debtor with two mortgages which Debtor ultimately could not sustain. . . . It therefore appears unsupportable that where no other facts support a lack of good faith, the seeming disproportionate result of the calculation of disposable income by itself would provide a basis to find that the Chapter 13 plan is not proposed in good faith. . . . It is true that some courts nonetheless have imposed a further test of 'reasonably necessary' upon expenses of an above median income debtor even though those expenses are expressly allowed as part of the determination of disposable income under Section 1325(b) referring to Section 707(b)(2)(A) and (B). However, in the absence of facts demonstrating that projected disposable income will be actually significantly different than the formula derived disposable income, it appears Congress intends that the formula meets the requirement of Section 1325(b)(1)(B). A plan that proposes to pay at least the projected disposable income of debtor, in the absence of other facts, cannot be found to be in bad faith, simply because it does not pay more.").

In re Johnson, No. 05-13865-DK, 2008 WL 821848 (Bankr. D. Md. Mar. 25, 2008) (Keir) (Debt that would be nondischargeable in Chapter 7 is not per se indicator of bad faith at conversion to Chapter 13; however, prepetition misconduct—destroying secured property and untruthful testimony—were indicators of bad faith that justified denial of confirmation.).

In re Smith, No. 05-90649PM, 2006 WL 4748145, at *1 (Bankr. D. Md. May 26, 2006) ("New debtor syndrome" case was not filed in good faith for purposes of § 1325(a)(7); "[c]onsidering the totality of the circumstances, good faith would be evidenced by paying all creditors in full.").

North Carolina

Eastern District of North Carolina

In re Wolk, No. 17-00615-5-DMW, 2018 WL 1135935 (Bankr. E.D.N.C. Feb. 28, 2018) (Warren) (Debtor’s failure to amend schedules to reflect receipt of $4,456 tax refund is indicative of a lack of good faith for purposes of § 1325(a)(3).).

In re Brown, 546 B.R. 642, 649-50 (Bankr. E.D.N.C. Mar. 4, 2016) (Callaway) (For good-faith purposes, plan satisfies "unusual or exceptional problem" factor because debtor needs second car for use by adult daughter with five-year-old grandchild, but plan fails totality-of-circumstances analysis because daughter is likely to graduate from college and get a job in two years and debtor claims a stepfather as a household member without adequate proof. Plan for individual debtor proposed to keep two cars, one of which was used by the debtor's 27-year-old daughter for transportation to college and for the benefit of the debtor's five-year-old grandchild. "Ms. Brown satisfies the 'unusual or exceptional problem,' as she is forced to either support her adult child, or watch both her daughter and five-year-old grandchild go without. . . . [A] genuine need for two cars has been shown, being the daughter's transportation to school and the benefit of a small child . . . . On the other hand, . . . the adult daughter cannot reasonably expect unsecured creditors of her mother (not even her own creditors) to pay for a car entirely used by her. . . . [H]er daughter would likely graduate from community college 'in 2017, possibly get a job and get out,' . . . . When a change in income or expenses is 'known or virtually certain,' then the anticipated modification should be baked into the plan from its inception. . . . Ms. Brown does not appear to take any likely changes into account regarding the second automobile. She instead wants to bake the plan cake and eat it too.").

In re Barnes, No. 12-06613-8-RDD, 2013 WL 153848, at *8-*9 (Bankr. E.D.N.C. Jan. 15, 2013) (Doub) (Attorney fee only plan with early termination provision is not proposed in good faith. Citing Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 177 L. Ed. 2d 23 (June 7, 2010), "the 'forward-looking' approach is totally contradictory to the concept of a plan which includes an early termination provision. . . . [I]t is known or virtually certain that the debtor will continue to have the income to continue making payments for the duration of the thirty-six (36) or sixty (60) month period and will have the income available after attorney's fees are paid. . . . While 'good faith' does not necessarily require a substantial repayment to creditors, the proposed Plan, with the Trustee's early termination language, provides payment of only attorney fees. Such proposal does not strike this Court as a good faith attempt to repay pre-petition creditors.").

In re Mathis, No. 12-05618-8-RDD, 2013 WL 153833, at *8-*12 (Bankr. E.D.N.C. Jan. 15, 2013) (Doub) (Attorney fee only plan with early termination provision fails good-faith test. "Based on the Supreme Court decisions in [Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 177 L. Ed. 2d 23 (June 7, 2010), Ransom v. FIA Card Services, N.A., __ U.S. __, 131 S. Ct. 716, 178 L. Ed. 2d 603 (Jan. 11, 2011),] . . . this Court is compelled to adopt a forward-looking approach to determine projected disposable income and holds that the Applicable Commitment Period is a temporal requirement for all debtors. . . . [T]he 'forward-looking' approach is totally contradictory to the concept of a plan which includes an early termination provision. . . . [I]t is known or virtually certain that attorney's fees will be paid prior to the expiration of the applicable commitment period, which frees up additional projected disposable income to be received during the applicable commitment period for the benefit of unsecured creditors. . . . While 'good faith' does not necessarily require a substantial repayment to creditors, the proposed plan, with the Trustee's early termination language, provides payment of only attorney fees. Such proposal does not strike this Court as a good faith attempt to repay pre-petition creditors. . . . '[A]ttorney fee only' Chapter 13 petitions and plans are not per se filed in bad faith as the debtor, upon an objection by the Trustee or unsecured creditor, may be able to prove circumstances which would justify an attorney fee only case. Here, with the early termination provision, there are no priority or secured creditors other than the Trustee's fees and the Debtor's attorneys' fees. The plan is in essence only a payment plan for the attorneys' fees and this is unacceptable. Chapter 13 was not created as a vehicle for the payment of attorneys' fees only. . . . The Debtor is not adjusting anything. . . . [T]he early termination language in this case violates the good faith requirements of 11 U.S.C. § 1325(a)(3), (7).").

In re Pliler, 487 B.R. 682 (Bankr. E.D.N.C. Jan. 15, 2013) (Doub) (Certifies to Fourth Circuit question whether good-faith test can be satisfied when plan contains an "early termination" provision that would allow completion of payments in less than the applicable commitment period without payment to unsecured creditors.), aff'd, 747 F.3d 260 (4th Cir. Mar. 28, 2014) (Duncan, Wynn, Thacker).).

In re Tedder, No. 12-06232-8-RDD, 2013 WL 145416 (Bankr. E.D.N.C. Jan. 14, 2013) (Doub) (Attorney fee only plan with early termination provision is not proposed in good faith when all secured debt will be paid directly by the debtor and plan will terminate in less than applicable commitment period without payment to unsecured creditors.).

In re Tedder, No. 12-06232-8-RDD, 2013 WL 145416, at *12 (Bankr. E.D.N.C. Jan. 14, 2013) (Doub) (Attorney fee only plan with early termination provision is not proposed in good faith. "'[A]ttorney fee only' Chapter 13 petitions and plans are not per se filed in bad faith as the debtor, upon an objection by the Trustee or unsecured creditor, may be able to prove circumstances which would justify an attorney fee only case. Here, with the early termination provision, there are no priority or secured creditors paid through the plan other than the Trustee's fees and the Debtors' attorneys' fees. The plan is in essence only a payment plan for the attorneys' fees and this is unacceptable. Chapter 13 was not created as a vehicle for the payment of attorneys' fees only. . . . All of the Debtors' secured debts will be paid directly, outside of the plan. . . . The Debtors are not adjusting anything. The Debtors are cancelling and eliminating the claims of unsecured creditors while deciding to only pay their attorney. . . . There is little doubt that these types of plans are attempting to manipulate the Bankruptcy Code to discharge debts at the expense of creditors. . . . [T]he Debtors will pay attorney's fees and the Trustee's commission in thirty-three (33) months. At the time the plan will be confirmed it is known or virtually certain that the Debtors can pay $99.00 per month. As Debtors are above median-income debtors, they must do so for the sixty (60) month applicable commitment period.").

In re Stallings, No. 08-08973-8-ATS, 2009 WL 1241263 (Bankr. E.D.N.C. May 4, 2009) (Small) (Not bad faith for debtors who own four cars to list unencumbered car at Line 28 of Form B22C and to then list at Line 29 encumbered car with lowest average monthly payment; no provision of the Bankruptcy Code or of the Internal Revenue Standards requires debtors to list their expenses in a way that maximizes disposable income. It cannot be a lack of good faith that debtors listed their cars to maximize their expense deductions. Accord In re Harris, No. 08-08162-8-ATS, 2009 WL 1241267 (Bankr. E.D.N.C. May 4, 2009) (Small).).

In re Alston, No. 07-02100-5-ATS, 2008 WL 3981811 (Bankr. E.D.N.C. Aug. 22, 2008) (unpublished) (Small) (Although obligation in divorce decree to pay credit card debt is property settlement that is not entitled to priority payment in full, plan fails good faith requirement in § 1325(a)(3) when unsecured creditors will receive nothing and debtor is keeping an expensive car.).

In re Sewell, No. 07-00777-5-ATS, 2008 WL 8130029, at *4 (Bankr. E.D.N.C. Jan. 3, 2008) (Small) (Although obligation to pay former spouse $19,000 for second mortgage debt was not a DSO and could be paid less than in full, confirmation was denied for lack of good faith under § 1325(a)(3) based on small percentage payment proposed by plan. "Although the debtor's obligation . . . may not be a domestic support obligation, the debt is one that would be nondischargeable in a chapter 7 case. 11 U.S.C. §§ 727(b); 523(a)(15). Ms. Sewell's claim need not be paid in full for the plan to be confirmed, but her claim should receive more than is currently provided.").

In re Alexander, 344 B.R. 742, 752 (Bankr. E.D.N.C. June 30, 2006) (Leonard) (Disposable income test in § 1325(b), not good faith-test in § 1325(a)(3), determines entitlement of unsecured creditors in Chapter 13 case. "The Fourth Circuit in [Deans v. O'Donnell, 692 F.2d 968 (4th Cir. Sept. 12, 1982) (Winter, Phillips, Murnaghan),] made clear that there was no minimum repayment requirement in order to meet the good faith test. . . . [I]f a debtor follows the calculation method for determining disposable income under § 1325(b)(2), the debtor is not manipulating the statute. While this figure may differ from what was historically known to be 'disposable income,' the debtor is simply complying with the new law. . . . [T]he debtor's disposable income must be determined under § 1325(b) and not as an element of good faith under § 1325(a)(3) . . . . Congress demonstrated a determination to replace judicial discretion under general standards with precise rules-based calculations. . . . So long as the debtor calculates the projected disposable income with specific reference to the new definition of disposable income and commits that projected disposable income to pay unsecured creditors for the applicable commitment period, she is in good faith compliance with the Code.").

Middle District of North Carolina

In re Hubbard, 539 B.R. 484 (Bankr. M.D.N.C. Oct. 23, 2015) (Aron) (Bad faith for § 1325(a)(3) purposes in Chapter 20 case included no proposed payment to unsecured creditors, manipulation of income from business to produce no disposable income and multi-year delay of creditors that would result in a no-discharge case.).

In re Mazzarella, No. 10-81189, 2010 WL 4452352 (Bankr. M.D.N.C. Nov. 1, 2010) (Aron) (Zero percent plan lacked good faith when debtor retained two time-shares that were unnecessary for reorganization and 2008 Nissan Titan was a luxury.).

In re Mazzarella, No. 10-81189, 2010 WL 4452352, at *2 (Bankr. M.D.N.C. Nov. 1, 2010) (Aron) (Zero percent plan lacked good faith when debtor retained two time-shares and three vehicles. "The Debtor's retention of the 2008 Nissan Titan for the purpose of taking his household trash to the dump is an unnecessary luxury. In addition, when questioned about the retention of the two timeshares while paying a 0% dividend to unsecured creditors, the Debtor indicated that he had no reservations regarding the proposed plan. In total, the Debtor spends $938.24 per month on the Nissan Titan and the two timeshares. The retention of the unnecessary vehicle and the two timeshares, accompanied by the Debtor's indifference to paying any dividend to unsecured creditors, is evidence of his lack of good faith.").

In re Stanley, 441 B.R. 37, 41-43 (Bankr. M.D.N.C. Aug. 19, 2010) (Waldrep) (Plan was not proposed in good faith when debtor's unsecured creditors will receive 9% and nonfiling spouse's unsecured creditors will eventually be paid in full. Nonfiling spouse had $1,000 of unemployment income that would terminate in two months. Nonfiling spouse had separate expenses for automobile lease, credit card installment payments and student loan that totaled $756 per month. Nonfiling spouse contributed "little, if any," to joint household expenses. "The income and expenses of a non-filing spouse should be considered in determining whether a plan has been proposed in good faith under Section 1325(a)(3). . . . [T]he Debtor has not satisfied his burden to show that his plan was proposed in good faith. By claiming an expense of $395 so that Mrs. Stanley could make payments on her credit cards, thereby keeping such debts from falling into default, the Debtor proposed a plan that would pay off his wife's unsecured creditors in full, while his unsecured creditors would receive only 9% of their claims. Thus, the Debtor is attempting to force his unsecured creditors to subsidize the repayment of his wife's unsecured creditors. Mrs. Stanley contributes very little, if any, to their joint household expenses since most, if not all, of her income is directed to pay her credit card debt, lease payments, and student loan. Additionally, the unemployment income of Mrs. Stanley is expected to terminate very soon. . . . Once her unemployment income ceases, the Debtor's income will be the only source for paying their joint debts and Mrs. Stanley's debts. . . . [T]he proposed payment of a substantially higher dividend to the creditors of the non-filing spouse raises a serious question of good faith, which the court must view in the totality of the circumstances. In this case, the Plan proposes for M[r]s. Stanley's creditors to receive 100%, and the Debtor's creditors to receive only 9%, and all the while the Debtor would pay all, or almost all, of their joint household expenses. In the circumstances of this case, the Court finds that the Plan is fundamentally unfair to the Debtor's creditors.").

In re Walls, No. 10-80201, 2010 WL 2219329 (Bankr. M.D.N.C. June 2, 2010) (unpublished) (Carruthers) (Debtor failed to prove good faith under § 1325(a)(3) when unsecureds would be paid nothing while debtor retained vehicle costing more than $1,000 monthly, debtor continued to open and use credit card accounts until month before petition and debtor made no effort to find less expensive vehicle.).

In re Chanthaleukay, No. 09-11796C-13G, 2010 WL 55498, at *4 (Bankr. M.D.N.C. Jan. 7, 2010) (Stocks) (In Chapter 20 case in which Chapter 13 was filed one month before Chapter 7 was closed, plan was not proposed in good faith under Neufeld v. Freeman, 794 F.2d 149 (4th Cir. June 18, 1986) (Phillips, Sneeden, Sentelle). "Confirmation of the proposed plan would allow the Debtors to manipulate the system so as to obtain the benefits of Chapter 13 while retaining substantial disposable income that should be paid to unsecured creditors by a debtor receiving the benefits of Chapter 13." No unsecured creditors were listed in Chapter 13, and proposed plan would leave $300 in monthly disposable income that would not be paid to unsecured creditors, who had been discharged in Chapter 7.).

In re Parker, No. 08-81819C-13D, 2009 WL 1147949, at *2 (Bankr. M.D.N.C. Apr. 28, 2009) (Stocks) (Debtors with negative disposable income can make payments on a motorcycle without violating good-faith requirement in § 1325(a)(3) because disposable income would be negative even if motorcycle payments were excluded. Rule announced in In re Barr, 341 B.R. 181 (Bankr. M.D.N.C. Apr. 5, 2006) (Stocks), extends to debtors with CMI less than applicable median family income: "[T]he issue of whether the debtor is committing sufficient income to the plan should be determined under section 1325(b) rather than as an element of good faith under section 1325(a)(3).").

In re Walker, No. 07-11819, 2008 WL 2559420 (Bankr. M.D.N.C. June 23, 2008) (Waldrep) (Citing In re Murphy, 375 B.R. 919 (Bankr. M.D. Ga. 2007) (Walker), and In re Robinson, No. 07-41562-13, 2008 WL 2095349 (Bankr. D. Kan. May 16, 2008) (Karlin), filing third Chapter 13 case to bifurcate car claim that was insulated from § 506 in two prior failed Chapter 13 cases is not bad faith when circumstances changed and debtor did not time third case to take advantage of expiration of 910-day period.).

In re Cauthen, No. 06-11092, 2007 WL 1577860 (Bankr. M.D.N.C. May 31, 2007) (BAPCPA did not change the components of good faith for § 1325(a)(3) purposes; debtor's failure to completely and accurately answer questions and complete bankruptcy schedules was indicative of lack of good faith.).

In re Cauthen, No. 06-11092, 2007 WL 1577860 (Bankr. M.D.N.C. May 31, 2007) (Chapter 13 case 63 days after 144% title loan is not filed in good faith when primary purpose was to reduce interest rate; that plan would pay creditor in full with Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004), interest does not rescue the plan from lack of good faith.).

In re Barr, 341 B.R. 181, 184-86 (Bankr. M.D.N.C. Apr. 5, 2006) (Stocks) (Disposable income test in § 1325(b), not good-faith test in § 1325(a)(3), determines amount that must be paid to unsecured creditors. Applying § 707(b)(2)(A) and (B), debtor had disposable income of negative $76.47. According to Schedules I and J, debtor had actual disposable income exceeding $2,000 a month and more than $513 per month available for unsecured creditors. Trustee argued that good faith in § 1325(a)(3) prohibited confirmation. "Following the adoption of section 1325(b), most of the courts that considered the issue concluded that the adoption of section 1325(b) narrowed the focus for determining good faith under section 1325(a)(3) because the factors related to the debtor's ability to pay previously considered under the totality of the circumstances test were subsumed by the ability-to-pay test adopted in section 1325(b). . . . While BAPCPA made significant changes to section 1325(b), nothing in those changes or elsewhere in BAPCPA suggests any legislative intent that any section of the Bankruptcy Code other than section 1325(b) should be controlling in dealing with a Chapter 13 debtor's ability to pay. To the contrary, . . . the 2005 amendments to section 1325(b) indicate even stronger that section 1325(b), rather than section 1325(a)(3), is controlling in determining whether a debtor is committing sufficient income to a Chapter 13 plan. . . . There are new definitions of the income and expenses to be used for determining disposable income that are much different than under the former statute. These definitions are detailed and inflexible, particularly as to expenses and deductions for above-median-income debtors. . . . [I]t appears that Congress intended to adopt a specific test to be rigidly applied rather than a standard to be applied according to the facts and circumstances of the case. Calculating 'disposable income' for above-median-income debtors under new section 1325(b) is now separated from a review of Schedules I and J and no longer turns on the court's determination of what expenses are reasonably necessary for the debtor's support. . . . [T]he language of section 1325(b)(3) is unambiguous in requiring that the expenses and deductions of above-median-income debtors be determined under section 707(b)(2)(A) and (B). . . . [T]his court is not free to ignore revised section 1325(b) or replace it with a standard pulled from section 1325(a)(3). . . . [W]ith an above-median-income Chapter 13 debtor, the debtor's ability to pay and whether the proposed plan commits all of the debtor's disposable income must be determined under section 1325(b) rather than as an element of good faith under section 1325(a)(3).").

South Carolina

In re Palcher, No. 17-03938-HB, 2018 WL 481863, at *4 (Bankr. D.S.C. Jan. 17, 2018) (Burris) (Not bad faith that projected disposable income test permits debtor to deduct 83-year-old mother’s expenses as part of debtor’s household but allows debtor to exclude mother’s Social Security income from debtor’s current monthly income. “It is true that the calculation provided by the Disposable Income Test departs from reality here because, although Mother’s expenses are included in Palcher’s calculations, a substantial portion of her income cannot be counted. However, this is often true when determining disposable income under §§ 707 and 1325 due to the application of standard expenses and arbitrary rules imposed by the Bankruptcy Code. This fact alone is not enough to warrant an in-depth good faith analysis.”).

In re Prince, No. 11-01041-DD, 2011 WL 2747797 (Bankr. D.S.C. July 12, 2011) (Duncan) (Plan was not proposed in good faith that would modify debt secured by mobile home in which debtor had no ownership or equitable interest. Mobile home was purchased by former father-in-law, who never expressed intention that debtor become owner.).

In re Herrmann, No. 10-06523-JW, 2011 WL 576753, at *9-*10 (Bankr. D.S.C. Feb. 9, 2011) (Waites) (Social Security income is excluded from CMI and from projected disposable income by § 101(10A) and by 42 U.S.C. § 407, but Social Security income must be fairly allocated to living expenses between spouses to satisfy good faith under § 1325(a)(3). Debtors excluded Social Security income from Official Form B22C and Schedule I. The effect was to allocate all of joint debtors' expenses to income other than Social Security. "Mrs. Herrmann proposes to assume the burden of paying Mr. Herrmann's share of their joint expenses and deducts them from her available income before committing her projected disposable income. This is proposed even though Mr. Herrmann has the ability to pay his share of the expenses through the use of his social security income. . . . Section 407 does not preclude this Court from considering whether it is good faith for a spouse, who does not receive social security income, to avoid paying her creditors to her full capability by deducting from her income the living expenses of a joint debtor who has the ability to pay his expenses from social security income. As the Supreme Court recently emphasized in [Ransom v. FIA Card Services, N.A., __ U.S. __, 131 S. Ct. 716, __ L. Ed. 2d __ (Jan. 11, 2011)], one of the fundamental purposes of BAPCPA is 'to ensure that debtors repay creditors the maximum they can afford.' . . . [T]he issue is not whether Mr. Herrmann can be forced to use his social security income to pay his pre-petition debts, but rather whether Congress intended to protect a joint debtor's social security from being to be [sic] used to pay his own normal and customary living expenses. This Court does not believe that was Congress's purpose or intent. . . . Debtors' joint living expenses should be allocated fairly between them and Mrs. Herrmann should not be allowed to absorb more than her fair share of the expenses at the expense of her creditors. . . . [U]sing a significant portion of Mrs. Herrmann's income to pay Mr. Herrmann's share of expenses when he has resources to pay those expenses—in fact, resources specifically protected by Congress for that purpose—at the expense of unsecured creditors indicates a lack of good faith on the part of Mrs. Herrmann.").

In re Miller, 445 B.R. 504 (Bankr. D.S.C. Jan. 11, 2011) (Duncan) (It is not bad faith that debtor excluded her Social Security income and Social Security income received by her nonfiling spouse from disposable income calculation. Applying totality-of-circumstances test, 6% plan was proposed in good faith when debtor was honest in disclosing her financial circumstances, debtor never filed bankruptcy before, credit card debt was reason for the Chapter 13 case and debtor was not retaining any luxury items.).

In re Melton, No. 10-05297-DD, 2010 WL 5128631 (Bankr. D.S.C. Dec. 9, 2010) (Duncan) (Lack of good faith included that debtor purchased vehicle one month before bankruptcy filing and made no payments, failed to report prepetition tax refund, failed to remain current on postpetition mortgage payments and failed to provide documentation concerning attempts to modify mortgage loan.).

In re Melton, No. 10-05297-DD, 2010 WL 5128631 (Bankr. D.S.C. Dec. 9, 2010) (Duncan) (Plan was not proposed in good faith when debtor purchased vehicle one month before bankruptcy filing and made no payments, failed to report prepetition tax refund, failed to remain current on postpetition mortgage payments and failed to prove attempts to modify mortgage loan.).

In re Johnson, 438 B.R. 854 (Bankr. D.S.C. Oct. 27, 2010) (Duncan) (That debtor purchased vehicle four months prior to bankruptcy did not establish lack of good faith. Under totality of circumstances, debtor had other cause to file case and had stable business and income.).

In re Pearson, No. 10-05166-JW, 2010 WL 5169081 (Bankr. D.S.C. Oct. 18, 2010) (Waites) (Failure to disclose property that had been owned and lived in by debtor for 10 years and that had been scheduled in prior Chapter 13 case was lack of good faith that barred confirmation.).

In re Benincasa, No. 09-07869-JW, 2010 WL 4638758 (Bankr. D.S.C. Aug. 10, 2010) (Waites) (Evidence of lack of good faith included: debtors deducted $1,670 per month for housing for dependent mother when unsecured creditors would receive only 7.5%; debtors claimed $600 per month for food when IRS allowance was $537; debtors spent $107.50 per month to maintain business and professional licenses that produced no income; and debtors claimed $400 per month for transportation to visit relatives.).

In re Namie, 395 B.R. 594, 596-97 (Bankr. D.S.C. Aug. 5, 2008) (Waites) (Plan paying $5,376.54 per month to maintain and cure mortgage arrearages when unsecured creditors will receive 1% is not proposed in good faith. "Notwithstanding the test formulated under 11 U.S.C. § 1325(b), a debtor must propose a plan in good faith pursuant to 11 U.S.C. § 1325(a)(3). . . . Utilization of the vast majority of Debtor's net disposable income to retain an expensive asset while depriving his other creditors of payment indicates a lack of good faith. . . . Debtor presented no testimony or other evidence that alternative housing, suitable for a family of two, cannot be found at a lesser cost. . . . [R]etention of a home that consumes all of his personal net disposable income, to the detriment of his significant number of unsecured creditors, is not in good faith.").

In re Allawas, No. 07-06058-HB, 2008 WL 6069662, at *4 (Bankr. D.S.C. Mar. 3, 2008) (unpublished) (Burris) (Debtor failed to prove that plan was proposed in good faith when debtor proposed to retain unnecessary vehicle and pay de minimis to unsecured creditors over five years. "Debtor argues that nothing is due from her to general unsecured creditors under the disposable income test of § 1325(b)(1), so any payment to such creditors is a sign of good faith. The Court disagrees. The Debtor proposes only a 1% repayment to general unsecured creditors over five years, and stretches payments to other creditors over a five-year period as well even though she has the actual ability to pay more quickly, so that she can retain and pay for a luxury item. Any points the Debtor gains for her voluntary repayment are countered by the lengthy repayment period and minimal amount.").

In re Anstett, 383 B.R. 380, 384-86 (Bankr. D.S.C. Feb. 8, 2008) (Duncan) (Although projected disposable income is negative amount after debtor is required to include funds that will become available when pension loans are repaid, confirmation is denied on good-faith ground when debtor declines to increase payments to unsecured creditors when pension loans are repaid. "Once the [pension] loan is repaid Debtor will have a greater amount of 'projected disposable income.' A revised calculation of § 1325(b)(2) disposable income . . . continues to result in a negative amount of disposable income. . . . This Court has the authority to make an independent review of the propriety of plan confirmation. Among the requirements for confirmation is that the plan be proposed in good faith. . . . Here Debtor proposes a one percent dividend . . . . He proposes to make plan payments for 60 months but will have paid one of his 401(k) loans after only twenty months. . . . Debtor is essentially repaying himself. . . . While Congress has expressed the public policy favoring continuation of debtor contributions to qualified retirement plans in bankruptcy and providing that loans from such plans may be repaid, this in no way supports Debtor's proposal to repay the loan to his retirement plan and then use the funds for other living expenses. The strict mechanical application of § 1325(b)(1)(B) following computation of disposable income using artificial expenditures does not necessarily satisfy the requirement to propose a plan in good faith. . . . The completion of payments to the 401(k) plan does not simply free that money for discretionary application but should shift to creditors, at least in significant part, and result in repayment of the people Debtor owes. To propose nothing further to them, especially with an initial one percent dividend, is not a good faith effort.").

In re Edmunds, 350 B.R. 636, 648-49 (Bankr. D.S.C. Sept. 18, 2006) (Waites) (Disposable income test as modified by BAPCPA does not eliminate economic factors in good-faith test in § 1325(a)(3); lack of good faith when debtors with CMI greater than applicable median family income exhaust disposable income consistent with Form B22C but have additional income available for creditors according to Schedules I and J. "[T]he strict mechanical application of the Means Test does not necessarily satisfy Debtors' burden of demonstrating good faith in the proposal of their plans, including whether they are devoting sufficient income to their plan. . . . In [Deans v. O'Donnell, 692 F.2d 968 (4th Cir. Sept. 23, 1982) (Winter, Phillips, Murnaghan)], the Fourth Circuit sets forth a nonexclusive list of factors to determine whether a plan has been proposed in good faith. Included in this list is a debtor's current financial situation and percentage of proposed repayment to unsecured creditors. . . . These factors are relevant even if a debtor's plan satisfies § 1325(b). . . . Nothing in the legislative history of [BAPCPA] clearly indicates that Congress intended to change the existing practice in this Circuit of considering a debtor's actual financial situation at the time of the filing or the percentage of proposed repayment as elements of good faith. . . . Since it appears from Debtors' respective Schedules I and J that they have sufficient projected disposable income to pay a greater distribution to general unsecured creditors than proposed in their current plans . . . Debtors' present plans were . . . not proposed in good faith.").

In re Bridges, 326 B.R. 345 (Bankr. D.S.C. Mar. 29, 2005) (Debtors' "Chapter 20" attempt was not bad faith when an initial Chapter 13 filing was dismissed because the debtors' guarantees of their Subchapter S corporation's debts exceeded the debt limits in Chapter 13 and they had no nonexempt assets in their subsequent Chapter 7. The debtors originally filed a Chapter 13 petition, which case was dismissed when the debtors' obligations exceeded the debt limits of § 109. The debtors' debts were principally guarantees from their closely held corporation. The debtors then filed a Chapter 7 petition and received a discharge, with no distribution to unsecured creditors. When the debtors filed a subsequent Chapter 13 case, the trustee sought dismissal, arguing the filing was not in good faith. The filing of a Chapter 13 petition following a Chapter 7 discharge is not per se bad faith under Johnson v. Home State Bank, 501 U.S. 78, 111 S.Ct. 2150, 115 L. Ed. 2d 66 (1991), but the filing must be done in good faith. Here, the debtors attempted to file a repayment under Chapter 13 but were precluded by the debt limits. They were honest and made all nonexempt assets available to the Chapter 7 trustee. The debtors were proposing to dedicate a substantial portion of their disposable income to their Chapter 13 plan, and no creditor objected to the debtors' treatment of their claims under the proposed plan. Considering the totality of the circumstances, there was no evidence of manipulation or planned sequence of filings that signals abuse or prejudice creditors.).

In re Bridges, 326 B.R. 345, 351 (Bankr. D.S.C. Mar. 29, 2005) (Applying totality-of-circumstances test from Deans v. O'Donnell, 692 F.2d 968, 972 (4th Cir. 1982), and Solomon v. Cosby (In re Solomon), 67 F.3d 1128, 1234 (4th Cir. 1995), Chapter 13 filed less than 30 days after conclusion of Chapter 7 is not necessarily in bad faith. "The short period between the close of Debtors' Chapter 7 case and the filing of their second Chapter 13 case is a factor that weighs in favor of the Chapter 13 Trustee." Other factors weighed in favor of debtors: changes in debtors' circumstances, including Chapter 7 discharge, that will permit them to comply with their plan to pay 100% of secured claims and priority tax claims; prior Chapter 7 was no-asset case, but debtors did not conceal assets and cooperated with Chapter 7 trustee; no evidence of improper or abusive motive exists; and this Chapter 20 scenario treats creditors fairly.).

Virginia

Eastern District of Virginia

In re Brandland, 570 B.R. 203, 218-19 (Bankr. E.D. Va. Apr. 19, 2017) (Kenney) (Lack of good faith based on debtor’s misconduct during a prepetition divorce supported denial of confirmation and dismissal, sua sponte. “The Debtor was not truthful in his deposition in his divorce case concerning his ownership of a one-third membership interest in City Floorcoverings . . . . This alone, while not admirable, might not be enough to warrant a denial of confirmation or a dismissal . . . . More damning, though, was the Debtor’s decision not to disclose the Redemption Agreement and the receipt of $150,000.00 in proceeds for his one-third interest in City Floorcoverings . . . . The Debtor’s intent to discharge Ms. Odom’s equitable distribution debt, which would not be dischargeable in a Chapter 7 case, coupled with his pre-petition concealment of the Redemption Agreement from the Circuit Court and from Ms. Odom, and his use of all of the $150,000.00 in proceeds without payment of virtually any of the equitable distribution award when he had the opportunity to do so, causes the Court to sustain Ms. Odom’s good faith objection[.]”).

In re Paliev, No. 11-17647-BFK, 2012 WL 3564031, at *5 (Bankr. E.D. Va. Aug. 17, 2012) (Kenney) (Not bad faith that debtor borrowed from 401(k) to pay bankruptcy counsel and to cure mortgage arrearage or that case has been pending for nine months without confirmation of a plan. "[T]he Debtor borrowed $4,600 against her 401(k) Plan shortly before her bankruptcy filing in order to fund her bankruptcy counsel's retainer and make up her mortgage arrearages. . . . [I]f she had not borrowed from her 401(k) in order to pay the mortgage arrearages, the arrearages would have had to be paid in her Chapter 13 Plan, to the detriment of the unsecured creditors. Consequently, the Court cannot find a lack of good faith based on the Debtor's pre-petition borrowing from her 401(k).").

In re Williams, No. 11-15920-RGM, 2012 WL 1556532, at *3 (Bankr. E.D. Va. May 1, 2012) (Mayer) (Plan lacked good faith that did not "purge the taint" of purchase of luxury car five days before petition. On August 5, 2011, the debtors traded a 2007 Lexus RX 400H and a 2007 Lexus ES 350 toward the purchase of a new 2011 Lexus RX 350 for a total purchase price of $46,900. The Chapter 13 petition was filed on August 11, 2011. "They chose to trade their two cars for a new one. In the process, they sought to obtain a benefit—a new car—at the expense of their creditors. . . . But for the trustee's keen attention to detail, they would have been injured by the debtors' conduct.").

In re Lawhon, No. 11-32790-DOT, 2012 WL 115381, at *4 (Bankr. E.D. Va. Jan. 13, 2012) (Tice) (Prepetition sale of nonfiling spouse's separate property was not indicative of bad faith; that debtor claimed exemption in property owned as tenant by the entirety with nonfiling spouse did not prove lack of good faith when plan would pay debts secured by that property. "What has led to the dispute in this case is the fact that § 522(b)(3)(B) . . . provides an exemption for debtor's interest in the property he holds with his wife in a tenancy by the entireties. The exemption applies with respect to debtor's individual debt, which is all of his debt in the case other than the secured claims against the realty. . . . [D]ebtor's plan is filed in good faith and should be confirmed. The fact that debtor claims the exemptions to which he is entitled should not in itself preclude his seeking relief under provisions of the Bankruptcy Code.").

In re Hixon, No. 11-30850-DOT, 2011 WL 4006651 (Bankr. E.D. Va. Sept. 9, 2011) (Tice) (Plan lacked good faith when sole purpose was to delay payment of a nondischargeable debt. Only debt was stipulated to be nondischargeable in prior Chapter 7 case. Payout percentage was low. Only purpose of case was to frustrate sole creditor's garnishment.).

In re Hixon, No. 11-30850-DOT, 2011 WL 4006651 (Bankr. E.D. Va. Sept. 9, 2011) (Tice) (Chapter 13 case was not filed in good faith when only scheduled debt was fraud claim stipulated to be nondischargeable in pending Chapter 7 case.).

In re Green, No. 09-17646-SSM, 2010 WL 5572090 (Bankr. E.D. Va. Dec. 30, 2010) (Mitchell) (Confirmation was denied when amended plan only increased distribution to unsecured creditors from $.21 to $.22 per dollar; further increase in distribution to unsecured creditors, including former spouse, would be required to satisfy good-faith test.).

In re Haney, No. 10-10258-SSM, 2010 WL 3363270, at *5 (Bankr. E.D. Va. Aug. 24, 2010) (unpublished) (Mitchell) (Correspondence between debtor and former spouse's divorce attorney presented "troubling questions about the debtor's good faith in filing"; however, debtor was given final opportunity to propose confirmable plan that would pay domestic support obligations in full.).

In re Kahn, No. 09-20056-SSM, 2010 WL 2507031 (Bankr. E.D. Va. June 16, 2010) (unpublished) (Mitchell) (Plan that would attempt to strip off wholly unsecured junior mortgage was not filed in bad faith when debtor was ineligible for discharge but plan would accomplish meaningful relief by curing first mortgage arrearage; determination of stripoff of wholly unsecured mortgage required adversary proceeding, and court expressed doubt whether debtor ineligible for Chapter 13 discharge, because of prior Chapter 7 discharge, could accomplish stripoff.).

In re Green, No. 09-17646-SSM, 2010 WL 396253, at *3 (Bankr. E.D. Va. Jan. 27, 2010) (Mitchell) (Applying Deans v. O'Donnell, 692 F.2d 968 (4th Cir. Sept. 23, 1982) (Winter, Phillips, Murnaghan), compromise of claim that would be nondischargeable in Chapter 7 is not necessarily bad faith, but when debtor borrowed against home, reducing equity available for former spouse, and failed to account for loan funds, "coupled with a relatively low dividend being paid and the fact that the largest [§ 523(a)(15)] debt would be non-dischargeable in chapter 7, . . .balance in this case [tips] against a finding of good faith.").

In re Villca, No. 09-16569-SSM, 2009 WL 3754737, at *3 (Bankr. E.D. Va. Nov. 5, 2009) (unpublished) (Mitchell) ("[A] plan does not lack good faith simply because the debtors are paying their attorney more than they are paying their creditors. On the other hand, the disproportion does raise the question of why . . . these above-median income debtors have chosen to make payments only over three years. . . . [A]lthough the court does not find that either the ratio of the attorneys fees to the plan payment or the use of chapter 13 to obtain relief not available in chapter 7, standing alone, constitutes bad faith, they are appropriate factors to be considered in applying the totality of the circumstances test. Coupled as they are here, with a minimal, even meaningless dividend on unsecured claims, and a plan period that is less than the statutory commitment period, the court cannot find that the plan is proposed in good faith unless the debtors agree to extend the plan period to five years.").

In re Villca, No. 09-16569-SSM, 2009 WL 3754737 (Bankr. E.D. Va. Nov. 5, 2009) (unpublished) (Mitchell) (Debtors must extend plan from 3 years to 5 years to satisfy good faith when distributions to unsecureds would otherwise be less than payment of attorneys fees.).

In re Villca, No. 09-16569-SSM, 2009 WL 3754737, at *3 (Bankr. E.D. Va. Nov. 5, 2009) (unpublished) (Mitchell) (Thirty-six-month plan that strips off second mortgage and pays unsecured creditors less than amount of attorney fees fails good-faith test unless debtors extend payments to five years. Debtors with CMI greater than applicable median family income had negative disposable income on Form B22C and proposed a plan paying the trustee $110 per month for 36 months. Separate adversary proceeding would strip off a wholly unsecured second deed of trust. "[A] plan does not lack good faith simply because the debtors are paying their attorney more than they are paying their creditors. On the other hand, the disproportion does raise the question of why . . . these above-median income debtors have chosen to make payments only over three years. . . . [A]lthough the court does not find that either the ratio of the attorneys fees to the plan payment or the use of chapter 13 to obtain relief not available in chapter 7, standing alone, constitutes bad faith, they are appropriate factors to be considered in applying the totality of the circumstances test. Coupled as they are here, with a minimal, even meaningless dividend on unsecured claims, and a plan period that is less than the statutory commitment period, the court cannot find that the plan is proposed in good faith unless the debtors agree to extend the plan period to five years.").

In re Uzaldin, 418 B.R. 166 (Bankr. E.D. Va. Aug. 7, 2009) (Mayer) (Debtor's failure to pay mortgage ordered by domestic relations court resulting in foreclosure put good faith at issue when debtor was employed and had ability to comply with divorce court order.).

In re Kelly, 416 B.R. 232, 238-39 (Bankr. E.D. Va. Mar. 2, 2009) (Mitchell) (That plan satisfies projected disposable income test does not preclude finding that plan fails good-faith test in § 1325(a)(3) because debtor could pay more to unsecured creditors. "[T]he estimated percentage of repayment, 25%, although more than 'minimal,' and indeed substantial in dollar amount, nevertheless represents a severe compromise. . . . [T]his is not a case in which the debtor is living a luxurious or extravagant lifestyle . . . . At the same time, the debtor's current financial situation would rather clearly allow him to make payments significantly in excess of the $1,805 per month that he has proposed to make. . . . [T]he court is left with the conviction that the plan does not represent an honest effort to repay creditors to the extent that the debtor's financial ability and circumstances will permit. . . . [A]lthough the court will overrule the disposable income objection, the court will deny confirmation on the alternate ground that the plan was not proposed in good faith.").

In re Kim, No. 08-12266-SSM, 2009 WL 903266, at *2 (Bankr. E.D. Va. Jan. 14, 2009) (Mitchell) (Applying factors from Deans v. O'Donnell, 692 F.2d 968, 972 (4th Cir. 1982), plan not in good faith when "it was simply an attempted end-run around this court's ruling that denied confirmation of a modified plan in the prior case." Current case was filed less than one month after denial of modification motion in prior case. There was no evidence of change in financial condition, and current plan proposed lower monthly payment than plan modification just rejected. Confirmation would allow debtors to be protected from creditors for nine years—four years in prior plan plus five years in current plan.).

In re Faison, 416 B.R. 227 (Bankr. E.D. Va. Dec. 16, 2008) (Huennekens) (Paying 3% to unsecured creditors was not evidence of lack of good faith for purposes of § 1325(a)(3) when debtor had negative current monthly income, debtor was eligible to convert to Chapter 7 and creditors would receive nothing in a Chapter 7 case.).

In re Faison, 416 B.R. 227, 231-32 (Bankr. E.D. Va. Dec. 16, 2008) (Huennekens) (Not indicative of bad faith that debtor did what Congress mandated—listing expenses for monthly payments on account of secured debts and leaving no monthly disposable income for unsecured creditors. "The Court will not find that the Debtor acted not in good faith by doing what Congress has allowed in BAPCPA, even if the expenses taken result in a lower dividend to unsecured creditors than they would receive if the Debtor were forced to relinquish property that is worth far less than the debt securing it.").

In re Hoskings, No. 07-13785-RGM, 2008 WL 2235350, at *6 (Bankr. E.D. Va. May 29, 2008) (unpublished) (Mayer) (Not bad faith that debtor deducted payments on surrendered property to calculate projected disposable income. "'If the sole objection to the debtor's good faith is that the debtor proposes to pay the amount Congress requires by the mathematical formula, the debtor has complied with the good faith requirement.").

In re Mascoll, No. 08-10288-SSM, 2008 WL 1869293 (Bankr. E.D. Va. Apr. 24, 2008) (Mitchell) (Seventh Chapter 13 case in three years was not filed in good faith when no plan was proposed, payments did not timely commence and sole apparent purpose was to defeat rights of creditors.).

In re Abbas, No. 07-71828-SCS, 2007 WL 4556665 (Bankr. E.D. Va. Dec. 20, 2007) (unpublished) (St. John) (Prior Chapter 7 case in close proximity to current case, and failure in prior case to disclose assets that would have been available to pay claims is evidence of prepetition bad faith. Although plan proposes to eventually pay 100%, debtor's lack of honesty is not overcome.).

In re Abbas, No. 07-71828-SCS, 2007 WL 4556665 (Bankr. E.D. Va. Dec. 20, 2007) (unpublished) (St. John) (Failure to disclose assets in prior Chapter 7 case is relevant to good-faith analysis in current case.).

In re Abbas, No. 07-71828-SCS, 2007 WL 4556665 (Bankr. E.D. Va. Dec. 20, 2007) (unpublished) (St. John) (Prepetition conduct is relevant to good faith; that debtor omitted assets in prior Chapter 7 is evidence of lack of good faith in current case. Court must sua sponte determine good faith, with debtor having burden of proof. Debtor's invocation of Fifth Amendment is factor in determination whether debtor made full, good-faith disclosure.).

In re Abbas, No. 07-71828-SCS, 2007 WL 4556665 (Bankr. E.D. Va. Dec. 20, 2007) (unpublished) (St. John) (Failure to disclose ownership of asset in prior Chapter 7 case and invocation of Fifth Amendment in current case are factors that question good faith.).

In re Winokur, 364 B.R. 204, 206 (Bankr. E.D. Va. Jan. 18, 2007) (Mayer) ("If the sole objection to the debtor's good faith is that the debtor proposes to pay the amount Congress requires by the mathematical formula, the debtor has complied with the good faith requirement. . . . Congress could have written the law differently. . . . It could have required a plan payment that was the greater of the mathematical formula or the debtor's actual ability to pay. It did not. It knew that the formula approach was not perfect and that some debtors would pay less than they could actually afford. This may be an abuse in a particular case, but Congress was concerned with the entire bankruptcy system. It may have concluded that although the abuse under the formula approach will be more visible than under the prior approach, total abuse will be less.").

In re Tittle, 346 B.R. 684 (Bankr. E.D. Va. Mar. 20, 2006) (Solvent debtor's Chapter 13 case two years after discharge in a Chapter 7 case and after substantial appreciation in value of real property was permissible sequential filing; appreciation of real property was unanticipated change in circumstances, and plan proposes to pay unsecured creditors in full.).

In re Moroney, 330 B.R. 527 (Bankr. E.D. Va. June 8, 2005) (Considering totality of circumstances, under Neufeld v. Freeman, 794 F.2d 149, 152 (4th Cir. 1986), 5.9% payout to unsecured creditors is not good faith when debtor paid nothing to IRS for 12 years, prior Chapter 7 discharge excepted IRS debt and IRS is only significant unsecured creditor.).

In re Moroney, 330 B.R. 527 (Bankr. E.D. Va. June 8, 2005) (5/9% payment of IRS debt excepted from discharge in 2002 case is not good faith when debtor had not paid IRS anything in 12 years and IRS is only significant creditor.).

In re Moroney, 330 B.R. 527 (Bankr. E.D. Va. June 8, 2005) ("Singling out" IRS, as only significant creditor, for 5.9% payment when prior Chapter 7 discharge had excepted IRS debt and debtor had not voluntarily paid IRS anything in 12 years is not good faith.).

In re Williams, 338 B.R. 678, 683 (Bankr. E.D. Va. June 7, 2004) (Confirmation denied when debtor scheduled fee simple ownership of church property for which he as minister only held bare legal title and proposed payment of church's debt would be prejudicial to his creditors. "The plan cannot be approved because it proposed to pay debt of other co-debtors (trustees) who are contributing nothing.").

In re Williams, 338 B.R. 678, 683 (Bankr. E.D. Va. June 7, 2004) (A Chapter 13 plan which proposes to pay the debts of codebtors who are contributing nothing while paying unsecured creditors only 10 cents on the dollar is not proposed in good faith. The debtor was one of five trustees of the Restoration Christian Fellowship Church who had taken title as trustees of church property and signed personal guaranties to the sellers. When the payments went into default, the debtor filed a Chapter 13 petition, proposing to cure the defaults and retain the church property. "The plan cannot be approved because it proposes to pay debt of other co-debtors (trustees) who are contributing nothing. This is prejudicial to the claims of unsecured creditors who are to receive only a 10% dividend.").

In re Williams, 338 B.R. 678, 681, 683-84 (Bankr. E.D. Va. June 7, 2004) (Debtor/minister did not propose plan in good faith that pays his individual unsecured creditors 10% while paying church mortgage 100%. "A plan proposing to pay a significant indebtedness shared by a debtor with a non-contributing co-debtor is not filed in good faith.").

In re Carpenter, 318 B.R. 645, 647-48 (Bankr. E.D. Va. Dec. 11, 2003) (Confirmation of 30% plan is denied on good-faith grounds when budget included a $650 monthly payment for credit card debt of nonfiling spouse. "[D]ebtor has not satisfied his burden to demonstrate the plan was filed in good faith. He effectively proposes to prefer other debt to the claims of his unsecured creditors." The $650 payment was more than the $493 per month necessary to make minimum payments on the nonfiling spouse's credit card debt of $32,031. "While reasonable family expenses may appropriately include payment of debt of the non-filing spouse . . . the court must examine the payment in the context of the debtor's entire family budget. . . . [D]ebtor is essentially paying most if not all of the $650.00 payments on his wife's credit card debt.").

Western District of Virginia

Romar Elevators, Inc. v. Tomer (In re Tomer), No. 4:09CV0008, 2009 WL 2029798, at *5-*6 (W.D. Va. July 14, 2009) (Kiser) (Order confirming plan and finding plan was proposed in good faith for § 1325(a)(3) purposes is reversed and remanded for specific findings with respect to § 1325(a)(7) good faith in filing petition. "Good faith in filing a petition is separate and distinct from the concept of good faith required in connection with proposing a plan. It is clear from the factors used for § 1325(a)(3) and §§ 1307(c) or 1325(a)(7) analysis that a court must use a different focus. . . . The bankruptcy court satisfactorily found, based on a totality of the circumstances, that the Chapter 13 plan demonstrated good faith. However, this holding—as to the plan—does not satisfy a finding regarding the petition. The good faith analysis as to the petition is broader in scope with a different focus than that of the plan, which centers mainly on fairness and feasibility. The court must determine if the debtor should even have petitioned for bankruptcy before analyzing the plan itself, and it cannot imbue the findings of the latter on the former. The bankruptcy court must consider the facts, circumstances, testimony, and evidence before it to determine whether the Chapter 13 petition of Robin Tomer was filed in good faith.").

In re Colston, No. 15-70654, 2015 WL 5989747, at *9 (Bankr. W.D. Va. Oct. 14, 2015) (Black) (Citing In re Love, 957 F.2d 1350 (7th Cir. Feb. 26, 1992) (Wood, Ripple, Manion), case was not filed in good faith and should be dismissed based on factors including that Chapter 13 petition was filed on the eve of trial in an "undue influence" action that generated a judgment likely to be nondischargeable in a Chapter 7 case, there was an undisclosed transfer of an asset to the debtor's mother and de minimis payment of unsecured claims. "While limited guidance exists on what a debtor must prove to obtain confirmation under Section 1325(a)(7), the standards used in a Section 1307(c) good faith analysis are helpful. . . . Factors generally accepted in determining good faith under Section 1307(c) include: 'the nature of the debt, including . . . whether the debt would be nondischargeable in a chapter 7 proceeding; how the debt arose; the debtor's motive in filing the petition; how the debtor's actions affected creditors; the debtor's treatment of creditors both before and after the petition . . . ; . . . whether the debtor has been forthcoming with the bankruptcy court . . . . ' . . . This case has the hallmarks of a petition not filed in good faith. . . . [T]he Debtor . . . filed her bankruptcy petition shortly before the scheduled trial date . . . to avoid an adverse judgment against her individually. . . . [T]he last minute filing coupled with a de minimis offering . . . lack of disclosure . . . . [I]ntent in filing this case is manifest. Her design was to stop Ms. Alexander from attempting to recover what was improperly taken from her . . . .").

In re Colston, No. 15-70654, 2015 WL 5989747, at *6-*7 (Bankr. W.D. Va. Oct. 14, 2015) (Black) (Citing 10 factors from Deans v. O'Donnell, 692 F.2d 968 (4th Cir. Sept. 23, 1982) (Winter, Phillips, Murnaghan), Solomon v. Cosby (In re Solomon), 67 F.3d 1128 (4th Cir. Oct. 23, 1995) (Widener, Wilkinson, Michael), and Neufeld v. Freeman, 794 F.2d 149 (June 18, 1986) (Phillips, Sneeden, Sentelle), plan lacked good faith under § 1325(a)(3): the Chapter 13 case was a two-party dispute, the case was filed to deal with a large "undue influence" claim that would likely be nondischargeable in Chapter 7, there was an undisclosed transfer of an asset to the debtor's mother and the plan proposed de minimis payment. "The . . . factors are each still relevant in cases following BAPCPA. . . . [T]he percentage of proposed repayment and debtor's actual financial situation at the time of filing are still elements of good faith. . . . [T]he proposed dividend to unsecured creditors . . . 4%. . . . [T]his case was filed for the sole purpose of impeding Ms. Alexander and her family from attempting to recover the assets taken by Ms. Colston. . . . Ms. Alexander has presented compelling evidence that . . . there is a substantial likelihood the debt she seeks to recover would be declared nondischargeable in a Chapter 7 proceeding. . . . [A] Section 523(a)(6) debt can be discharged in Chapter 13. This does not mean, however, the presence of a potential Section 523(a)(6) claim cannot or should not be considered under a good faith analysis.").

In re Styles, 397 B.R. 771, 774-75 (Bankr. W.D. Va. Nov. 21, 2008) (Krumm) (Although unmarried debtor with no dependents and CMI greater than applicable median family income is entitled to ownership and operating expenses for two cars for purposes of disposable income test, good faith review based on totality of circumstances applies to "nonessential assets" and requires debtor to demonstrate that unsecured creditors are not injured by allowed expense deductions. "Debtor's plan may include nonessential assets and as such is subject to review for good faith. . . . '[N]onessential assets' [include] a recreational boat or 'an extra nonessential vehicle.' . . . 'Notwithstanding the fact that the Debtors are entitled to account for [the nonessential assets] when calculating their disposable income under the means test[,] confirmation of a plan proposing to retain [the nonessential asset] is subject to the good faith test under 11 U.S.C. § 1325(a)(3).' . . . [T]o achieve confirmation of the plan with the [nonessential] assets in it the debtor would have to 'demonstrate that unsecured creditors are better off than they would be if the asset is excluded and the monthly payments on the secured debt are added into a monthly plan payment.'").

In re Hylton, 374 B.R. 579, 586 & n.8 (Bankr. W.D. Va. Aug. 22, 2007) (Krumm) (Although debtors are entitled by § 707(b)(2)(A)(iii) to deduct average monthly payments secured by a luxury boat, those deductions are subject to good-faith analysis. "Notwithstanding the fact that the Debtors are entitled to account for the boat payments when calculating their disposable income under the means test, confirmation of a plan proposing to retain the boat is subject to the good-faith test under 11 U.S.C. § 1325(a)(3). . . . While an above-median debtor who proposes to retain a nonessential or luxury asset may not be doing so at the expense of unsecured creditors post-BAPCPA, because the return to general unsecured creditors under a Chapter 13 plan is guided by the means test, such a conclusion does not make this court any less mindful of the fact that 'the good faith inquiry is intended to prevent abuse of the provisions, purpose, or spirit of Chapter 13.' . . . Debtors' proposal to retain their boat, which is used solely for recreational purposes, is subject to the Bankruptcy Code's good faith test." In a note: "To achieve confirmation with the asset included in the plan, the Debtors will have to demonstrate that unsecured creditors are better off than they would be if the asset is excluded and the monthly payments on the secured debt are added into a monthly plan payment.").

West Virginia

Northern District of West Virginia

In re Kramp, No. 10-1681, 2011 WL 4002614 (Bankr. N.D. W. Va. Sept. 6, 2011) (Flatley) (Plan paying 5% to unsecured creditors while making direct payments to keep luxury Harley Davidson motorcycle was not in good faith.).

In re Kramp, No. 10-1681, 2011 WL 4002614 (Bankr. N.D. W. Va. Sept. 6, 2011) (Flatley) (Citing Ransom v. FIA Card Services, N.A., __ U.S. __, 131 S. Ct. 716, 178 L. Ed. 2d 603 (Jan. 11, 2011), Congress drafted BAPCPA to ensure that debtors repay creditors maximum amount affordable; plan paying 5% to unsecured creditors while making direct payments to retain luxury Harley Davidson motorcycle lacked good faith.).

In re Bailey, No. 09-2564, 2010 WL 3813847 (Bankr. N.D. W. Va. Sept. 24, 2010) (unpublished) (Flatley) (Case was not filed in bad faith—rejecting former spouse's claim that case was filed for purpose of harassment related to domestic support obligation. Pending complaint filed by former spouse, if successful, would establish that domestic support obligations would survive discharge. Former spouse was also protected because plan could not be confirmed unless debtor was current in postpetition domestic support obligations and debtor could not obtain discharge unless current on postconfirmation domestic support obligations.).

E. Fifth Circuit

Beaulieu v. Ragos (In re Ragos), 700 F.3d 220, 227 (5th Cir. Oct. 29, 2012) (Davis, Dennis, Haynes) (Not bad faith to exclude substantial portion of Social Security income because debtors are "merely . . . doing what the Code permits them to do."), aff'g 466 B.R. 803 (Bankr. E.D. La. July 21, 2011) (Magner) (Agreeing with Baud v. Carroll, 634 F.3d 327 (6th Cir. Feb. 4, 2011) (Cole, Clay, Katz), Social Security benefits are excluded from calculation of projected disposable income; although benefits are not exempt under Louisiana law, it was not bad-faith manipulation of Bankruptcy Code for debtors to follow clear Code provisions. "The logical consequence of Congress' decision to exclude social security benefits from the amount Debtors must contribute to a Chapter 13 plan, is that a lesser amount will be available to pay unsecured creditors. . . . The natural consequence of Congress' specific exclusion of social security benefits cannot be seen as lack of good faith by Debtors. Debtors have taken no deductions for medical expenses or taxes incurred because of social security benefits. Nor is this the rare debtor whose proposed plan is technically in compliance with Section 1325(b), but proposed in bad faith. Instead, this is a relatively typical fact pattern which follows the natural consequences of Congressional intent.").

Sikes v. Crager (In re Crager), 691 F.3d 671, 675-76 (5th Cir. Aug. 16, 2012) (Higginbotham, Haynes, Higginson) (Not per se bad faith that debtor's attorney will receive almost all money paid to trustee under plan. "There is no rule in this circuit that a Chapter 13 plan that results in the debtor's counsel receiving almost the entire amount paid to the Trustee, leaving other unsecured creditors unpaid, is a per se violation of the 'good faith' requirement.").

Louisiana

Eastern District of Louisiana

In re Worthy, No. 10-10027, 2010 WL 1994851 (Bankr. E.D. La. May 18, 2010) (unpublished) (Magner) (In sixth bankruptcy case, chronicle of failures to deal honestly with the court and creditors in the wake of Katrina supports finding that current case was filed in bad faith.).

In re Devilliers, 358 B.R. 849 (Bankr. E.D. La. Jan. 9, 2007) (Magner) (Compliance with the "strict and technical" provisions of § 1325(b) does not necessarily satisfy a Chapter 13 debtor's burden with respect to good faith.).

Western District of Louisiana

Sikes v. Crager, No. 10-1863, 2011 WL 4591889, at *5 (W.D. La. Sept. 30, 2011) (Hicks) (Plan not in good faith when first 35 months would pay only administrative expenses, primarily attorney fees, and in 36th month unsecured creditors would get $76. "A more conscionable plan (i.e. good faith plan) would be to truly pay the creditors for most of the 36 months instead of paying just attorney and administrative fees. The creditors here are the losing parties virtually to the exclusion of payments of the attorney who is the only one profiting."), rev'd, 691 F.3d 671 (5th Cir. Aug. 16, 2012) (Higginbotham, Haynes, Higginson).).

Raspanti v. Keaty, No. CIVA 6:05CV2135, 2006 WL 2803061 (W.D. La. Sept. 28, 2006) (unpublished) (After conversion from Chapter 7, plan was in good faith that paid 4% of nondischargeable debt for willful and malicious injury; plan was funded by 37.5% of gross income from debtor's law practice.), aff'd, 235 Fed. Appx. 315 (5th Cir. 2007).).

In re McDonald, No. 14-11740, 2015 WL 1524096, at *1-*3 (Bankr. W.D. La. Mar. 27, 2015) (Norman) (Confirmation denied sua sponte for lack of good faith when plan would pay $5,000 to retain a four-wheeler used by the debtor for hunting and for work. "The plan originally came before the Court without hearing on a recommendation of confirmation by the Chapter 13 Trustee. The Court denied the form of order submitted by the Trustee confirming the plan based on the debtors' retention of a 2012 Polaris Sportsman 500 HO, which is more generally described as a motorized four wheeler. . . . The debtor testified that the four wheeler is used primarily for hunting, but that he had used it for his job as well. . . . His estimation was that he had used the four wheeler on his job for 21 days during 2015. . . . [G]ood faith is an independent basis to consider economic components, notwithstanding compliance with the disposable income test. . . . The debtor is still able to work and hunt without the four wheeler. . . . The four wheeler is a luxury . . . . The four wheeler is a convenience, not a necessity . . . . The debtors' proposal to pay only $1,000.00 to unsecured creditors, yet over $5,000.00 for the four wheeler, does not show any sacrifice quotient[.]").

Mississippi

Southern District of Mississippi

In re Patrick, No. 12-03042-NPO, 2013 WL 168222, at *3-*5 (Bankr. S.D. Miss. Jan. 16, 2013) (Olack) (Distinguishing Beaulieu v. Ragos (In re Ragos), 700 F.3d 220 (5th Cir. Oct. 29, 2012) (Davis, Dennis, Haynes), when Social Security income is necessary to fund plan, debtors cannot use Social Security income to insulate expense deductions from good-faith analysis; plan lacks good faith when Social Security income will pay for three cars and other expenses that are not reasonably necessary. "[In Ragos,] the Fifth Circuit held that debtors who refused to fund a chapter 13 plan using their Social Security benefits did not violate the good faith standard per se. . . . Ragos concerned the 'income' side of the disposable income calculation, this case concerns the 'expense' side of the disposable income calculation. Clearly, Ragos does not support the Debtors' argument that the Court lacks authority to consider the reasonableness of the expenses and items inside the Plan merely because the Plan is funded in part by Social Security benefits. . . . Debtors make no attempt to prove the reasonableness of the expenses and items in question. . . . [W]here the Debtors are below-median-income, where Mrs. Patrick voluntarily included Social Security benefits to fund the Plan, where the Plan is not feasible unless the Social Security benefits are voluntarily included in the Plan, where the Plan proposes to retain a third automobile and includes expenses that are not reasonably necessary, and where unsecured creditors are not being paid in full, the Court finds that the Debtors have not satisfied their burden of proving good faith.").

In re Mims, No. 10-52281-KMS, 2011 WL 1749809 (Bankr. S.D. Miss. May 6, 2011) (Samson) (Omissions from schedules were unintentional and not proof of bad faith in filing petition and plan. Debtor believed that error had been corrected at meeting of creditors. Debtor cooperated with trustee to disclose use of property by adult son.).

In re Cuevas, No. 08-51337-NPO, 2009 WL 1515041 (Bankr. S.D. Miss. May 28, 2009) (unpublished) (Olack) (Transfer of property to children without consideration within three months of petition and failure to disclose transfer is bad faith and precludes confirmation.).

Texas

Eastern District of Texas

In re Louviere, 389 B.R. 502, 511 (Bankr. E.D. Tex. Apr. 4, 2008) (Parker) (Although not appropriate to account for nonfiling spouse's income as a single line item in Schedule I, when filing debtor's income falls after petition and it is appropriate to use Schedules I and J rather than Form B22C to determine projected disposable income, good faith is satisfied when expenses are apportioned roughly in same ratio as filing and nonfiling spouses' incomes. "[T]he Debtor has satisfactorily demonstrated that the bankruptcy estate has not assumed a disproportionate share of the reasonable family expenses in this case and the Trustee's objection based upon a lack of good faith must be denied.").

In re Aprea, 368 B.R. 558, 568 (Bankr. E.D. Tex. Apr. 25, 2007) (Rhoades) ("This case involves an affluent debtor who has every apparent intention of continuing to live an affluent lifestyle." Debtor provided nearly complete financial support for unemployed fiancée, contributed 15% of monthly salary to his 401(k) and proposed to pay unsecured creditors $315 over five-year plan.).

In re Aprea, 368 B.R. 558, 567 (Bankr. E.D. Tex. Apr. 25, 2007) (Rhoades) ("Where, as here, a debtor who is ineligible for Chapter 7 proposes to make no significant repayment to his creditors in his Chapter 13 plan, the Court finds that the petition was not filed in good faith. It appears from the record . . . Mr. Aprea filed his Chapter 13 petition merely to circumvent the 'presumption of abuse' in § 707(b).").

Northern District of Texas

In re Gonzales, No. 17-50150-rlj13, 2018 WL 501332, at *4 (Bankr. N.D. Tex. Jan. 19, 2018) (Jones) (Plan was filed in good faith notwithstanding small dividend to unsecured creditors, insufficient income to make required payments and the need to amend schedules to more accurately describe income and expenses. “The fact that unsecured creditors are not receiving much, if anything, does not render her plan or petition as having been filed in bad faith.”).

In re Owsley, 384 B.R. 739 (Bankr. N.D. Tex. Mar. 31, 2008) (Nelms) (Citing Hardin v. Caldwell (In re Caldwell), 895 F.2d 1123 (6th Cir. 1990), "[w]hen a creditor challenges a plan as being in bad faith, it is the debtor's burden to establish good faith. . . . It is difficult, if not impossible, for a debtor to meet this burden without putting on evidence. . . . No such evidence was given here. Consequently, the debtors did not satisfy their burden on the good faith issue.").

In re Owsley, 384 B.R. 739, 750-51 (Bankr. N.D. Tex. Mar. 31, 2008) (Nelms) (Although claiming Local Standards deduction for ownership of two cars is not bad faith notwithstanding that allowance is greater than actual ownership expense, debtors failed to prove that plan was proposed in good faith. "[C]ompliance with section 1325(b)(3) and section 707(b)(2)(A) is not dispositive of good faith because good faith embraces more than just lawful compliance with those sections. . . . [B]ecause this court reads section 707(b)(2)(A)(ii)(I) to authorize debtors to take the standard deduction even if they exceed the 'amount actually paid,' it can only conclude that Congress intended that result. . . . It seems fundamentally inconsistent to characterize an expense amount as reasonably necessary in section 1325(b)(3), yet conclude under section 1325(a)(3) that it is bad faith for the debtor to claim it. . . . [E]xpenses deemed to be 'reasonably necessary' under subsection (b)(3) are presumed to be asserted in good faith under subsection (a)(3). The presumption of good faith can be negated by aggravating circumstances, an example of which might be a debtor's deduction of an ownership expense for a luxury vehicle purchased on the eve of bankruptcy. . . . One of the purposes of the means test was to remove from bankruptcy courts much of the discretion they had when it came to confirmation of plans under pre-BAPCPA practice. . . . If section 1325(a)(3) were a trump card that permitted courts to override the means test, then the discretion taken from bankruptcy courts in section 707(b)(2) would be reinstated in section 1325(a)(3). . . . When a creditor challenges a plan as being in bad faith, it is the debtor's burden to establish good faith. . . . It is difficult, if not impossible, for a debtor to meet this burden without putting on evidence. . . . No such evidence was given here. Consequently, the debtors did not satisfy their burden on the good faith issue.").

In re Williams, No. 06-10312-RLJ-13, 2007 WL 128899, at *2 (Bankr. N.D. Tex. Jan. 11, 2007) (unpublished) (Chapter 13 case filed in 1998 and dismissed in 1999 did not implicate a lack of good faith in second Chapter 13 case filed in September 2006. "The cases are not sufficiently proximate in time to raise an issue of bad faith.").

In re Williams, No. 06-10312-RLJ-13, 2007 WL 128899 (Bankr. N.D. Tex. Jan. 11, 2007) (unpublished) (Failure to schedule one creditor was "mere negligence" that did not require finding of lack of good faith.).

In re Reinicke, 338 B.R. 292, 296 (Bankr. N.D. Tex. Jan. 9, 2006) (On objection to confirmation by insider-creditors that did not file timely proofs of claim, 100% plan was filed in good faith; therefore, creditors other than insiders would be prejudiced by denial of confirmation. "Where, as here, substantial unsecured debt is to be satisfied in full under a plan, it seems to the court that there should be a presumption that the debtor has proposed the plan in good faith. There is absolutely no evidence before the court of improper conduct by Debtor during this chapter 13 case.").

In re Reinicke, No. 03-91150DML 13, 2005 WL 6441380, at *2 (Bankr. N.D. Tex. June 7, 2005) (Lynn) (Confirmation denied for lack of good faith under § 1325(a)(3) when "evidence suggests that Debtor was using chapter 13—and the Plan—to evade responsibility for dissipating funds belonging to her mother.").

In re Armstrong, 320 B.R. 97, 107, 108 (Bankr. N.D. Tex. Jan. 18, 2005) (In the same sense that a debtor must "forthrightly disclose" assets and liabilities in the statement and schedules, a creditor must forthrightly disclose the underlying support for a proof of claim when an objection is filed by the debtor; it is not bad faith for a Chapter 13 debtor to file blanket objections to unsecured proofs of claim when the attachments required by Bankruptcy Rule 3001 are not present so long as the debtor responds appropriately when the missing documentation is supplied. "[A] debtor acts in good faith by objecting to a proof of claim that lacks the requisite documentation. The court cannot, therefore, in the abstract, establish per se rules for when a debtor acts in bad faith contrary to the requirement of § 1325(a)(3) by objecting to a proof of claim.").

Southern District of Texas

In re Doucet, No. 14-33437-H3-13, 2014 WL 6686548 (Bankr. S.D. Tex. Nov. 25, 2014) (Paul) (Bad faith that debtor misrepresented status of principal residence and proposed sale to fund plan without consideration of rights of nondebtor spouse.).

In re McMahan, 481 B.R. 901 (Bankr. S.D. Tex. Oct. 25, 2012) (Bohm) (Good-faith filing requirement applies to Chapter 24 petition. Chapter 11 had been filed to stop foreclosure. Subsequent Chapter 13 case was dismissed with prejudice since Chapter 11 plan had been confirmed.).

Smart Fin. Credit Union v. Williams (In re Williams), 466 B.R. 95 (Bankr. S.D. Tex. Oct. 7, 2011) (Brown) (Filing on eve of breach of contract suit in state court was not bad faith. Any judgment that might be entered would be unsecured, dischargeable debt.).

In re Meador, No. 06-80509-GE-13, 2008 WL 243673 (Bankr. S.D. Tex. Jan. 25, 2008) (unpublished) (Clark) (Confirmation is denied and petition is dismissed when debtors filed succession of amended schedules and Forms B22C which misstated and obscured disposable income; that debtors were unable to explain fluctuating figures demonstrated an attempt to manipulate and mislead the trustee and the court with respect to the entitlement of unsecured creditors.).

In re McPike, No. 03-47538-H3-13, 2006 WL 3422684 (Bankr. S.D. Tex. Nov. 27, 2006) (unpublished) (Lack of good faith when plan proposed to pay only $222.07 to unsecured creditors. Creditor holding $58,000 unsecured claim objected to confirmation. Debtor's testimony that income had been reduced 20% was unsupported by proof, especially when his mother controlled amount of his income and she didn't testify.).

In re Solis, 356 B.R. 398 (Bankr. S.D. Tex. Nov. 14, 2006) (Steen) (Plan fails good-faith test in § 1325(a)(3) because it bifurcates debt secured by car that is used by and paid for by debtor's adult son. There was no legal obligation of debtor to support son, and debtor could not bifurcate lien if car were for debtor's use because of hanging sentence in § 1325(a).).

In re Russell, 348 B.R. 441 (Bankr. S.D. Tex. Aug. 26, 2006) (Lack of good faith that debtor filed Chapter 13 in Southern District of Texas during appeal of nondischargeability judgment in Chapter 7 case pending in Eastern District of Texas.).

In re Russell, 348 B.R. 441 (Bankr. S.D. Tex. Aug. 26, 2006) (Lack of good faith when debtor filed Chapter 13 in Southern District of Texas while appeal was pending of judgment of nondischargeability in Chapter 7 case in Eastern District of Texas; nondischargeable judgment represented 65% of unsecured debt in Chapter 13 case.).

In re Russell, 348 B.R. 441 (Bankr. S.D. Tex. Aug. 26, 2006) (Lack of good faith indicated by "minimal duration" 36-month plan that would pay 1.93% of a nondischargeable judgment.).

Western District of Texas

Viegelahn v. Morgan (In re Morgan), No. SA-12-CV-00436-DAE, 2013 WL 1152057 (W.D. Tex. Mar. 19, 2013) (unpublished) (Ezra) (Citing Beaulieu v. Ragos (In re Ragos), 700 F.3d 220 (5th Cir. Oct. 19, 2012) (Davis, Dennis, Haynes), not bad faith for debtors to exclude Social Security income from calculation of projected disposable income.).

Viegelahn v. Essex, 452 B.R. 195 (W.D. Tex. June 27, 2011) (Rodriguez) (To apply totality-of-circumstances test for good faith, court need not make explicit statement that it considered relevant factors individually and cumulatively, but "fair import" of trial court's opinion must support that relevant factors were considered; citing Suggs v. Stanley (In re Stanley), 224 Fed. Appx. 343 (5th Cir. Mar. 29, 2007) (Garwood, Wiener, Clement), once § 1325(a)(3) objection is raised, court must assess whether debtor met burden to show that plan was proposed in good faith. Plan was not in good faith that would pay 1% to unsecured creditors, while retaining $600,000 home.).

Viegelahn v. Essex, 452 B.R. 195, 201, 202 (W.D. Tex. June 27, 2011) (Rodriguez) (Plan paying 1% to unsecured creditors, while retaining $600,000 home was not in good faith. Section 707(b)(2)(A)(iii)(II) places no reasonableness requirement on monthly payments for primary residence, but compliance with § 1325(b)(3) and § 707(b)(2)(A) does not automatically mean that plan proposing to pay monthly mortgage within those limits was in good faith. "[O]verruling Appellant's Section 1325(a)(3) objection solely on the basis of whether Appellees' proposed plan complies with Section 1325(b)(3) would be improper and would render Section 1325(b)(3) superfluous. However, to find that the Appellees proposed their plan in bad faith even though the housing expenses comply with Section 1325(b)(3) would also be inconsistent." Expenses deemed reasonably necessary under § 1325(b)(3) may be presumed to be asserted in good faith, but "[t]he presumption of good faith can be negated by aggravating circumstances, an example of which might be a debtor's deduction of an ownership expense for a luxury vehicle purchased on the eve of bankruptcy. [In re Owsley, 384 B.R. 739, 750 (Bankr. N.D. Tex. Mar. 31, 2008) (Nelms)]." "Appellees' proposal to retain a home valued at $600,000 while paying only 1% of the $136,681.46 unsecured debt owed to the IRS is a proposal in bad faith. Furthermore, in making this proposal, Appellees have not asserted a reason why it is necessary to retain a home for which the mortgage payments are over four times the amount of the IRS standard for their area despite the extremely low dividend they seek to pay to their unsecured creditors. . . . Although the Bankruptcy Court was correct to emphasize that a purpose of Chapter 13 bankruptcy proceedings is to allow debtors to keep their homes, it is doubtful that Congress intended to protect individuals, like the Appellees, who purchased the home during a time period when they evaded their income taxes. To allow the Appellees to retain their homestead while paying only 1% of the debt owed to unsecured creditors, including the IRS, would be to allow a bargain that too greatly favors the Appellees.").

Viegelahn v. Essex, 452 B.R. 195, 201, 202 (W.D. Tex. June 27, 2011) (Rodriguez) (Although § 707(b)(2)(A)(iii)(II) imposes no reasonableness requirement on monthly payments for primary residence, compliance with § 1325(b)(3) and § 707(b)(2)(A) did not automatically mean that plan paying monthly mortgage within those limits was in good faith. "[O]verruling Appellant's Section 1325(a)(3) objection solely on the basis of whether Appellees' proposed plan complies with Section 1325(b)(3) would be improper and would render Section 1325(b)(3) superfluous. However, to find that the Appellees proposed their plan in bad faith even though the housing expenses comply with Section 1325(b)(3) would also be inconsistent." Expenses deemed reasonably necessary under § 1325(b)(3) may be presumed to be asserted in good faith, but "[t]he presumption of good faith can be negated by aggravating circumstances, an example of which might be a debtor's deduction of an ownership expense for a luxury vehicle purchased on the eve of bankruptcy. [In re Owsley, 384 B.R. 739, 750 (Bankr. N.D. Tex. Mar. 31, 2008) (Nelms)]." "Appellees' proposal to retain a home valued at $600,000 while paying only 1% of the $136,681.46 unsecured debt owed to the IRS is a proposal in bad faith. Furthermore, in making this proposal, Appellees have not asserted a reason why it is necessary to retain a home for which the mortgage payments are over four times the amount of the IRS standard for their area despite the extremely low dividend they seek to pay to their unsecured creditors. . . . Although the Bankruptcy Court was correct to emphasize that a purpose of Chapter 13 bankruptcy proceedings is to allow debtors to keep their homes, it is doubtful that Congress intended to protect individuals, like the Appellees, who purchased the home during a time period when they evaded their income taxes. To allow the Appellees to retain their homestead while paying only 1% of the debt owed to unsecured creditors, including the IRS, would be to allow a bargain that too greatly favors the Appellees.").

In re Barfknecht, 378 B.R. 154, 164-65 (Bankr. W.D. Tex. Nov. 7, 2007) (Clark, L.) (Applying totality-of-circumstances test, absent other evidence, failure to commit all Social Security benefits to funding plan is not lack of good faith. "The trustee here has not directed the court to any peculiar circumstances in either of these cases demonstrating a lack of good faith. The trustee points only to the issue of the Debtors' retention of some or all of their Social Security benefits. . . . [T]he enactment of BAPCPA calls into doubt whether a debtor's retention of Social Security benefits may ever be a factor to consider under the good faith standard. . . . The Bankruptcy Code specifically states that Social Security benefits are excluded as income of the debtor for purposes of satisfying the debtor's ability to pay test. The good faith test in section 1325(a)(3) serves a salutary purpose to be sure—cutting off abuse. But it strikes this court at least as an odd reading of the Code indeed to conclude that a debtor's following the Code, without more, could constitute abuse of the bankruptcy process. . . . As there is no other evidence indicating that the Debtors' plans have not been proposed in good faith, and the Debtors otherwise have been honest and forthcoming with the court, this court concludes that the plans have been proposed in good faith.").

F. Sixth Circuit

Kentucky

Eastern District of Kentucky

In re Pfetzer, No. 17-20802, 2018 WL 1448742, at *2–*7 (Bankr. E.D. Ky. Mar. 22, 2018) (Wise) (Failure to timely object to confirmation on ground that petition was filed in bad faith under § 1325(a)(7) precludes motion to dismiss for bad faith under § 1307(c)—notwithstanding that no plan has been confirmed. Enactment of § 1325(a)(7) in 2005 requires creditors to timely challenge bad faith in filing of Chapter 13 petition before confirmation. Before entry of confirmation order but after deadline for filing objections to confirmation under local rule, creditor moved to dismiss for bad faith under § 1307(c). “Debtor’s amended plan has not yet been confirmed. Accordingly, the Court has not yet found, by confirming his plan, that Debtor satisfied all requirements under § 1325(a), including that Debtor filed his petition in good faith under § 1325(a)(7). . . . Since 2005, the Code has required that whether the debtor filed a chapter 13 petition in good faith is an issue that must be addressed in connection with plan confirmation. . . . Creditor . . . had a clear deadline by which it could object to confirmation of Debtor’s plan based upon alleged bad faith in filing the petition under § 1325(a)(7). Creditor did not do so. . . . [O]nce the deadline to object to a plan under § 1325(a)(7) has passed, this precludes a creditor from seeking dismissal based on bad faith in filing a petition as ‘cause’ under § 1307(c). Otherwise, the objection to confirmation deadline is meaningless in the context of anything other than a creditor’s plan treatment. . . . [T]he addition of § 1325(a)(7) obligated Creditor to timely object to confirmation if it perceived that Debtor filed his petition in bad faith. . . . Creditor’s failure to do so amounted to a waiver of this bad-faith argument under § 1307(c).”).

Western District of Kentucky

In re Miller, No. 07-32080(1)(13), 2007 WL 4563445 (Bankr. W.D. Ky. Dec. 21, 2007) (Lloyd) (Plan paying 5% or 10% of large debt to former spouse declared nondischargeable in prior Chapter 7 case is bad-faith continuing attempt to avoid paying ex-spouse.).

In re Miller, No. 07-32080(1)(13), 2007 WL 4563445 (Bankr. W.D. Ky. Dec. 21, 2007) (Lloyd) (That debtor regularly made more than $100,000 a year working for the same company and now shows current income of only $11,000 per year is evidence of bad faith under employment by design.).

In re Hall, 346 B.R. 420, 426 (Bankr. W.D. Ky. July 31, 2006) (New § 1325(a)(7) provides courts with the alternative of denying confirmation rather than dismissing a Chapter 13 petition that is not filed in good faith; totality-of-circumstances test applies to § 1325(a)(7), including the good-faith factors from In re Alt, 305 F.3d 413 (6th Cir. 2002), and In re Barrett, 964 F.2d 588 (6th Cir. 1992). "[T]he insertion of § 1325(a)(7) is meant to provide courts with an alternative to the harsh dismissal called for under § 1307(c) if the Court finds that a petition was not filed in good faith. . . . [I]t is appropriate to draw guidance from previous Sixth Circuit precedent addressing § 1307(c) in examining § 1325(a)(7). If this Court finds that a petition was not filed in good faith, it will then consider, based on the particular facts and circumstances presented, if the appropriate remedy is dismissal under § 1307(c), or the less harsh remedy of denial of confirmation under § 1325(a)(7). . . . [T]he good faith standard for § 1325(a)(3) and § 1307(c) is identical, although the provisions address good faith in relation to the proposal of a Chapter 13 plan versus good faith filing of a Chapter 13 bankruptcy petition." Court finds bad faith based on conflicting testimony by the debtor, a precipitous drop in income in the month prior to Chapter 13 petition, the presence of a single large unsecured debt that precipitated the bankruptcy filing, "inconsistencies and half-truths" with respect to family problems and the debtor's "purposeful diminution of his assets" by transferring real property back and forth to a former spouse.).

Michigan

Eastern District of Michigan

Antal v. Carroll (In re Antal), 459 B.R. 248, 253-54 (E.D. Mich. Oct. 20, 2011) (Rosen) (Plan provision to retain all property in estate after confirmation lacks good faith under § 1325(a)(3) and (a)(7) when § 362(c)(3) was applicable and purpose of provision was to extend stay without overcoming presumption that current case was not filed in good faith. Chapter 13 trustee objected to plan that would overcome vesting effect in § 1327(b). One debtor had two prior Chapter 13 petitions, and automatic stay would terminate 30 days after current petition under § 362(c)(3). Without addressing extent of stay that expires 30 days after petition, effort to work around expiration of stay without overcoming presumption of a lack of good faith was itself an effort that lacked good faith. "Zoltan had not sought to retain the protection of the automatic stay through the direct route of filing a motion under § 362(c)(3)(B) to extend this stay. . . . [H]ad Zoltan filed such a motion, he would have been required to produce evidence to overcome a statutory presumption that his latest Chapter 13 petition had not been filed in good faith. . . . Zoltan sought to 'escape that presumption by not filing a motion' . . . . Zoltan faced a statutory presumption under § 362(c)(3)(C) that his latest Chapter 13 petition was not filed in good faith. To be sure, it is open to debate whether this presumption applies only in the specific context of a repeat-filer's motion under § 362(c)(3)(B) for continuation of the automatic stay, as opposed to the context of a § 1325(a) inquiry whether to confirm a plan. Yet, a Bankruptcy Court surely is free to find a lack of good faith even in the absence of a statutorily mandated presumption. More to the point, the record in this case supports such a finding, where Debtors and their counsel failed to pursue an available statutory avenue—i.e., a motion under § 362(c)(3)(B)—for demonstrating Zoltan's good faith in filing his latest Chapter 13 petition.").

Dow Chem. Employees Credit Union v. Collins, No. 10-14611, 2011 WL 2746210 (E.D. Mich. July 14, 2011) (Ludington) (When credit union did not raise good faith before bankruptcy court, it could not raise it on appeal of confirmation. Credit union objected to plan, which included $300 monthly expense for cigarettes and $300 for recreation, under disposable income test.).

Reymer v. Carroll (In re Reymer), 403 B.R. 475, 480 (E.D. Mich. Apr. 7, 2009) (Roberts) (Totality-of-circumstances determination requires more than just a de minimis payment to unsecured creditors to support sua sponte dismissal for lack of good faith. Bankruptcy court held that Chapter 13 plan was disguised Chapter 7 because of 1% dividend to unsecured creditors. Particular scrutiny required by the Sixth Circuit for small percentage plans in In re Caldwell II, 895 F.2d 1123 (6th Cir. 1990), "does not mean outright rejection. A small dividend alone does not mandate a conclusion that a debtor's plan was filed in bad faith. See In re Francis, 273 B.R. 87, 91 (B.A.P. 6th Cir. 2002).").

In re Mihal, No. 13-54435, 2015 WL 2265790, at *4 (Bankr. E.D. Mich. May 6, 2015) (Shapero) (Answering question reserved in Baud v. Carroll, 634 F.3d 327 (6th Cir. Feb. 4, 2011) (Cole, Clay, Katz), "confirmation cannot be denied on good faith grounds solely for failure to include Social Security income. Theoretically, if a debtor for example proposed using the retained Social Security income to purchase luxury goods or to maintain an excessive standard of living, an argument can be made that confirmation of such a plan should be denied on good faith grounds, not because Social Security income was excluded from disposable income, but because of those other circumstances of the case. . . . Additionally, the feasibility requirement of § 1325(a)(6) will continue to be relevant to plan confirmation.").

In re Larson-Asplund, 519 B.R. 682 (Bankr. E.D. Mich. Oct. 8, 2014) (Shefferly) (Obligation in consent decree to pay half of college education expenses was not a domestic support obligation, but plan to pay former spouse de minimis amount in a Chapter 13 case in which the debtor was not eligible for discharge because of § 1328(f) was not proposed in good faith. Factors indicating lack of good faith under § 1325(a)(3) included third case, debtor not eligible for discharge, few creditors, filing immediately after unfavorable state court ruling, former spouse as only pressing creditor and plan proposed de minimis payments toward nondischargeable debts.).

In re Brinkley, 505 B.R. 207 (Bankr. E.D. Mich. Nov. 5, 2013) (Tucker) (Retention of rental property leased to debtor's adult son and wife, when rental income did not cover mortgage payment, was not good faith under § 1325(a)(3).).

In re Kwiatkowski, 486 B.R. 409 (Bankr. E.D. Mich. Jan. 25, 2013) (Tucker) (Bad-faith filing: debtor concealed ineligibility by scheduling unsecured deficiency debt after prepetition foreclosure as "unknown" when debtor knew deficiency was at least $250,000.).

In re Kwiatkowski, 486 B.R. 409 (Bankr. E.D. Mich. Jan. 25, 2013) (Tucker) (Bad-faith plan when debtor concealed ineligibility by scheduling unsecured deficiency debt after prepetition foreclosure as "unknown" when debtor knew deficiency was at least $250,000.).

In re Lehnert, No. 07-55988, 2009 WL 1163401 (Bankr. E.D. Mich. Jan. 14, 2009) (Shapero) (When Schedule I understated income, plan proposing to pay between 0% and 4% to unsecured creditors did not evidence sincere motivation to repay creditors; debtors given 30 days to file new plan.).

Western District of Michigan

Mains v. Foley, Nos. 1:11-CV-456, 1:11-CV-740, 2012 WL 612006, at *3-*6 (W.D. Mich. Feb. 24, 2012) (unpublished) (Jonker) (Good faith under § 1325(a)(3) includes consideration of Social Security income notwithstanding exclusion of Social Security from the projected disposable income test. "The subjective good faith test of section 1325(a) is distinct from and independent of the objective requirement of section 1325(b) . . . . Congress actually reinforced the point in the 2005 BAPCPA amendments by expressly excluding Social Security benefits from the objective 'disposable income' analysis of section 1325(b), but leaving undisturbed the open-ended and unqualified subjective determination of good faith under section 1325(a). . . . [I]t is entirely possible for a debtor to satisfy the objective test of section 1325(b) while at the same time leaving ample factual basis upon which to find a subjective lack of good faith. . . . [N]othing in section 407 of the Social Security Act gives a debtor immunity from demonstrating good faith as a pre-condition to confirmation of a Chapter 13 plan . . . . The intrinsic flexibility of the standard is its strength, both in general, and in the particular assessment of whether, when and how Social Security benefits must fit into the good faith determination. A per se rule in either direction defeats the purposes of the good faith test.").

In re Gomery, 523 B.R. 773 (Bankr. W.D. Mich. Jan. 28, 2015) (Boyd) (Evidence of lack of good faith for purposes of §§ 1325(a)(3), 1325(a)(7) and 1307(c) included failure to disclose half interest in valuable corporation, failure to disclose bank accounts and payments in personal and law firm bankruptcies, failure to disclose firearms and filing to avoid bonding appeal of large state court judgment.).

In re St. Vincent, No. DM 11-90684, 2012 WL 879286 (Bankr. W.D. Mich. Mar. 22, 2012) (Dales) (Filing was in bad faith when there were no creditors or debt, but only disputed property interest. Debtor held interest with two co-tenants, including spouse, in real estate that was subject of pending Chapter 7 trustee proceeding to sell.).

In re Mains, 451 B.R. 428, 434 (Bankr. W.D. Mich. Mar. 25, 2011) (Hughes) (Stay of order denying confirmation is denied because debtors have little likelihood of prevailing on argument that Social Security income should not be considered in good-faith analysis under § 1325(a)(3). "[W]hile the Eighth Circuit may have eliminated ability-to-pay factors from its consideration of Section 1325(a)(3) good faith, the Sixth Circuit most certainly has not. . . . [W]hile [Baud v. Carroll, 634 F.3d 327 (6th Cir. Feb. 4, 2011) (Cole, Clay, Katz),] is correct that the Sixth Circuit has not yet decided what social security benefits should be included for purposes of determining Section 1325(a)(3) good faith, there are a number of Sixth Circuit decisions that indicate what the outcome will likely be. These cases clearly establish that ability to pay remains an important factor in assessing a debtor's good faith under Section 1325(a)(3). . . . [T]his court sees no reason why the Sixth Circuit would not take into consideration all of a debtor's income, including social security benefits, in considering the sincerity of his repayment plan regardless of whether those benefits were included or not under Section 1325(b).").

In re McGillis, 370 B.R. 720, 743-53 (Bankr. W.D. Mich. May 15, 2007) (Hughes) (Ability to pay and consideration of actual income and expenses at effective date of plan remain components of good faith notwithstanding BAPCPA amendments to disposable income test; debtor with CMI greater than applicable median family income who has little or no disposable income under § 707(b)(2)(A) and (B) is denied confirmation when actual income and reasonable and necessary expenses on effective date of plan reveal income to pay creditors. "[W]hat is important is that [Hardin v. Caldwell (In re Caldwell), 851 F.2d 852 (6th Cir. July 14, 1988) (Krupansky, Boggs, Brown),] adopted the [United States v. Estus (In re Estus), 695 F.2d 311 (8th Cir. Dec. 15, 1982) (Heaney, Stephenson, Henley),] list one year after the Eighth Circuit itself determined in [Education Assistance Corp. v. Zellner, 827 F.2d 1222 (8th Cir. Sept. 3, 1987) (Arnold, Gibson, Wright),] that most of the Estus factors had been subsumed by the ability to pay criteria of Section 1325(b) when it had been enacted in 1984. . . . Consequently, there is no question that the Sixth Circuit is not in agreement with Zellner . . . for its conclusion that a debtor's ability to pay is not an appropriate subject for consideration under Section 1325(a)(3). . . . [T]he developing body of case law recognizes a relationship between Section 707(b)(2) and Section 707(b)(3)(B) whereby all debtors must submit first to an objective evaluation of their financial circumstances and perhaps then a second, subjective evaluation of their financial circumstances as well. Therefore, it stands to reason that BAPCPA includes a similar objective/subjective dichotomy between Section 1325(b) and Section 1325(a)(3), for it is essential that these two sections mirror Sections 707(b)(2) and (b)(3)(B). . . . I conclude that proposing a plan in good faith today under Section 1325(a)(3) means the same as what it meant under Section 1325(a)(3) pre-BAPCPA, that the debtor is to make a honest effort to repay his creditors . . . . Section 1325(b) affords no relief to debtors from this responsibility. Section 1325(b) is a hazard, not a harbor. . . . Section 1325(a)(3) good faith is best measured by comparing what the debtor is proposing under his plan with what a similarly situated person in the debtor's community could afford to pay yet still live a modest but comfortable lifestyle. . . . [A] significant number of relatively well off debtors will be able to avoid compliance under Section 1325(b) because of differences between their average historical earnings and their current earnings. Debtors so situated certainly do not like the fact that Section 1325(a)(3) good faith still requires them to account for their present wherewithal in order to confirm their plan. . . . I conclude that all debtors' plans should be evaluated for good faith under Section 1325(a)(3) based upon the assumption that three years is the appropriate measure. . . . I conclude that a debtor's ability to fund a Chapter 13 plan based upon his current earnings and expenses remains an important consideration for purposes of determining whether the debtor's plan is proposed in good faith under Section 1325(a)(3) even in those instances when the debtor has successfully withstood an objection brought under Section 1325(b). Section 1325(b) does nothing more than set an objective benchmark for determining when confirmation is to be denied. Passing the Section 1325(b) test, though, does not mean that the debtor's financial wherewithal is exempt from further scrutiny by the court. Rather, the good faith standard of Section 1325(a)(3) still requires the debtor to establish to the court's satisfaction that he is in fact making an honest effort under the circumstances to repay his creditors through his proposed plan.").

Ohio

Northern District of Ohio

In re Rolince, No. 14-33871, 2015 WL 1321510, at *1-*2 (Bankr. N.D. Ohio Mar. 17, 2015) (Whipple) (Plan lacks good faith that promises 1% to unsecureds when debtor is not currently eligible for discharge, four years will pass before any unsecured creditor except attorney gets payments and debtor will become eligible again for discharge—at which point debtor will likely dismiss the case. "[M]ore than 4 years of the plan would be devoted to paying administrative expenses, mostly lawyer's fees. Unsecured creditors would not receive even their minimal distribution under the plan, if any, until the very end. And by then, the 8 year limitation on filing another Chapter 7 case will have passed . . . , making the likelihood that Debtor actually completes her proposed plan slim. . . . The court finds that Debtor filed her case in good faith. She is a long time, hardworking employee of Wal-Mart trying to keep her mortgage paid and make ends meet on her wages. She supplements those wages with food stamps and, evidently, credit card use. But the court cannot find that Debtor has proposed her plan in good faith.").

In re Weltlich, No. 12-30181, 2012 WL 3782553 (Bankr. N.D. Ohio Aug. 31, 2012) (Whipple) (Plan proposing to sell property was in good faith, when debtor had listed property and demonstrated sincere effort to sell.).

In re Predragovic, No. 10-60259, 2010 WL 3239360, at *2-*4 (Bankr. N.D. Ohio Aug. 16, 2010) (Kendig) (Plan fails 12-factor analysis for good faith when single debtor with no dependents keeps two cars and claims living expenses allowed by § 707(b)(2) but excessive under circumstances. Debtor took transportation ownership cost deductions on Form B22C for two cars, one unencumbered. Citing 12 factors from Alt v. United States (In re Alt), 305 F.3d 413 (6th Cir. Oct. 2, 2002) (Daughtrey, Clay, Williams): "Debtor failed to meet his burden of establishing good faith. His sole argument in response to Trustee's objection is that a plan cannot be filed in bad faith based on deductions claimed on the means test. The court vehemently disagrees. . . . The allowance or disallowance of expenses on the means test is not determinative of good faith. . . . Debtor would have us head down this road, treating the means test as the HAL 9000, obviating the need for all of the pesky provisions of the Bankruptcy Code requiring evaluations of things like reality and social values. The rest of the Bankruptcy Code has not ceased to exist and most certainly not § 1325(a)(3). . . . [T]he means test allows $517.00 as the national standard for 'food, apparel and services, housekeeping supplies, personal care, and miscellaneous. According to Schedule J, Debtor's expenses in these categories . . . total $845.00. Debtor has used the congressionally established allowances for vehicles on the means test to support a lifestyle above the congressionally approved living expenses. . . . Courts frequently find cases where a single debtor seeks to retain multiple vehicles objectionable. . . . A single debtor claiming $750 in vehicle expenses, in addition to claiming higher expenses for almost every other living expense, is not good faith.").

In re Smith, No. 09-64409, 2010 WL 2400065, at *2-*3 (Bankr. N.D. Ohio June 15, 2010) (unpublished) (Kendig) (Although 401(k) contributions are not property of the estate and are excluded from disposable income by § 541(b)(7), increasing contributions from 3% of income to 15% of income on eve of Chapter 13 filing was bad faith for § 1325(a)(3) purposes. "[T]he debtors' contributions to 401(k) plans are excluded from the debtors' disposable income. Post-BAPCPA, bankruptcy courts have disagreed as to whether 401(k) contributions can be considered when determining whether a debtor's plan is proposed in good faith. . . . Congress did not intend to handicap the courts' good faith inquiries or unintentionally create a loophole through which debtors could redirect their incomes from creditors at the last moment. . . . [G]ood faith should serve as a backstop against debtors who aggressively game BAPCPA's provisions at the expense [of] bankruptcy policies . . . . However, the enactment of section 541(b)(7) injected a policy favoring retirement savings into the bankruptcy code. Therefore, the harsh approach toward 401(k) contributions taken by courts pre-BAPCPA is no longer warranted. Instead, the Court must balance the policy in favor of retirement savings against other bankruptcy policies . . . . Mr. Smith increased his 401(k) contribution by five times on the eve of filing bankruptcy to a level far beyond what was typical for him. . . . [T]he increase reduced the distribution to unsecured creditors by more than half. . . . [T]he debtors present no financial-planning justification for the increase. The Court finds that under these circumstances the debtors' 401(k) contributions go far beyond reasonably measured retirement planning and are unfair to unsecured creditors.").

In re Bond, No. 08-61720, 2008 WL 6178147 (Bankr. N.D. Ohio Nov. 10, 2008) (Kendig) (Plan provision for surrender of vehicle lacks good faith when debtor does not have possession or title to vehicle transferred to repair shop.).

In re Baughman, No. 07-63208, 2008 WL 4487879, at *5-*7 (Bankr. N.D. Ohio Sept. 30, 2008) (unpublished) (Kendig) (Plan satisfies disposable income test that allows Local Standards transportation ownership deduction for unencumbered car and for car with payment less than amount allowed by IRS; however, plan fails good faith test because transportation expenses not immediately committed must be saved or otherwise accounted for "in good faith." "[M]ore than merely permitting the deduction is necessary . . . to reflect the reality that a car without payments is likely to be an aging vehicle that will need replacement within five years. . . . The purpose, not just the dollar value, is part of the statutory prescription. . . . Debtors' plan is not proposed in good faith; when Congress allowed debtors to shelter money from creditors for the costs of owning a motor vehicle, they meant that money to be used for the costs of owning a motor vehicle, or for debtors to specifically justify the good faith of their actions. Debtors may propose a plan that provides for saving the money above their actual currently [sic] monthly ownership expense but below the level of the allowable deduction, earmarked for the future payment of vehicle ownership expenses . . . . There are other uses, such as specific unique problems, not accounted for in rigid tests, that could also qualify. The use of these unappropriated funds must meet a searching and particularized good faith examination. . . . This plan does not spend for the allowed purpose, nor does it save, nor does it explain where the difference will go, however, and it therefore cannot be confirmed.").

Southern District of Ohio

Selby v. Selby (In re Selby), No. 10-1078, 2010 WL 6494059, at *2 (Bankr. S.D. Ohio Dec. 15, 2010) (Perlman) ("[T]he Chapter 13 case was filed, and the plan proposed, in good faith. Debtor was driven to filing his Chapter 13 case because of the deterioration of the real estate market beginning in 2007 and 2008.").

In re McDonald, 437 B.R. 278 (Bankr. S.D. Ohio Sept. 30, 2010) (Humphrey) (Plan was not proposed in good faith under totality of circumstances when unsecureds would get minimal distribution while debtors retained high-end home and vehicles for which secured claims would be paid in full. Debtors did not submit evidence of any special circumstance, such as medical expense, that caused financial misfortune. Debtors failed to pay substantial business taxes, and plan was fundamentally unfair to pay secured claims and taxes at expense of unsecured creditors. Case resembled veiled Chapter 7. Debtors may be able to propose confirmable plan, which might require liquidation of unnecessary assets for benefit of unsecured creditors and payment of sales taxes without impairing unsecured creditors.).

In re Lofty, 437 B.R. 578 (Bankr. S.D. Ohio Sept. 30, 2010) (Humphrey) (Applying totality-of-circumstances test, plan lacked good faith that devoted substantial portion of income to secured creditors, creating equity in property for debtors with respect to motor home, and paying for home of adult son and adult grandson, who were not dependents. Under objective good-faith standard, debtors were choosing to support non-dependent family members at expense of unsecured creditors, and debtors offered no evidence to support necessity of retaining motor home.).

In re Lofty, 437 B.R. 578, 589 (Bankr. S.D. Ohio Sept. 30, 2010) (Humphrey) (Plan was not proposed in good faith that would maintain ownership and pay debt secured by motor home and by property in which adult son and grandson resided, but son and grandson were not dependents. "The focus of the Trustee's good faith argument is essentially that the Debtors are paying a substantial portion of their income to secured creditors to either create equity in collateral for the benefit of themselves or their family or, with respect to the Motor Home, that income is being foolishly frittered away on the depreciating Motor Home. The Trustee posits that by surrendering the Motor Home and moving into one of their parcels of real estate, the Debtors could pay a significantly higher dividend to nonpriority secured creditors. The court finds that the Trustee met his burden of producing evidence in support of his objection. . . . The Debtors did not sustain their burden of proving that their Plan was proposed in good faith. The primary area of dispute does not concern the Debtors' subjective good faith, but rather, the objective good faith of the Plan.").

In re Upton, 363 B.R. 528, 536 (Bankr. S.D. Ohio Mar. 14, 2007) (Preston) (Notwithstanding that Social Security benefits are excluded from CMI by § 101(10A) and are not considered in the projected disposable income calculation in § 1325(b), good faith in the Sixth Circuit includes consideration of amount of debtor's proposed payments and amount of debtor's surplus; debtor with Social Security benefits can fail good-faith analysis when effect of SSI is surplus income that is not committed to paying unsecured creditors. "Congress . . . did not amend the requirement of good faith contained in § 1325, or the elements to be considered in that analysis.").

In re Henry, 328 B.R. 529 (Bankr. S.D. Ohio Dec. 28, 2004) (Hoffman) (Plan is not proposed in good faith when debtor purchased vehicle within 34 days of filing a proposed plan that would pay only 5% to unsecured creditors over 39 months. Under totality of circumstances, while Memphis Bank & Trust Co. v. Whitman, 692 F.2d 427 (6th Cir. 1982), does not mandate 100% plan, court concludes 100% repayment is required for this debtor.).

In re Henry, 328 B.R. 529, 540, 541 (Bankr. S.D. Ohio Dec. 28, 2004) (A Chapter 13 plan, filed 34 days after the debtor acquired a new automobile, proposing to cram down the automobile loan and reduce the interest rate, was not proposed in good faith. The debtor purchased a Cavalier with a "sticker price" of $13,044 and borrowed money from AmeriCredit which also paid off a $6,600 balance on a trade-in car, leaving the debtor with a total obligation of $20,300. Shortly after buying the car, the debtor filed a Chapter 13 petition proposing to "cram down" the vehicle's secured claim to $13,300 and reduce the interest rate from 21.95% to 5%. "The close proximity in time between Henry's purchase of the Grand Am and the Petition Date convince the Court that he sought bankruptcy relief in order to gain an unfair advantage over AmeriCredit and thus has not proceeded in good faith. . . . Under these circumstances, to allow the Debtor to gain an economic advantage at AmeriCredit's expense would violate the spirit of the Bankruptcy Code." The intervening circumstances, threatened criminal prosecution for a bad check, was of the debtor's own making. Debtor's minimal commitment (37 months) and minimal payback to unsecured creditors (5%) and the debtor's repeated access to the Bankruptcy Code (Chapter 7 discharge within three years before filing) support a finding of a lack of bad faith. Even though the plan may properly "value" the secured claim of AmeriCredit, the plan cannot be confirmed as proposed without the requisite good faith.).

Tennessee

Eastern District of Tennessee

In re Newell, No. 04-13285, 2007 WL 3023455, at *7 (Bankr. E.D. Tenn. Oct. 12, 2007) (Small percentage payment of debts determined to be nondischargeable in prior Chapter 7 is not bad faith. In prior Chapter 7, debtor consented to nondischargeable judgments under § 523(a)(2). Soon after discharge, debtor filed Chapter 13 case, which reflected significant debt to IRS as well as nondischargeable claims. If case were governed by BAPCPA, debts would be nondischargeable in Chapter 13. Debtor's financial situation was hopeless. "There may be a fine line between the sincere intent to pay according to the debtor's financial ability and the intent to use the law to defy, or even to inflict additional injustice on, a creditor who has already been harmed by the debtor's wrongdoing. The debtor in this case admitted her wrongdoing and did not reveal any intent to use her chapter 13 case to continue defying or harming the objecting creditors. The court concludes that the debtor did not propose the third modified plan with the kind of wrongful intent that amounts to bad faith.").

In re Derryberry, 367 B.R. 616 (Bankr. E.D. Tenn. Apr. 30, 2007) (Civil judgment for willful and malicious injury to property resulting from debtor's arson would be dischargeable in Chapter 13 case, but minimal repayment plan was not proposed in good faith when debtor received inheritance a few months before petition but made no effort to repay judgment.).

Middle District of Tennessee

In re Petro, 381 B.R. 233, 235, 242-43 (Bankr. M.D. Tenn. Jan. 23, 2008) (Paine) (When recently employed debtor has negative disposable income on Form B22C and satisfies projected disposable income test, good-faith requirement in § 1325(a)(3) does not require denial of confirmation. Form B22C calculation and Schedules I and J "paint a different financial picture" because one debtor was recently employed. "The court overrules any objection to good faith based on the debtors' failure to contribute all their disposable income to the plan. . . . The court cannot find these debtors acted in bad faith by following Congress' statutory instructions in calculating their disposable income."), rev'd on other grounds, 395 B.R. 369 (B.A.P. 6th Cir. Oct. 17, 2008) (Fulton, McIvor, Shea-Stonum).).

Western District of Tennessee

United States Dep't of Educ. v. Harris, 339 B.R. 673, 676 (W.D. Tenn. Mar. 30, 2006) (Chapter 13 payments for a student loan should be applied in accordance with federal law, first to accrued interest then payments to principal. The debtor's initial Chapter 13 plan proposed 100% distribution to certain student loan creditors without interest. The debtor objected to a proof of claim filed by the student loan creditors in a subsequent case. The debtor argued that the payments received in the first case should have been applied to principal, thus reducing the accrual of postpetition interest. "Congress has determined that absent proven undue hardship, student loans are nondischargeable and, thus, pass unaffected through the bankruptcy estate for purposes of the debtor's liability, and Congress has approved that the creditor, in applying a debtor's defaulted student loan payments, generally must apply those payments first to accrued interest before principal. . . . [A]dopting the Debtors' position would, in essence, permit them partially to discharge the interest on their nondischargeable student loan debts without a showing of undue hardship. . . . This would place the Debtors in a far more favorable position than other student loan debtors solely by virtue of their Chapter 13 bankruptcies, thus allowing the Debtors to accomplish indirectly what they could not accomplish directly.").

G. Seventh Circuit

In re Turner, 574 F.3d 349, 356 (7th Cir. July 20, 2009) (Posner, Sykes, Van Bokkelen) (Arguably in dicta, not bad faith for § 1325(a)(3) purposes for debtor to propose plan that includes a deduction from disposable income for monthly mortgage payment that will disappear when house is abandoned to mortgagee. "A plan does not violate [§ 1325(a)(3)] merely because it contains, fully disclosed, an arguable claim rejected in the course of the bankruptcy proceeding. . . . It is not bad faith to seek to advance one's economic interests by making a claim based on a defensible view of one's legal rights, even if the view ends up being rejected."), rev'g on other grounds 384 B.R. 537 (Bankr. S.D. Ind. Mar. 27, 2008) (Coachys) ("[T]he Court would be unwilling to find bad faith based solely on the fact that Debtor is not committing more to fund a plan than is otherwise required under § 1325(b)(2). . . . [T]he prevailing rule of law since the initial adoption of § 1325(b) in 1984 is that the sufficiency of resources committed to unsecured creditors is governed by that more specific provision and is no longer a consideration in the good faith analysis under § 1325(a)(3).").

Illinois

Central District of Illinois

In re Schweighart, No. 14-81045, 2015 WL 7753408 (Bankr. C.D. Ill. Dec. 1, 2015) (Altenberger) (Plan that requires a substantial increase in payments in the 45th month is not filed in good faith when debtors testified that they would be unable to make the larger payment and instead intended to convert to Chapter 7 in the 45th month—after home mortgage arrearages were cured.).

In re Youngblood, No. 13-71071, 2013 WL 5592904 (Bankr. C.D. Ill. Oct. 10, 2013) (Gorman) (Bad faith included that case was filed to avoid or delay collection of state court sanctions for misconduct and misrepresentations.).

In re McCreary, No. 09-81743, 2009 WL 5215587 (Bankr. C.D. Ill. Dec. 29, 2009) (Perkins) (Good-faith objections to petition and to confirmation by former spouse fail under § 1325(a)(7) and § 1325(a)(3); same factors that determine dismissal for bad faith under § 1307(c) should be considered for § 1325(a)(7). There was no allegation of misrepresentation, and debtor with minimal income proposed $350-per-month plan. Former spouse held two property-settlement judgments which were dischargeable under § 523(a)(15) if debtor received full-payment discharge.).

In re Powell, 403 B.R. 583 (Bankr. C.D. Ill. Apr. 1, 2009) (Perkins) (Applying In re Smith, 286 F.3d 461 (7th Cir. 2002), that debtor borrowed $1,500 three days before petition and used $500 for bankruptcy attorney fees is not sufficient to prove bad-faith filing of plan under § 1325(a)(3). "In Smith, . . . [t]he court recognized that a plan could be confirmed despite egregious pre-filing conduct where the plan represents a good faith effort to pay creditors. . . . [E]ven if BETTY fraudulently obtained the loan from INCI, that by itself is not sufficient to warrant a bad faith plan determination.").

In re Powell, 403 B.R. 583 (Bankr. C.D. Ill. Apr. 1, 2009) (Perkins) (Applying In re Smith, 286 F.3d 461 (7th Cir. 2002), that debtor borrowed $1,500 three days before petition and used $500 for bankruptcy attorney fees is not sufficient to prove bad-faith filing of plan under § 1325(a)(3); this outcome is "further buttressed by the existence of the remedy of nondischargeability, a remedy that INCI is pursuing in tandem with its plan objection.").

In re Powell, 403 B.R. 583 (Bankr. C.D. Ill. Apr. 1, 2009) (Perkins) (In dicta, "[i]f the DEBTORS file an Amended Plan proposing to keep and pay for the Lincoln at the full amount of FMCC'S claim, such a plan would lack good faith.").

In re Smith, No. 07-82462, 2009 WL 937144, at *3 (Bankr. C.D. Ill. Mar. 24, 2009) (unpublished) (Perkins) (When debtor with CMI greater than applicable median family income shows negative disposable income on Line 58 of Form B22C, good faith is not an obstacle to confirmation of plan that will pay approximately 8% to unsecured creditors with payments to unsecured creditors beginning around 37th month after confirmation. "Generally, the court may not use the good faith standard of Section 1325(a)(3) to require greater payments by an above-median debtor whose Schedule J shows excess available funds. . . . Since the DEBTORS' Second Amended Plan will propose to pay unsecureds more than minimally required by Line 58 on Form 22C, it passes the 'projected disposable income' test of Section 1325(b)(1)(B). Having passed that hurdle, it does not run afoul of the good faith requirement merely because Schedule J shows available disposable income that is not being paid into the plan for a portion of the plan's term. . . . It is common for secured claims, that are payable ahead of unsecured claims, to be paid inside the plan, in which case unsecured creditors may receive no distribution until the third, fourth, or even fifth year of the plan. A similar result occurs here, under the proposed Second Amended Plan, even though the DEBTORS are proposing to pay the two secured claims outside the plan. . . . [T]he proposed deferral of the plan payments does not result in unsecured creditors being treated worse than they have the right to demand. . . . [T]he deferral in commencement of the plan payments, which is not prohibited by any applicable statutory provision, does not rise to the level of a lack of good faith.").

In re Franklin-Kidwell, No. 08-90911, 2008 WL 4516299, at *1 (Bankr. C.D. Ill. Sept. 9, 2008) (Fines) (Filing Chapter 13 60 days after buying used car is not a lack of good faith when there are numerous other creditors and restructuring of car loan was not "the only consideration for the Debtor's Chapter 13 bankruptcy filing.").

In re Guthrie, No. 05-82828, 2005 WL 3542664, at *1 (Bankr. C.D. Ill. Dec. 22, 2005) (unpublished) (Denying creditor's summary judgment motion, "the question of good faith requires a totality of the circumstances analysis that merits a trial.").

Northern District of Illinois

In re Manzo, No. 16 C 7218, 2017 WL 3675809, at *5–*8 (N.D. Ill. Aug. 25, 2017) (Alonso) (Because Social Security benefits are excluded from Chapter 13 estate and from calculation of disposable income, it is not appropriate to consider debtor’s decision not to voluntarily use Social Security benefits to pay creditors in the good-faith determination. Debtor received lump-sum Social Security benefit before petition and held part in a bank account. Trustee argued that good faith required debtor to voluntarily submit some or all of banked benefits when plan would strip off wholly unsecured junior mortgage and pay small percentage of unsecured claims. “The Ninth, Fifth, and Tenth Circuits . . . have all considered whether the fact that a Chapter 13 debtor’s surplus income from social security benefits is not reflected in his repayment plan may properly impact the good faith determination. All three circuits have concluded that it may not. . . . Congress explicitly excluded social security income from the calculation of disposable income, and ‘[w]hen Congress speaks directly to one of the good faith factors, the judicial good faith inquiry is narrowed accordingly.’ . . . Even if it is not clear enough from the language of 42 U.S.C. § 407 alone that Congress intended to exclude social security benefits from consideration in bankruptcy proceedings, . . . it is clear from the provisions of Chapter 13, in which Congress went to great lengths to prescribe a method of calculating income that explicitly excludes social security benefits, that Congress intended social security benefits to be beyond the reach of creditors who object to a proposed Chapter 13 repayment plan in order to boost their recovery. . . . [T]hat a Chapter 13 debtor proposes to pay only a small portion of a debt that is not dischargeable in Chapter 7 is an important, though not necessarily determinative, factor that the bankruptcy court must take into consideration in its good faith analysis . . . . ‘[B]ecause Congress unambiguously clarified the amount a debtor is required to pay in § 1325(b), the good faith analysis of § 1325(a)(3) should not be considered when determining a payment amount.’ . . . [G]ood faith analysis should center on whether there are ‘other indicia of bad faith[.]’”).

Sutton v. Reed (In re Reed), 526 B.R. 713 (N.D. Ill. Aug. 20, 2014) (Chang) (Not bad faith that plan paid 2.59% to unsecured claims, crammed down secured claim on business property, and took 13 months to confirm. Return to unsecured creditors satisfied best-interests test and any delay in confirmation was not the result of bad faith but rather fluidity of small business.).

In re Hill, No. 17 BK 27598, 2018 WL 1075860, at *4 (Bankr. N.D. Ill. Feb. 23, 2018) (Schmetterer) (Not bad faith for confirmation purposes that debtor was financially unable to reclaim car after it was impounded by city; that car was crushed when no one claimed it from impoundment is not bad faith by debtor when lender could have reclaimed the car before it was crushed. “Debtor’s inaction with regards to the vehicle is excusable given that it stemmed entirely from her financial inability to pay the fees to the City.”).

In re Klein, 581 B.R. 579, 582 (Bankr. N.D. Ill. Feb. 16, 2018) (Goldgar) (Not bad faith that Chapter 13 debtor with current monthly income greater than applicable median family income who has negative disposable income on Official Form 122C-2 shows some excess income on Schedules I and J or that expenses on Schedule J have been misstated or manipulated. Schedules I and J are not relevant to good-faith inquiry if the debtor satisfies the projected disposable income test based on Official Form 122C-2. “Before 1984, courts determined a debtor’s good faith by looking at whether the plan proposed to make a ‘substantial or meaningful repayment to unsecured creditors.’ . . . By adding section 1325(b) with its disposable income test, however, the 1984 amendments eliminated that inquiry. . . . Good faith ‘no longer had an economic component.’ . . . That became a fortiori true after the 2005 amendments, at least where above-median debtors like Klein were concerned. For those debtors, even the reasonable necessity of their expenses is no longer something for courts to determine. Reasonable necessity has instead become ‘a simple and straightforward matter of arithmetic based on sections 707(b)(2)(A) and (B).’ . . . Because the disposable income and good faith questions are ‘separate and distinct,’ . . . inflated expenses on an above-median debtor’s Schedule J do not establish bad faith . . . . [A]ny misstatements on Klein’s Schedule J are irrelevant. An above-median debtor’s Schedule J has no effect at all on what creditors receive under the plan. Fabricated or exaggerated expenses on a Schedule J instead tend to make the debtor’s plan appear less feasible, making confirmation less likely. These kinds of problems do not work to an above-median debtor’s advantage—quite the contrary. Mistakes in a chapter 13 debtor’s schedules that do not affect creditors and gain the debtor nothing do not show bad faith.”).

In re Olson, 553 B.R. 343 (Bankr. N.D. Ill. June 22, 2016) (Schmetterer) (In fourth bankruptcy case in five years, good-faith objections to confirmation are rejected; minor inaccuracies in schedules do not prove bad faith; filing on eve of foreclosure is not bad faith when bankruptcy provides remedies not available under state law; and on-paper budget shows that debtor is able to pay $225,500 arrearage on mortgage.).

In re Banks, 545 B.R. 241, 244-46 (Bankr. N.D. Ill. Feb. 9, 2016) (Schmetterer) (Fee-only Chapter 13 plan was proposed in good faith when debtor has special circumstance that Chapter 13 case can discharge parking ticket fines that would be nondischargeable in a Chapter 7 case. "[F]ee-only Chapter 13 plans are not per se bad faith. . . . [F]ee-only plans must meet a '"heavy burden" in demonstrating "special circumstances" [ ] to justify the chapter 13 petition or the chapter 13 plan.' . . . Chapter 13 offers this Debtor something that Chapter 7 cannot offer him and that he desperately needs—a discharge of his debt owed to the City of Chicago for parking tickets so that he can keep his driver's license. In this case, 'special circumstances' do exist to warrant the Debtor filing a Chapter 13 instead of a Chapter 7.").

In re Neal, No. 12 B 26305, 2014 WL 1424941 (Bankr. N.D. Ill. Apr. 10, 2014) (Schmetterer) (Sloppy record keeping by unsophisticated debtors inexperienced in business was not sufficient to establish lack of good faith when coupled with absence of any evidence of intent to deceive or hide property or income.).

In re Neal, No. 12 B 26305, 2014 WL 1424941 (Bankr. N.D. Ill. Apr. 10, 2014) (Schmetterer) ("Fairness" requirement for good faith set forth in Ravenot v. Rimgale (In re Rimgale), 669 F.2d 426 (7th Cir. Jan. 18, 1982) (Cummings, Fairchild, Brown), was displaced by BAPCPA amendments; plan that proposed to strip off unsecured lien and treat creditor as unsecured could not be deemed unfair as debtors were exercising well-recognized rights.).

In re Burmeister, 378 B.R. 227, 232 (Bankr. N.D. Ill. Nov. 16, 2007) (Goldgar) (Good-faith objection is not appropriate challenge to calculation of disposable income when debtors take secured debt deduction for mortgage on real property surrendered through plan. "Because the [good-faith] argument is premised on the notion that the Burmeisters have miscalculated their disposable income and there is no miscalculation, there is nothing to the argument. . . . Lack of good faith is not a proper basis for objecting to a miscalculation of disposable income. 'Disposable income is "determined under section 1325(b) rather than as an element of good faith under section 1325(a)(3)."'").

In re Farrar-Johnson, 353 B.R. 224, 231-32 (Bankr. N.D. Ill. Sept. 15, 2006) (Goldgar) (Good-faith test in § 1325(a)(3) is not an economic measure that substitutes for disposable income test when debtor claims housing deduction under Local Standards but does not actually pay for housing. "This kind of good faith objection to a debtors' disposable income has had little or no potency since the 1984 amendments to the Code. . . . If the reasonable necessity of a debtor's expenses is no longer relevant, then plainly the debtor's 'good faith' in claiming them cannot be relevant. Disposable income is 'determined under section 1325(b) rather than as an element of good faith under section 1325(a)(3).' . . . The disposable income a debtor decides to commit to his plan is not the measure of his good faith in proposing the plan.").

Southern District of Illinois

In re Eubanks, 581 B.R. 583, 587–88 (Bankr. S.D. Ill. Feb. 16, 2018) (Grandy) (Not bad faith to pay unsecured creditors 100% in five years notwithstanding excess projected disposable income that could be used to pay unsecured creditors faster when there is no other evidence of bad faith in totality-of-circumstances analysis. “[T]he amount of a plan payment should not—in and of itself—determine whether the plan is proposed in good faith, as long as the plan complies with either § 1325(b)(1)(A) or (B). . . . [T]he Debtors’ plan complies with § 1325(b)(1)(A) by proposing to pay general unsecured creditors 100% of their claims over five years. While the debtors could pay unsecured creditors in a shorter period of time if they contributed all of their monthly disposable income, they are not required to do so under the plain language of § 1325(b)(1). . . . [T]he Court cannot conclude that the plan was proposed in bad faith solely because the payments do not include all disposable income. . . . Conversely, the Debtors’ compliance with § 1325(b)(1) does not mean that the good faith requirement set forth in § 1325(a)(3) is automatically satisfied. The Court may still examine other factors under the Seventh Circuit’s ‘totality of circumstances’ test . . . . If the proposed plan payment meets the requirements of § 1325(b)(1)(A) or (B), the amount of the payment will not be considered in a good faith analysis unless other, additional facts suggest bad faith.”).

In re Curtis, No. 09-41396, 2010 WL 1444851, at *2 (Bankr. S.D. Ill. Apr. 9, 2010) (unpublished) (Altenberger) (After BAPCPA, confirmation of plan necessarily included finding that petition was filed in good faith under § 1325(a)(7); motion to dismiss based on lack of good faith is moot when movant did not object to confirmation and plan was confirmed before hearing on motion to dismiss. "[T]o confirm a plan a court must also find that the action of the debtor in filing the petition was in good faith. . . . When the Court confirmed the plan, it necessarily found that the Debtor's petition was filed in good faith, and under § 1327(a), Pennell is now bound by that determination. . . . Pennell's motion to dismiss the Debtor's Chapter 13 case is denied as moot.").

In re Delp, No. 08-31466, 2009 WL 322227, at *3 (Bankr. S.D. Ill. Feb. 9, 2009) (Pepper) (When Schedules I and J show monthly net income of $1,492.43 and Form B22C shows negative disposable income, it is bad faith for debtors to amend plan to reduce monthly payment from $1,492 to $1,020 when only explanation for reduction is that counsel "forgot" decision in the district that calculated projected disposable income based on Form B22C. "[T]he debtors have demonstrated that they have the ability to make plan payments of $1,492 per month. They now propose to make plan payments that amount to some $472 per month less than that—not because their income has decreased, not because their debts have increased, but because at the time they proposed the $1,492 payments, they 'forgot' that there was a court decision which, if followed, would allow them to pay less. . . . [T]he debtors' proposal to make smaller plan payments than they are capable of making does not indicate a fundamental fairness in dealing with their creditors.").

In re Franco, No. 07-30741, 2008 WL 444679, at *2 (Bankr. S.D. Ill. Feb. 12, 2008) (unpublished) (Meyers) (Good-faith analysis under § 1325(a)(3) does not intrude on deduction of secured debt for three encumbered cars under § 707(b)(2)(A)(iii) for a Chapter 13 debtor with CMI greater than applicable median family income absent evidence other than lack of necessity of the collateral. "[In re Sallee, No. 07-30776, 2007 WL 3407738 (Bankr. S.D. Ill. Nov. 15, 2007) (unpublished) (Meyers),] did not foreclose a court's ability to examine a debtor's expenses under the good faith standards of 11 U.S.C. §§ 1325(a)(3) and (7). . . . [T]hese standards still apply after enactment of BAPCPA and allow it 'to review the debtors' plan and petition to determine if they are fundamentally fair to creditors and comply with the spirit of the Bankruptcy Code.' . . . Nonetheless, given Congress' supplanting of the Court's role of making a subjective analysis of 'reasonably necessary' by virtue of its enactment of § 707(b)(2)(A)(iii)(I), a good faith determination cannot depend solely upon an examination of whether the expense is reasonable and/or necessary. . . . [T]he trustee . . . has provided the Court with no facts that would support a finding of lack of good faith other than his reliance on the number of vehicles owned by the debtors and his argument that such a number is unreasonable and unnecessary for these debtors. . . . [I]n a post-BAPCPA world, since the secured expenses for the instant debtors' three vehicles can be deducted under § 707(b)(2)(A)(iii)(I), the trustee must challenge them on some basis other than lack of necessity.").

In re Sallee, No. 07-30776, 2007 WL 3407738 (Bankr. S.D. Ill. Nov. 15, 2007) (Good-faith tests in § 1325(a)(3) and (a)(7) apply after BAPCPA, allowing review of plan proposals to see if they are fundamentally fair to creditors; retention of secured vehicle, while having two unsecured vehicles, is in good faith.).

Indiana

Northern District of Indiana

In re Rippe, No. 12-10220, 2013 WL 5701605 (Bankr. N.D. Ind. Sept. 25, 2013) (Grant) (Payment in full not enough to save plan from bad-faith finding based on cumulative effect of nondischargeable debt to former spouse, filing on eve of second contempt hearing in state court, and debtor's "flippant and slippery" demeanor.).

In re Jongsma, 402 B.R. 858, 871 (Bankr. N.D. Ind. Mar. 25, 2009) (Klingeberger) (Creditor filing untimely proof of claim has standing to object to confirmation based on lack of good faith in filing case and plan. Although creditor asserted debtor failed to schedule all assets, plan could be (but here wasn't) filed in good faith. Quoting In re Smith, 848 F.2d 813, 819 (7th Cir. 1998): "'Chapter 13 plan may be confirmed despite even the most egregious pre-filing conduct where other factors suggest that the plan nevertheless represents a good faith effort by the debtor to satisfy his creditor's claims.'").

In re Jongsma, 402 B.R. 858, 871 (Bankr. N.D. Ind. Mar. 25, 2009) (Klingeberger) (Quoting In re Smith, 848 F.2d 813, 819 (7th Cir. 1998): "'Chapter 13 plan may be confirmed despite even the most egregious pre-filing conduct where other factors suggest that the plan nevertheless represents a good faith effort by the debtor to satisfy his creditor's claims.'").

In re Jongsma, 402 B.R. 858 (Bankr. N.D. Ind. Mar. 25, 2009) (Klingeberger) (Petition not filed in good faith when debtor made false statements in schedules and failed to disclose tenancy-by-entirety interests in time shares. Under totality-of-circumstances test, "[t]he most critical component of whether or not a case has been filed in good faith is the disclosure of information required by Schedules and Statements of Financial Affairs at the inception of the case. . . . [T]he critical determination under the 'totality of circumstances' test is whether the debtors are attempting to pay their creditors or are they trying to thwart them. . . . [B]ased upon the record before the court, the court determines that Jongsma intentionally omitted the time share interests from disclosure in her initial filings, and that she intended to shield those time share interests from any possible incursion by creditors in her bankruptcy case.").

In re Foster, No. 05-50448 HCD, 2006 WL 2621080, at *8 (Bankr. N.D. Ind. Sept. 11, 2006) (unpublished) (Dees) (Citing In re Smith, 286 F.3d 461 (7th Cir. April 11, 2002) (Bauer, Posner, Ripple): "the plan requirements listed in § 1325(a)(1)-(4) were not changed by BAPCPA. It therefore follows the Seventh Circuit's holding that the § 1325 mandate to determine the disposable income available for a chapter 13 plan was independent of the good faith requirement.").

Southern District of Indiana

In re Trainor, No. 13-09818-JMC-13, 2014 WL 7338901, at *4 (Bankr. S.D. Ind. Dec. 22, 2014) (Carr) (Applying In re Love, 957 F.2d 1350 (7th Cir. Feb. 26, 1992) (Wood, Ripple, Manion), case was filed in good faith for § 1325(a)(7) purposes when debtor was paying as much as possible toward debt to former spouse that would probably be dischargeable at completion of payments. "The Debtor's prepetition conduct towards the Creditor is troubling, but the Court is mindful of the Seventh Circuit's admonition in Love that egregious prepetition conduct alone is not sufficient to justify the finding of bad faith that would result in dismissal.").

In re Trainor, No. 13-09818-JMC-13, 2014 WL 7338901 (Bankr. S.D. Ind. Dec. 22, 2014) (Carr) (Applying Ravenot v. Rimgale (In re Rimgale), 669 F.2d 426 (7th Cir. Jan. 18, 1982) (Cummings, Fairchild, Brown), plan was filed in good faith under § 1325(a)(3) when minor inaccuracies were explained and there was no evidence that debtor had hidden assets or income.).

In re Worthington, 507 B.R. 276 (Bankr. S.D. Ind. Mar. 21, 2014) (Moberly) (Not bad faith for § 1325(a)(3) purposes that debtor commits nearly one-half of Social Security income to funding plan when Social Security is excluded from CMI by § 101(10A)(B) and 42 U.S.C. § 407(b).).

In re Canniff, 498 B.R. 213, 217 (Bankr. S.D. Ind. Sept. 19, 2013) (Lorch) (Section 407 of the Social Security Act and § 101(10A) of the Bankruptcy Code prohibit finding that exclusion of Social Security benefits can be bad faith under § 1325(a)(3). "The good faith test argued by the Trustee under § 1325(a)(3) does not mention [§ 407 of the Social Security Act], so it must not be meant to limit, supersede, or otherwise modify it. Consequently, Debtors are not in bad faith merely for doing what the Social Security Act and the Bankruptcy Code allow them to do.").

In re Platt, No. 12-6170-RLM-13, 2012 WL 5842899 (Bankr. S.D. Ind. Nov. 19, 2012) (Moberly) (Although not per se bad faith, attorney-fee-only plan was not supported by proof of special circumstances.).

In re Platt, No. 12-6170-RLM-13, 2012 WL 5842899 (Bankr. S.D. Ind. Nov. 19, 2012) (Moberly) (Although not per se bad faith, debtor did not show special circumstances to justify attorney-fee-only plan.).

In re Evans, No. 11-12376-AJM-13, 2012 WL 2802228, at *3 (Bankr. S.D. Ind. July 10, 2012) (Metz) (Plan did not lack good faith under totality of circumstances: "touchstone of the good faith analysis under § 1325(a)(3) remained 'whether the plan could be said to be a sincere effort at repayment, or was instead an effort to thwart repayment.'" In re Schaitz, 913 F.2d 452, 453 (7th Cir. Sept. 20, 1990) (Cudahy, Posner, Pell).).

In re Spruch, 410 B.R. 839, 843, 844 (Bankr. S.D. Ind. Nov. 12, 2008) (Lorch) (Leasing a 2006 Hummer for $1,000 per month and deducting $58 for a vacation timeshare are some evidence of bad faith but not sufficient to deny confirmation when debtors have negative disposable income on Form B22C and propose to pay all monthly net income from Schedules I and J toward priority and secured debt for 60 months. Citing In re Williams, 394 B.R. 550 (Bankr. D. Colo. Sept. 12, 2008) (Brown), for the "intermediate approach, whereby . . . compliance with section 1325(b) precludes a good faith challenge under [§] 1325(a)(3) based on ability to pay except in cases of manipulation, subterfuge, or unfair exploitation of the Code by the debtor[,]" court found that retention of the timeshare "is not what this Court would deem a particularly extravagant entertainment expense" and the Hummer, though a luxury vehicle, could not be replaced by the debtors at "much of a financial advantage over the course of a five year plan.").

Wisconsin

Eastern District of Wisconsin

In re Fair, 450 B.R. 853, 858 (E.D. Wis. Apr. 19, 2011) (Randa) (Debtor ineligible for discharge because of § 1328(f)(1) can strip off wholly unsecured junior mortgage on principal residence subject to review for good faith. "This is not to say that debtors enjoy an absolute right to strip off unsecured liens in a no-discharge chapter 13 case. Courts have an independent duty to determine whether chapter 13 proceedings are conducted in good faith. §§ 1325(a)(3), (7). . . . [T]his issue . . . should be explored by the bankruptcy court on remand.").

In re Hingiss, 440 B.R. 787, 789 (Bankr. E.D. Wis. Dec. 2, 2010) (Shapiro) (It was not bad faith that first case—filed within 910 days of car purchase—was dismissed for failure to make payments and debtors refiled three months later—outside 910-day period in hanging sentence; but equitable tolling extends 910-day period. "[T]here is no clear cut proof establishing that the chapter 13 plan filed in the second case was part of a scheme perpetrated by the debtors. All that was shown was mere speculation. That alone is not sufficient to enable this court to deny plan confirmation based on bad faith." Citing Young v. United States, 535 U.S. 43, 122 S. Ct. 1036, 152 L. Ed. 2d 79 (Mar. 4, 2002), equitable tolling applies. Car lender is protected by hanging sentence and must be treated as fully secured in second case.), rev'd and remanded, No. 11-C-0087, 2011 WL 2455323 (E.D. Wis. June 20, 2011) (Adelman).).

In re Anderson, No. 10-20123-svk, 2010 WL 2292913 (Bankr. E.D. Wis. June 3, 2010) (unpublished) (Kelley) (Omission from schedules of legal malpractice cause of action did not establish lack of good faith when debtors desired to avoid further litigation and creditor failed to establish clear cause of action for legal malpractice.).

In re Simpson, No. 08-21251, 2008 WL 2705606, at *4-*5 (Bankr. E.D. Wis. July 3, 2008) (unpublished) (McGarity) (Sixty-month plan that commits one-half of future tax refunds for only first 36 months lacks good faith. "[T]his debtor wishes to pay one half of her tax refunds into the plan for three years, but to retain all refunds for the remaining two years of the proposed plan. . . . [S]he wishes to retain the protections of chapter 13 longer than would be required, while also retaining more than her disposable income, without a showing that circumstances necessitate such a change or provision. In essence, she is using the bankruptcy law to pay all she can for three years, but after that, she is proposing an initial plan that on its face is stating that she is not going to pay all she can, even though she enjoys the benefits of chapter 13. I believe this is a misuse of chapter 13, and does not constitute good faith in proposing the plan[.]").

In re Van Bodegom Smith, 383 B.R. 441, 456 (Bankr. E.D. Wis. Mar. 6, 2008) (Pepper) (Citing In re Smith, 848 F.2d 813 (7th Cir. June 9, 1988) (Cudahy, Ripple, Manion), because Congress dealt quite specifically with a Chapter 13 debtor's ability to pay in § 1325(b)(2) and (b)(3), "the question of whether the debtors committed all of their projected disposable income into the plan is a matter solely for review under § 1325(b), and is not pertinent to engaging in a review of good faith under § 1325(a)(3).").

In re Kalata, No. 07-21710, 2008 WL 552856, at *6 (Bankr. E.D. Wis. Feb. 27, 2008) (unpublished) (McGarity) (Although debtor with CMI greater than applicable median family income cannot deduct secured debt when plan proposes to surrender collateral, it is not bad faith for debtor to propose that plan. "The debtor's attempt to obtain the results offered by law, as opposed to manipulation of his circumstances to the unfair or wrongful detriment of creditors, are [sic] not the kind of bad faith contemplated by 11 U.S.C. § 1325(a)(3). . . . [W]ithout such manipulation, any objection to the sufficiency of the debtor's chapter 13 plan payments had to be under the specific code provision applicable to the payment calculation, not the catch-all good faith provision.").

Western District of Wisconsin

Shafer v. Heartspring, Inc., 415 B.R. 705, 711 (W.D. Wis. Aug. 24, 2009) (Crabb) (Plan that pays four times disposable income is not proposed in good faith when other good-faith factors are considered. Debtors were keeping a retirement account that contained almost $1 million and living in a home valued at $565,000. Debtors had monthly income of $10,717.50 and substantial expenses because of two autistic children. "Appellants argue that their offer of $1,000 a month to pay off their debt is quite generous considering they have only $267.50 in disposable income a month and this somehow creates a presumption of 'good faith.' Although an offer to pay four times the amount of one's disposable income appears to be generous, the offer cannot be viewed in isolation.").

In re Mancl, 381 B.R. 537, 542-43 (W.D. Wis. Feb. 2, 2008) (Crabb) ("[T]he prevailing rule of law since the initial adoption of § 1325(b) (in 1984) is that the sufficiency of resources committed to unsecured creditors is governed by that more specific provision and is no longer a consideration in good faith analysis under § 1325(a)(3). . . . The 2005 BAPCPA amendments support this conclusion . . . . It is conceivable that debtors might fail the good faith test if they engaged in prepetition conduct for the purpose of manipulating the § 101(10A) calculation. For example, had debtors intentionally taken leaves from work to artificially depress their earnings in the six-month pre-petition period . . . . [T]he income of the debtors in this case was reduced in the pre-petition period because of unplanned misfortune. Debtors who suffer an unplanned loss of income that leads them to bankruptcy and who propose a plan committing assets to unsecured creditors in compliance with § 1325(b) have acted in good faith in proposing the plan."), rev'g 375 B.R. 514, 517 (Bankr. W.D. Wis. Aug. 24, 2007) (Utschig) (When debtor was injured and received less income during six months before petition, projected disposable income test is not based on CMI but is tempered by good-faith determination of projected income. "Form B22C should 'be the basis for projected disposable income unless there is evidence that simply using the historic six-month snapshot does not form a reasonable basis for projecting income forward.' This Court believes this is a fair application of the good faith test to the calculation of current monthly income. . . . [T]here is evidence that the Form B22C does not constitute a reasonable forecast of the debtors' future income.").

In re LaLonde, 431 B.R. 199 (Bankr. W.D. Wis. May 7, 2010) (Martin) (Conversion to Chapter 13 is not by itself an expression of bad faith because a Chapter 7 debtor has a near-absolute right to convert to Chapter 13 at any time under 11 U.S.C. § 706(a).).

In re LaLonde, 431 B.R. 199, 208 (Bankr. W.D. Wis. May 7, 2010) (Martin) (Errors and omissions in schedules were "simple oversights or readily explainable decisions made by LaLonde in consultation with her counsel" that would not support a lack of good faith at confirmation.).

In re Shafer, 393 B.R. 655, 659 (Bankr. W.D. Wis. June 9, 2008) (Martin) (BAPCPA's good faith filing requirement in § 1325(a)(7) does not change totality of circumstances test for good faith with respect to both plan and filing of case; § 1325(a)(7) "appears to be nothing more than a codification of the long-standing judge-made rule and a corollary of § 1307(c)—that a petition can be dismissed 'for cause.'".).

In re Shafer, 393 B.R. 655, 663, 661 (Bankr. W.D. Wis. June 9, 2008) (Martin) (BAPCPA's amended definition of disposable income does not alter application of totality of circumstances test to determine good faith in filing petition and proposing plan. "No single circumstance is dispositive, but together, they indicate that the debtors fail the [totality of circumstances] test. These debtors are not trying to pay creditors; they are trying to avoid paying them." Decision of district court in Mancl v. Chatterton (In re Mancl), 381 B.R. 537 (W.D. Wis. Feb. 12, 2008) (Crabb), "that the sufficiency of assets contributed to the plan has no bearing on the issue of good faith, so long as the payments have been properly calculated, and the payments are not artificially low because of prepetition misconduct[,]" is not controlling on issue of bad faith when it is "alleged that the debtors have inflated their expenses, live extravagant lifestyles, and voluntarily dismissed their [prior] case and refiled in order to avoid the repayment of $40,000 in preferences.").

In re Long, 372 B.R. 467 (Bankr. W.D. Wis. May 10, 2007) (Martin) (Overwithholding of income taxes to accumulate a significant sum of money could be bad faith for purposes of § 1325(a)(3), but debtors who use standard exemptions and withholding allowances have done nothing that indicates bad faith.).

H. Eighth Circuit

Fink v. Thompson (In re Thompson), 439 B.R. 140, 142-44 (B.A.P. 8th Cir. Sept. 16, 2010) (Kressel, Schermer, Mahoney) (Exclusion of Social Security benefits from CMI, from disposable income and from property of the Chapter 13 estate precludes trustee's argument that excluding Social Security benefits from payments to unsecured creditors is bad faith under § 1325(a)(3). Seventy- and 71-year-old debtors showed negative disposable income on Form B22C after excluding $2,565 per month of Social Security benefits. "[T]he plain language of the Bankruptcy Code precludes the Trustee from objecting to the Debtors' plan based on an alleged lack of good faith. The plain language of the Bankruptcy Code specifically excludes Social Security income from a debtor's required payments in a Chapter 13 plan. Section 101(10A) defines 'current monthly income[]' . . . [to exclude] 'benefits received under the Social Security Act.' . . . Section 1325(b)(2)'s definition of 'disposable income' specifically incorporates the debtor's current monthly income. . . . Absent changes in the debtor's income or expenses that are known or virtually certain at the time of confirmation, the debtor's projected disposable income will be limited to his disposable income. See [Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 2478, 177 L. Ed. 2d 23 (June 7, 2010)]. No changes in the Debtors' income or expenses were suggested here. . . . Considering the Debtors' exclusion of their Social Security income from their plan payments as part of the good faith analysis would improperly render section 1325(b)'s ability to pay test meaningless. . . . [T]he ability to pay test already addresses whether the Social Security income needs to be included in a debtor's plan payments. Considering the same issue under the good faith test would be duplicative. It simply was not bad faith for the Debtors to follow the requirements of the Bankruptcy Code and, in so doing, obtain a benefit provided therein. . . . Recently, the Eighth Circuit ruled that past and future Social Security proceeds are excluded from the bankruptcy estate. Carpenter v. Ries (In re Carpenter), [614 F.3d 930, 936 (8th Cir. July 30, 2010) (Riley, Gibson, Murphy)]. It would be inconsistent to say that the Debtors acted in bad faith simply by failing to devote to their plan money that was never property of their estate in the first instance.").

Arkansas

Eastern District of Arkansas

In re Wertz, 557 B.R. 695, 703–04 (Bankr. E.D. Ark. Aug. 17, 2016) (Jones) (Not bad faith that debtor values a pickup at $21,000 in third Chapter 13 case filed two months after dismissal of second case in which debtor agreed to value pickup at $32,275 to settle stay litigation. “The evidence overwhelmingly supports a finding that the Vehicle is worth substantially less than the $32,275.00 valuation used in the prior case. . . . [T]he Debtor was not attempting to unfairly manipulate the Bankruptcy Code in filing his current case, nor did the Debtor have improper or insincere motives in filing the new case. . . . [T]he Debtor was unaware of the settlement that resulted in the $32,275.00 valuation of the Vehicle in the 2014 Case. When the Debtor’s case was ultimately dismissed for failure to make full and timely payments pursuant to a strict compliance order, the Debtor retained new bankruptcy counsel, took advantage of the valuation provisions of Section 1325(a)(5)(B), and proposed a plan that values the Vehicle at $21,000.00 . . . . Based on the totality of the circumstances . . . the Debtor’s Current Plan has been proposed in good faith[.]”).

In re Hopper, 474 B.R. 872 (Bankr. E.D. Ark. June 27, 2012) (Evans) (Case and plan filed on eve of contempt hearing in divorce court were not filed in good faith, but rather were attempt to use bankruptcy as litigation tactic. Debtor did not accurately list expenses or complete schedules and statement of financial affairs. Transfers of valuable property were omitted. Plan proposed minimum funding for three years—just enough to pay attorney fees and trustee fees, with less than 1% to unsecured creditors, including former spouse.).

In re Hopper, 474 B.R. 872 (Bankr. E.D. Ark. June 27, 2012) (Evans) (Case filed just before contempt hearing in divorce court was not filed in good faith, but rather was attempt to use bankruptcy as litigation tactic. Debtor did not accurately list expenses or complete schedules and statement of financial affairs. Plan proposed minimum funding for three years—just enough to pay attorney fees and trustee fees, with less than 1% to unsecured creditors, including former spouse.).

Western District of Arkansas

Starnes v. Starnes (In re Starnes), No. 5:17-ap-7011, 2017 WL 7520654 (Bankr. W.D. Ark. Oct. 23, 2017) (Barry) (Plan fails good-faith requirement in § 1325(a)(3) when debtor with known obligations to former spouse makes no provision for payment of unsecured claims, understates income and reduces length of plan to 36 months when debtor has current monthly income greater than applicable median family income.).

Iowa

Northern District of Iowa

In re Jacoby, No. 10-02844, 2011 WL 2976799, at *3-*6 (Bankr. N.D. Iowa July 21, 2011) (Collins) (Good-faith test informs projected disposable income analysis; $257-per-month payment for motorcycle is not reasonably necessary when debtors retain two other serviceable motor vehicles. "While the 'good faith' test is not specifically part of this case, it still has bearing on this Court's analysis. Questions of good faith are, by necessity, intertwined with the 'reasonably necessary expense' inquiry in cases like this. . . . [T]he concepts of good faith and projected disposable income are often so closely aligned that distinguishing between them is immaterial in some cases . . . . [T]he motorcycle payment is not a 'reasonably necessary expense.'").

In re Johnson, No. 10 03184C, 2011 WL 1671536, at *4-*5 (Bankr. N.D. Iowa May 4, 2011) (Collins) (Plan that pays all unsecured creditors in full satisfies § 1325(b)(1)(A) and is filed in good faith notwithstanding that debtor has monthly net income that would enable larger payments and faster satisfaction of claims. "There is a long-standing debate over whether a debtor can comply with the Code's statutory provisions yet still have a plan rejected for bad faith. . . . The Eighth Circuit appears to have adopted the 'intermediate approach' before it was so identified. [Handeen v. LeMaire (In re LeMaire), 898 F.2d 1346, 1349 (8th Cir. Mar. 26, 1990) (Lay, McMillian, Arnold, Gibson, Fagg, Bowman, Wollman, Magill, Beam)] . . . . [I]t is not subterfuge or unfair manipulation simply to take advantage of the provisions of the Code. . . . When, as here, a debtor proposes a 100% plan, he elects the § 1325(b)(1)(A) option and avoids the means test under § 1325(b)(1)(B) entirely. Thus, . . . [Ransom v. FIA Card Services, N.A., __ U.S. __, 131 S. Ct. 716, 178 L. Ed. 2d 603 (Jan. 11, 2011),] does not apply here. This Court finds no bad faith simply because Debtor has the ability to pay more each month and thus can repay creditors more quickly.").

In re Anderson, No. 09-02142S, 2009 WL 5170003 (Bankr. N.D. Iowa Dec. 18, 2009) (unpublished) (Edmonds) ("Surreptitious" direct payment of co-signed loan secured by son's car was unfair discrimination and bad faith under § 1325(a)(3) when direct payment was not revealed in plan and monthly payment on car loan should have been disposable income available for unsecured creditors.).

In re Baird, No. 04-03738S, 2005 WL 612863, at *4 (Bankr. N.D. Iowa Mar. 10, 2005) (unpublished) (In anticipation of bankruptcy, debtors purchased a $200,000 home and a $20,000 new car. "[T]his plan is not proposed in good faith . . . . Bairds moved to Sioux City when they were well aware of their financial problems. They contemplated bankruptcy but decided that before filing, they would stabilize their living situation. They purchased a home for approximately $200,000.00 and a new car for $20,000.00. Monthly house payments, including an escrow payment for real estate taxes, are $1,692.06. Bairds have failed to justify their purchase of a $200,000.00 home when they were in financial trouble. . . . [I]t was an inappropriate decision. . . . [T]hey appeared to have made little, if any, effort to reduce the costs of housing in order to make a more substantial effort to satisfy their creditors. . . . [T]here are dependable cars, both new and used, that are less expensive than $20,000.00. The purchase of the house and the car immediately before filing this plan are evidence that the plan was not filed in good faith.").

In re Baird, No. 04-03738S, 2005 WL 612863, at *5 (Bankr. N.D. Iowa Mar. 10, 2005) (unpublished) (Bankruptcy court refuses to confirm a three-year plan that includes keeping a $200,000 house and a $20,000 new car both purchased on the eve of filing the Chapter 13 case. "I will not confirm a three-year plan which is based on Bairds' staying in their present home. I cannot say whether I would confirm a five-year plan under the same condition.").

Minnesota

In re Melander, 506 B.R. 855, 870 (Bankr. D. Minn. Mar. 13, 2014) (Ridgway) (Citing Carpenter v. Ries (In re Carpenter), 614 F.3d 930 (8th Cir. July 30, 2010) (Riley, Gibson, Murphy), and Fink v. Thompson (In re Thompson), 439 B.R. 140 (B.A.P. 8th Cir. Sept. 16, 2010) (Kressel, Schermer, Mahoney), absent other indicia of bad faith, voluntary contribution to the plan of a portion of Social Security income cannot be bad faith. However, confirmation is denied for lack of good faith when plan would violate "the spirit of chapter 13.").

In re Hofer, 437 B.R. 680 (Bankr. D. Minn. Oct. 21, 2010) (O'Brien) (Filing plan to modify state court marriage dissolution decree was inappropriate use of Chapter 13. Citing history of limitation on federal court jurisdiction over marital dissolution matters, bankruptcy court declines to exercise jurisdiction over plan (and case) that would modify state court orders for sale of former marital residence.).

In re Rowell, 421 B.R. 524, 538-39 (Bankr. D. Minn. Dec. 15, 2009) (Kishel) (Citing § 521(j) and § 1325(a)(3), good faith demands "tax compliance language" in plan that requires debtor to timely file returns and to timely pay all postpetition taxes when long history of failing to comply with taxpayer responsibilities drove debtor into Chapter 13. "The formal provision in a plan for a duty to file [postpetition] returns might be surplusage as to the existence of the duty; but, there is no real reason to bar the inclusion of an enunciated duty in the plan of a debtor who has been derelict in general taxpayer's obligations, pre-petition. . . . Current law imposes no specific statutory duty on Chapter 13 debtors to stay current in payment of post-petition tax obligations. . . . Given the undisputed history, the IRS was well-put to demand the inclusion of 'tax compliance language' in any plan to be confirmed here, as an 'integrity control' measure toward ensuring the Debtor's good faith. The Debtor cannot satisfy 11 U.S.C. § 1325(a)(3) unless she includes it in any further modified plan.").

In re Maronde, 332 B.R. 593 (Bankr. D. Minn. Nov. 8, 2005) (Sale of trailer and truck on the eve of bankruptcy and use of proceeds to create homestead equity with actual intent to hinder, delay or defraud creditors demonstrated lack of good faith for § 1325(a)(3) purposes.).

Missouri

Western District of Missouri

In re Williams, No. 16-30243-can13, 2017 WL 2120044, at *10 (Bankr. W.D. Mo. May 15, 2017) (Norton) (Plan was proposed in bad faith in second Chapter 13 case that purported to undo settlement reached in prior Chapter 13 case that required the debtor to surrender an IRA in partial satisfaction of a criminal restitution judgment. “Mr. Williams executed a settlement agreement with the United States in essence granting him forbearance from the United States’ collection efforts during the length of his plan. . . . For Mr. Williams to now propose a plan that in essence reneges on that deal is the epitome of bad faith[.]”).

In re Alexander, No. 12-40408-jwv13, 2012 WL 3156760, at *4 (Bankr. W.D. Mo. Aug. 1, 2012) (Venters) (Zero percent plan lacked good faith when debtors exhausted projected disposable income by incurring a $513 car loan four days before the petition and then claiming $486.55 per month as Local Standards transportation ownership expense deduction. Debtors owned two older, high-mileage cars and incurred the $513 debt secured by one of the cars four days before the petition to replace the aging vehicles in light of prior rulings in the district that Chapter 13 debtors were not entitled to the $200 older-vehicle expenses deduction. "[T]he indicium of bad faith is obtaining a loan four days before filing a Chapter 13 bankruptcy petition and then claiming a $486.55 vehicle ownership expense, despite the fact that the loan has nothing to do with the ownership (i.e., purchase or lease) of the vehicle.").

In re Arlen, 461 B.R. 550, 554-55 (Bankr. W.D. Mo. May 3, 2011) (Dow) ("[A] Chapter 13 plan that pays only fees of counsel is inconsistent with the spirit and purpose of Chapter 13 and is not filed in good faith. . . . These cases are little more than disguised Chapter 7 proceedings. . . . [P]ermitting the Debtors to confirm a plan in these cases which does nothing more than would be done in a Chapter 7 case, permits them to circumvent those restrictions on successive discharges. . . . Since their Social Security income is exempt from collection efforts by creditors, they are essentially judgment proof. . . . Debtors produced no evidence that they were unable to make a lump sum payment for the fees which would be demanded by Chapter 7 counsel. Neither is there any evidence that the Debtors were facing any exigency, such as the loss of a home or a car, which would render them unable to save the amount of counsel fees over a period of time. . . . [T]here is no contradiction between saying that debtors may not be convicted of bad faith for failure to pay more to their unsecured creditors based on not committing Social Security income to the plan and finding bad faith based upon the debtors' failure to pay anyone anything, in contravention of one of the principal purposes of Chapter 13. In other words, the question here is not whether unsecured creditors should be paid more, but whether it is appropriate to pay nothing to any creditor.").

In re Green, No. 09-44481-13, 2010 WL 8961439, at *3-*4 (Bankr. W.D. Mo. Feb. 1, 2010) (unpublished) (Venters) (Although Social Security income is excluded from CMI, SSI can be considered in good-faith analysis under § 1325(a)(3); failure to commit SSI to unsecured creditors is not per se bad faith. "[A] debtor taking advantage of a BAPCPA benefit, i.e., the exclusion of Social Security benefits from the calculation of projected disposable income, might still be unfairly manipulating the Code. . . . [Section] 101(10A)'s exclusion of Social Security benefits from CMI is limited to Bankruptcy Code provisions that specifically implicate CMI . . . . [I]t is permissible to consider Social Security benefits under § 1325(a)(3) . . . . In [Education Assistance Corp. v. Zellner, 827 F.2d 1222 (8th Cir. Sept. 3, 1987) (Arnold, Gibson, Wright),] . . . the Eighth Circuit concluded that the revised § 1325(b)'s 'ability to pay' criteria subsumed many of the [United States v. Estus (In re Estus), 695 F.2d 311 (8th Cir. Dec. 15, 1982) (Heaney, Stephenson, Henley),] factors. . . . Consideration of a debtor's finances as part of the good faith inquiry has not been abandoned, but the conclusion is inescapable that a debtor's ability to pay is no longer a central or predominant factor in determining good faith under § 1325(a)(3). Therefore, . . . while it may be proper to consider the retention of Social Security benefits under § 1325(a), the retention of those benefits cannot serve as the sole basis for a finding of bad faith.").

In re Montry, 393 B.R. 695 (Bankr. W.D. Mo. Sept. 11, 2008) (Venters) (Plan that makes no payment on prepetition debt and only pays attorney fees is not proposed in good faith. Plan would evade § 727(a)(8) restriction on successive Chapter 7 discharges and is contrary to prohibition in Laime v. United States Trustee, 540 U.S. 526, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (2004), against paying postpetition attorney fees from Chapter 7estate.).

In re Montry, 393 B.R. 695 (Bankr. W.D. Mo. Sept. 11, 2008) (Venters) (BAPCPA did not change definition of good faith or totality-of-circumstances test from United States v. Estus (In re Estus), 695 F.2d 311 (8th Cir. 1982); plan paying attorney fees but no prepetition debt is not filed in good faith. Plan would evade § 727(a)(8) restriction on successive Chapter 7 discharges and is inconsistent with Laime v. United States Trustee, 540 U.S. 526, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (2004)(prohibiting payment of postpetition attorney fees from Chapter 7 estate). Debtors admitted that only reason for filing Chapter 13 rather than Chapter 7 was to pay attorney fees over time.).

In re Ward, 359 B.R. 741, 745 (Bankr. W.D. Mo. Jan. 7, 2007) (Federman) (Although Social Security income is not included in projected disposable income because of the exclusion from CMI in § 101(10A), Chapter 13 debtor is still required to propose a plan in good faith and in the Eighth Circuit "a good faith determination under § 1325(c)(3) requires the court to consider, among other things, whether the debtor has unfairly manipulated the Code." Because the trustee did not raise good-faith objection to confirmation, bankruptcy court does not decide whether exclusion of Social Security income is bad faith.).

In re Smith, 328 B.R. 797 (Bankr. W.D. Mo. Aug. 22, 2005) (Lack of good faith to pay less than 1% to only creditor, the victim of arson and theft. Chapter 13 plan may be confirmed despite egregious, criminal conduct by the debtor when other factors indicate plan was proposed in good faith. Minimal payments ($50 a month), single creditor whose claim would be excepted from discharge in a Chapter 7, and minimal length of the plan (36 months) support finding of lack of good faith.).

Nebraska

In re Osborn, BK11-41944-TJM, 2012 WL 246301, at *5 (Bankr. D. Neb. Jan. 26, 2012) (Mahoney) (Providing inaccurate expense information so that schedules would show reduced disposable income was bad faith, but case not dismissed because debtor would then be imprisoned for failure to pay support. "Ms. Eads is not interested in having [the debtor's] case dismissed so that he can be sent to jail for failing to obey the state court order. She is interested in receiving payments that he is obligated to pay. The best way to assure him that he is not going to jail and to assure her that she will receive the payments is to let him remain in Chapter 13 and file an amended plan that reflects the truth on the amended schedules and provides for payment of his divorce decree obligations.").

In re McPheron, No. 10-40861-TLS, 2010 WL 5173719 (Bankr. D. Neb. Dec. 15, 2010) (Saladino) (Former spouse's bad-faith argument fails because mortgage that divorce decree required debtor to pay is not the only debt problem addressed by plan. Prepetition misconduct by the debtor that was dealt with by the domestic relations court is not relevant to good faith in subsequent Chapter 13 case.).

In re Lilienthal, No. 09-80928-TLS, 2009 WL 3103735 (Bankr. D. Neb. Sept. 23, 2009) (Saladino) (Citing Coop v. Frederickson (In re Frederickson), 545 F.3d 652 (8th Cir. Oct. 27, 2008) (Wollman, Beam, Riley), for "reality-based determination" of how much Chapter 13 debtor can pay, further hearing necessary to determine whether it is good faith for debtors to retain camper and boat when result is to reduce what unsecureds get by $15,000; not bad faith for debtors to keep $175,000 house subject to $183,000 mortgage because house is not luxurious.).

In re Cordle, No. 08-82332-TLS, 2009 WL 762184, at *2 (Bankr. D. Neb. Mar. 19, 2009) (Saladino) (Paying $31,000 to creditors secured by motorboat and travel trailer while paying little to unsecured creditors violates good-faith test in § 1325(a)(3) as interpreted in Handeen v. LeMaire (In re LeMaire), 898 F.2d 1346 (8th Cir. Mar. 26, 1990) (Lay, McMillian, Arnold, Gibson, Fagg, Bowman, Wollman, Magill, Bearn), and violates "starting point" disposable income calculation adopted in Coop v. Frederickson (In re Frederickson), 545 F.3d 652 (8th Cir. Oct. 27, 2008) (Wollman, Beam, Riley). "Using the 'reality-based determination' of Debtors' ability to pay, it is clear that the amounts paid for a boat and travel trailer used for recreational purposes are not reasonably necessary and, therefore, those amounts should be made available to unsecured creditors under the plan.").

In re Marti, 393 B.R. 697 (Bankr. D. Neb. Aug. 4, 2008) (Saladino) (Citing § 1325(a)(7) and (a)(3), physician with no income during six months before petition and $18,333.33 per month of income after petition lacks good faith when plan would pay $12,700 to general unsecured claims that total $100,782. "The Chapter 13 Trustee also points out that the new good-faith provision of 11 U.S.C. § 1325(a)(7) must have some independent significance. It was apparently included in the same section of BAPCPA that added the totality-of-circumstances/good faith test to Chapter 7 cases under 11 U.S.C. § 707(b)(3). Thus, arguably, it was intended as a 'catch-all' for situations such as this which seem to fall outside the box of the statutory framework. . . . [Section] 1327(a)(7) seems to reinforce the need to consider unique situations using a totality-of-circumstances approach. . . . Debtor knew that his income was going to rise dramatically post-petition, yet he fails to propose a pay-in-full plan as he would be required to do if his filing date were just six months later. Debtor's bankruptcy filing and plan appear to be an attempt to unfairly manipulate the Bankruptcy Code and do not represent a good faith effort to pay creditors. Under the unique circumstances of this case, I find that Debtor has failed to meet the good faith requirements of 11 U.S.C. § 1325(a)(3) and (7).").

In re Marti, 393 B.R. 697, 700-01 (Bankr. D. Neb. Aug. 4, 2008) (Saladino) (Physician with no income during six months before petition and income of $18,333.33 per month after petition has no CMI and no projected disposable income but lacks good faith under § 1325(a)(3) and (7) when plan pays unsecured creditors only $12,700. "[B]ased on [Educational Assistance Corp. v. Zellner, 827 F.2d 1222 (8th Cir. Sept. 3, 1987) (Arnold, Gibson, Wright),] and subsequent cases from the Eighth Circuit, this Court has determined that '[a] debtor does not fail the good faith test simply because of the ability to pay more than the means test result. There must be something else to trigger a lack of good faith in proposing a plan.' . . . [T]his case has that 'something else'—in this situation the means test is meaningless. . . . [T]he 'current monthly income' numbers used in the means test do not even reflect income. Debtor had no income prior to filing. This is an unusual situation where Debtor went from no income prior to filing to substantial income immediately after filing. . . . 'Outside the box' is certainly an apt description for this case. . . . For purposes of determining whether the plan was proposed in good faith under § 1325(a)(3), this Court cannot merely defer to established precedent which says ability-to-pay factors should not be taken into account because they are subsumed into other sections of § 1325 (the means test). Instead, the totality-of-circumstances consideration, which does remain a part of the § 1325(a)(3) analysis, reveals that the means test calculation is meaningless under the present circumstances. Further, § 1325(a)(7) seems to reinforce the need to consider unique situations using a totality-of-circumstances approach. . . . [D]espite the results of the means test, this Debtor has substantial income and has the ability to pay all creditors in full. The timing of the filing of this bankruptcy case and the plan proposed by Debtor indicate that Debtor's intent is to take advantage of what he perceives as a 'loophole' in the calculation of his current monthly income. . . . Debtor's bankruptcy filing and plan appear to be an attempt to unfairly manipulate the Bankruptcy Code and do not represent a good faith effort to pay creditors. . . . Debtor has failed to meet the good faith requirements of 11 U.S.C. § 1325(a)(3) and (7).").

In re Jones, No. BK07-81646, 2007 WL 4893472 (Bankr. D. Neb. Dec. 14, 2007) (unpublished) (Saladino) (Purchase of "luxury" condominium for $299,000 within a year of Chapter 13 petition was not indicative of bad faith when purchase reduced expenses by eliminating need for a second car.).

In re James, 379 B.R. 903, 907-08 (Bankr. D. Neb. Nov. 30, 2007) (Saladino) (When excess of income over expenses on Schedules I and J is greater than disposable income calculated on Form B22C, good faith does not require debtor to pay more than disposable income to unsecured creditors. "While recognizing that as a result of [Education Assistance Corp. v. Zellner, 827 F.2d 1222 (8th Cir. Sept. 3, 1987) (Arnold, Gibson, Wright),] and later cases, Debtors' ability to pay cannot be reached under the good faith test, the Chapter 13 Trustee urges that such law should no longer be applicable post-BAPCPA. . . . [W]hen revising § 1325(b), Congress made significant changes and incorporated a detailed formula for calculating the debtor's projected disposable income. Thus, by making § 1325(b) more detailed (and mandatory), it appears clear that the ability to pay factors are intended to be subsumed into § 1325(b). Thus, this Court is compelled to follow Eighth Circuit precedent that ability to pay factors are subsumed into § 1325(b), and not in the good faith standard of § 1325(a)(3). A debtor does not fail the good faith test simply because of the ability to pay more than the means test result. There must be something else to trigger a lack of good faith in proposing a plan.").

South Dakota

In re Squires, No. 05-10433, 2007 WL 1377637 (Bankr. D.S.D. May 7, 2007) (Debtor did not propose plan in good faith when she misrepresented facts to VA three times to obtain benefits for her husband and proposed no plan payments to VA on debt that would be nondischargeable in Chapter 7.).

In re Squires, No. 05-10433, 2007 WL 1377637 (Bankr. D.S.D. May 7, 2007) (Plan not proposed in good faith when debtor misrepresented facts to Department of Veterans Affairs three times to obtain benefits for her husband and proposed no payments to VA on debt that would be nondischargeable in Chapter 7.).

I. Ninth Circuit

Drummond v. Welsh (In re Welsh), 711 F.3d 1120, 1131-35 (9th Cir. Mar. 25, 2013) (Ripple, Trott, Paez) (Good-faith analysis under § 1325(a)(3) does not include consideration of Social Security income excluded from CMI by § 101(10A)(B) and does not include consideration of payments on secured debts deductible from CMI to determine projected disposable income under § 707(b)(2)(A)(iii). "We cannot conclude . . . that a plan prepared completely in accordance with the very detailed calculations that Congress set forth is not proposed in good faith. To hold otherwise would be to allow the bankruptcy court to substitute its judgment of how much and what kind of income should be dedicated to the payment of unsecured creditors for the judgment of Congress. Such an approach would not only flout the express language of Congress, but also one of Congress's purposes in enacting the BAPCPA, namely to 'reduce[ ] the amount of discretion that bankruptcy courts previously had over the calculation of an above-median debtor's income and expenses.' . . . Congress has spoken directly, and it explicitly excluded Social Security income from the calculation of disposable income. We thus join every court of appeals that has decided the issue in concluding that, '[w]hen a Chapter 13 debtor calculates his repayment plan payments exactly as the Bankruptcy Code and the Social Security Act allow him to, and thereby excludes [Social Security income], that exclusion cannot constitute a lack of good faith.' . . . In sum, the inquiry focuses on the debtor's motivation and forthrightness with the court in seeking relief. The disposable income requirement, in contrast, focuses on the amount of funds that Congress expects a debtor to devote to paying off unsecured creditors. These two inquiries are, indeed, separate and distinct. Therefore, consideration of disposable income—now defined in great detail by Congress—has no role in the good faith analysis. . . . '. . . Again, in the BAPCPA, Congress chose to remove from the bankruptcy court's discretion the determination of what is or is not "reasonably necessary." It substituted a calculation that allows debtors to deduct payments on secured debts in determining disposable income. That policy choice may seem unpalatable either to some judges or to unsecured creditors. Nevertheless, that is the explicit choice that Congress has made. We are not at liberty to overrule that choice.' . . . BAPCPA requires debtors to subtract their payments to secured creditors from their current monthly income. . . . Congress did not see fit to limit or qualify the kinds of secured payments that are subtracted from current monthly income to reach a disposable income figure. . . . [W]e would not be justified in imposing such a limitation under 'the guise of interpreting "good faith."'. . . We conclude that Congress's adoption of the BAPCPA forecloses a court's consideration of a debtor's Social Security income or a debtor's payments to secured creditors as part of the inquiry into good faith under 11 U.S.C. § 1325(a)."), aff'g, 465 B.R. 843, 852-58 (B.A.P. 9th Cir. Feb. 17, 2012) (Perris, Pappas, Hollowell) (Good-faith test is not failed solely because debtors deduct secured debt payments under § 707(b)(2)(A)(iii) with respect to collateral that is not necessary; exclusion of Social Security income from projected disposable income is not alone a lack of good faith. In dicta, cramming down secured debt to the fullest extent possible to pay more to unsecured creditors is not required to satisfy § 1325(a)(3). "[T]he 2005 BAPCPA modification of how disposable income is calculated . . . does not change the pre-2005 good faith analysis, which requires consideration of the totality of the circumstances but under which a debtor's lack of good faith cannot be found based solely on the fact that the debtor is doing what the Code allows. . . . [W]e reject those cases that allow a court to take into consideration an above-median-income debtor's exclusion of income or deduction of expenses that are allowed by the means test formula in determining whether a debtor has proposed the plan in good faith. . . . If, in proposing a plan, the debtor has misrepresented facts, unfairly manipulated the Code, or engaged in egregious behavior, a court may find that the plan was not proposed in good faith. That finding may not, however, be based on the mere fact that the debtor has excluded income or deducted expenses that the Code allows. . . . [W]e would reject the view that cramming down secured debt to the fullest extent possible to pay more to unsecured creditors is required for good faith. . . . [T]hat a debtor excludes income from the disposable income calculation that Congress specifically allows the debtor to exclude is not, by itself, probative of a lack of good faith. . . . [T]he bankruptcy court applied the correct legal standard in refusing to deny confirmation based solely on debtors' exclusion of Social Security payments and deduction of current payments secured by arguably unnecessary collateral. . . . [D]ebtors who devoted the requisite disposable income, as defined by the Code, to paying unsecured creditors met the requirement that their plan be proposed in good faith, even though they could have paid more to their unsecured creditors if they had stopped paying certain secured creditors amounts that are statutorily permitted."), aff'g, 440 B.R. 836, 848-50 (Bankr. D. Mont. Nov. 16, 2010) (Kirsher) (It is not bad faith that debtors excluded Social Security income from CMI and from disposable income and that debtors deducted contractually due secured debt payments on six motor vehicles, including two ATVs and a $23,000 Airstream trailer. "Their ATV[s] are not a luxury, since at least one is required . . . to plow [their] driveway in the winter . . . . Their retention of the Airstream, by itself, is not enough to find egregious conduct. The Trustee's good faith objection based on their payments to secured claims ignores the fact that payments to secured claims are authorized in the means test at 11 U.S.C. § 707(b)(2)(A)(i) and (iii). . . . Section 101(10A)(B) and 42 U.S.C. § 407 are two separate federal statutes, each more specific than § 1325(a)(3) with respect to SSI benefits. . . . The Trustee's good faith objection on the basis of SSI cannot be sustained without running afoul of 42 U.S.C. § 407(a) and the above-listed canons of statutory construction, while overruling the good faith objection gives them effect without weakening § 1325(a)(3).").

Mendez v. Harwood (In re Harwood), No. NC-15-1055-DTaKu, 2016 WL 1436235, at *5-*6 (B.A.P. 9th Cir. Apr. 8, 2016) (unpublished) (Dunn, Taylor, Kurtz) (Not bad faith that plan will pay less than 100% of judgment that may be nondischargeable under § 523(c) when judgment creditor did not file a complaint within the 60 days allowed by Bankruptcy Rule 4007 and other good-faith considerations are not flashing red. "[T]here is no general principle prohibiting a debtor from including in his schedules and plan a debt that later might be declared nondischargeable. . . . There is some authority for the proposition that a debtor's effort to discharge through chapter 13 a debt that would be nondischargeable under chapter 7 may be relevant to a good faith analysis. . . . Rule 4007 . . . provides that the proper avenue for such a request is an adversary proceeding, which must be commenced within 60 days following the date set for the debtor's meeting of creditors. Mendez did not commence an adversary proceeding within the time permitted.").

Bradley R. Kirk & Assocs., Inc. v. Spellman (In re Spellman), No. CC-15-1026-KiKuF, 2016 WL 1165827 (B.A.P. 9th Cir. Mar. 22, 2016) (unpublished) (Kirscher, Kurtz, Faris) (Not bad faith that plan would allow debtor to keep $600,000 interest in spendthrift trust while paying $7,000 to unsecured creditors. Large portion of spendthrift trust was not property of the estate and would not be available to creditors in a Chapter 7 case. That debtor filed on the eve of continuing litigation in state court is not unusual. There was no evidence of any misrepresentations or mischaracterizations. Debtor had other debt problems including a child support debt and a dog bite claim.).

Jablonowski v. Jean (in re Jean), No. NC-14-1198-KuPaJu, 2014 WL 6609697 (B.A.P. 9th Cir. Nov. 21, 2014) (unpublished) (Kurtz, Pappas, Jury) (Not bad faith that Chapter 13 petition was filed to deal with adverse state court judgment or that judgment debt might be nondischargeable in a Chapter 7 case under § 523(a)(6).), aff'g, No. 13-12072, 2014 WL 1312367 (Bankr. N.D. Cal. Mar. 31, 2014) (Jaroslovsky) (Distinguishing Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. Mar. 26, 1999) (Fletcher, Tashima, Bryan), not bad faith that plan deals with prepetition judgment requiring surrender of property.).

Hardcastle v. Greer (In re Hardcastle), Nos. EC-13-1072-PaJuKi, EC-13-1249-PaJuKi, 2013 WL 5944042 (B.A.P. 9th Cir. Nov. 7, 2013) (unpublished) (Pappas, Jury, Kirscher) (Amended plan lacked good faith when expenses were pumped up to consume new disposable income that resulted from mortgage modification and plan paid nothing to stripped-off junior lienholder notwithstanding valuation order that required it be paid as an unsecured claim.).

Meyer v. Lepe (In re Lepe), 470 B.R. 851, 856-62 (B.A.P. 9th Cir. May 9, 2012) (Pappas, Dunn, Markell) (Not bad faith that plan strips wholly unsecured junior lien and pays at least 17.5% of resulting unsecured claims. Debtor was not balance-sheet insolvent. Filing solely to strip unsecured lien is not prohibited when other good-faith factors favor debtor. Citing Goeb v. Heid (In re Goeb), 675 F.2d 1386 (9th Cir. May 3, 1982) (Choy, Schroeder, Hatter), "in this circuit, a good faith determination in connection with chapter 13 plan confirmation cannot be based on any single factor or feature of a proposed plan, to the exclusion of review of all other relevant information. Importantly, it is of no moment that a single factor may be indicative of bad faith, or that a specific plan feature is not consistent with the 'spirit of chapter 13' or may indicate manipulation of the Bankruptcy Code. Factors indicating good and bad faith may not be considered in isolation, but must always be weighed against the totality of the circumstances in each case. . . . The Ninth Circuit has held that the debtor's insolvency, while relevant, is not a requirement for finding that a debtor has proposed a plan in good faith in a chapter 11 case. . . . The Ninth Circuit has also held that a debtor's chapter 13 plan may strip the lien of a creditor holding a claim secured by the debtor's house where there is no value to support that lien . . . . Lepe's amended plan therefore proposes to do only that which the Bankruptcy Code allows. As a result, the plan's lien-strip provision, standing alone, cannot support a finding that Lepe lacked good faith.").

Mead v. Loheit (In re Mead), No. EC-09-1241-MkHDu, 2010 WL 6259982 (B.A.P. 9th Cir. June 15, 2010) (unpublished) (Markell, Hollowell, Dunn) (Chapter 13 case filed solely to defeat former spouse's rights under divorce decree after years of unsuccessful state court litigation was not filed in good faith.), aff'd, No. 09-1241, 2013 WL 3070534 (9th Cir. June 20, 2013) (unpublished) (Tallman, Smith, Hurwitz).).

Rocco v. King (In re King), No. AZ-07-1317-PaJuK, 2008 WL 8444814 (B.A.P. 9th Cir. Mar. 12, 2008) (unpublished) (Pappas, Jury, Klein) (Dismissal for bad faith under § 1307(c) and denial of confirmation because case was not filed in good faith under § 1325(a)(7) are analytically the same; under totality of circumstances, filing Chapter 13 to avoid posting bond to appeal state court judgment was not alone bad faith when debtors were willing and able to pay 100% through plan.), aff'g No. 206-BK-04089, 2007 WL 2350452, at *2 (Bankr. D. Ariz. Aug. 16, 2007) (unpublished) (Marlar) (Applying 11-factor test of totality of circumstances from Fidelity & Casualty Co. of New York v. Warren (In re Warren), 89 B.R. 87 (B.A.P. 9th Cir. 1988), debtor/attorney's Chapter 13 case and plan were filed in good faith when plan will pay 100% of judgment to former law partner. "The objecting creditor, here, has not cited a single case wherein Debtors, who proposed to pay—and who were capable of feasibly paying—100% of their unsecured creditors were found to have filed in bad faith.").

Penland v. Rakozy (In re Penland), No. ID-05-1467-HKMa, 2006 WL 6811002, at *6 (B.A.P. 9th Cir. Aug. 17, 2006) (unpublished) (Hollowell, Klein, Marlar) ("Because so many of the [Fidelity & Casualty Co. of New York v. Warren (In re Warren), 89 B.R. 87 (B.A.P. 9th Cir. Aug. 16, 1988) (Volinn, Meyers, Jones),] factors have been subsumed into § 1325(b), the factors identified in [Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. Mar. 26, 1999) (Fletcher, Tashima, Bryan),] should control a § 1325(a)(3) good faith analysis. . . . [A] bankruptcy court's § 1325(a)(3) good faith determination 'necessarily requires an assessment of a debtor's overall financial condition including, without limitation, the debtor's current disposable income'. Sunahara v. Burchard (In re Sunahara), 326 B.R. 768, 781-82 (9th Cir. BAP 2005).").

Penland v. Rakozy (In re Penland), No. ID-05-1467-HKMa, 2006 WL 6811002, at *7 (B.A.P. 9th Cir. Aug. 17, 2006) (unpublished) (Hollowell, Klein, Marlar) ("[I]nitially filing for chapter 7 relief and then converting to a chapter 13 is not a bad faith manipulation of the Bankruptcy Code. . . . [T]he fact that a debtor's case could have been dismissed under § 707(b) should not result in a per se finding of a lack of good faith under § 1325(a)(3). If that were the case, debtors would be faced with an impossible paradox of being refused bankruptcy relief except under chapter 13 (11 or 12) and then being refused confirmation because their case was initially commenced as a chapter 7. Such a result is inconsistent with congressional policy which prefers chapter 13 over chapter 7 as evidenced by the enactment of § 707(b), and by the amendments to the Bankruptcy Code made by the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA") of 2005. Specifically, under BAPCPA, a debtor is permitted to request conversion to chapter 13 if there is a determination of substantial abuse.").

Penland v. Rakozy (In re Penland), No. ID-05-1467-HKMa, 2006 WL 6811002, at *7-*8 (B.A.P. 9th Cir. Aug. 17, 2006) (unpublished) (Hollowell, Klein, Marlar) ("A court may properly consider the existence and use or non-use of exempt assets as part of the good faith analysis of § 1325(a)(3). . . . However, outside of bankruptcy, creditors cannot reach exempt assets and, generally, the results should not be different in bankruptcy. . . . An exemption the legislature has provided should not be denied or impaired simply because a judge finds it to be out of proportion. . . . Given that the legislative branch has specifically provided for the protection of exempt assets, any determination that the failure to use exempt assets to fund a plan constitutes bad faith should be supported by a finding that the Penlands affirmatively engaged in bad faith conduct, such as aggressive and fraudulent pre-bankruptcy planning.").

Shrenger v. Evans (In re Evans), No. WW-05-1425-NKPa, 2006 WL 6810927, at *7-*8 (B.A.P. 9th Cir. July 31, 2006) (unpublished) (Nielsen, Klein, Pappas) (District court determination that debtors converted their Chapter 7 case to Chapter 13 in good faith was law of the case that precluded reconsideration of good faith when bankruptcy court subsequently confirmed plan over appellants' good-faith objection. "[T]he district court specifically referenced the [Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. Mar. 26, 1999) (Fletcher, Tashima, Bryan),] factors in determining whether the bankruptcy court erred in concluding the conversion was in good faith. . . . A determination regarding the good faith of instituting a Chapter 13 case and the good faith in proposing a particular Chapter 13 plan involve similar factual inquiries under the totality of the circumstances."), aff'd, 253 Fed. Appx. 681 (9th Cir. Nov. 6, 2007) (Gould, Paez, Strom).).

Kinder v. Kingry (In re Kingry), No. SC-05-1126-PaMaS, 2006 WL 6810947 (B.A.P. 9th Cir. Mar. 16, 2006) (unpublished) (Pappas, Marlar, Smith) (At modification after confirmation to reduce percentage to unsecureds from 70% to 0%, remand was necessary for bankruptcy judge to make findings with respect to all good-faith factors. On remand, bankruptcy court should consider that 0% plan would discharge debt for fraud that would probably be nondischargeable in a Chapter 7 case and that debtor was working less than full time notwithstanding ability to work and earn more.).

Kinder v. Kingry (In re Kingry), No. SC-05-1126-PaMaS, 2006 WL 6810947 (B.A.P. 9th Cir. Mar. 16, 2006) (unpublished) (Pappas, Marlar, Smith) (At modification after confirmation to reduce distribution to unsecured creditors from 70% to 0%, remand is necessary for bankruptcy court to make specific findings with respect to good-faith factors, including that plan would discharge a debt for fraud that is probably nondischargeable in a Chapter 7 case.).

Mendoza v. Curry (In re Duque), No. CC-05-1069-MaMcB, 2005 WL 6960181 (B.A.P. 9th Cir. Dec. 30, 2005) (unpublished) (Marlar, McManus, Brandt) (Applying factors from Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. Mar. 26, 1999) (Fletcher, Tashima, Bryan), not bad faith that debtor filed Chapter 13 petition 19 days before state court trial of spousal assault and battery claim.).

Mendoza v. Curry (In re Duque), No. CC-05-1069-MaMcB, 2005 WL 6960181 (B.A.P. 9th Cir. Dec. 30, 2005) (unpublished) (Marlar, McManus, Brandt) (Not bad faith that debtor filed Chapter 13 petition 19 days before trial of civil action for assault and battery that followed plea of nolo contendere to misdemeanor count of spousal abuse.).

Alaska

In re Brown, No. A08-00235-DMD, 2008 WL 8652593 (Bankr. D. Alaska Dec. 23, 2008) (MacDonald) (Applying factors in Fidelity & Casualty Co. of New York v. Warren (In re Warren), 89 B.R. 87 (B.A.P. 9th Cir. Aug. 16, 1988) (Volinn, Meyers, Jones), not bad faith that 21.8% plan will discharge debt otherwise nondischargeable under § 523(a)(2) and (6). Debtor sold dump trailer and did not use proceeds to pay off lien. Buyer lost trailer to foreclosure. Buyer failed to file timely complaint objecting to discharge. Plan was otherwise confirmable.).

In re Burke, No. A08-00144-DMD, 2008 WL 8652590 (Bankr. D. Alaska July 7, 2008) (MacDonald) (Understatement of income tax liability on statement of financial affairs and misrepresentation that required tax returns had been filed were indicia of bad faith that justified denial of confirmation and dismissal.).

In re Burke, No. A08-00144-DMD, 2008 WL 8652590 (Bankr. D. Alaska July 7, 2008) (MacDonald) (Failure to file tax returns for three years and misrepresentation that all required returns had been filed—together with other inaccuracies in schedules and statement of financial affairs—required denial of confirmation for bad faith and dismissal of case.).

In re Burke, No. A08-00144-DMD, 2008 WL 8652590 (Bankr. D. Alaska July 7, 2008) (MacDonald) (Petition and plan were filed in bad faith when schedules and statement of financial affairs contained inaccuracies and omissions. Debtors misrepresented that they had filed required tax returns and understated tax liability. Petition was filed after foreclosure sale of residence, and plan contained no provision for payment of rent or mortgage. Debtors lacked financial ability to fund plan.).

Arizona

In re Vandenberg, No. 09-bk-23387, 2012 WL 1854298, at *4-*5 (Bankr. D. Ariz. May 21, 2012) (Curley) (Rejecting Drummond v. Welsh (In re Welsh), 465 B.R. 843 (B.A.P. 9th Cir. Feb. 17, 2012) (Perris, Pappas, Hollowell), plan that pays student loan in full and de minimis amount to other unsecured creditors while retaining real property that is not necessary to the reorganization may satisfy the disposable income test, but it lacks good faith when unsecureds will be paid a de minimis amount while the debtor pays debt secured by the unnecessary real property and pays the student loan in full. "[T]his Court concludes that the decision in Welsh was wrongly decided. . . . Section 1325(a)(3) has an independent requirement that the Debtor's plan be filed in good faith . . . . [T]he Debtor's payment of a de minim[i]s amount to her unsecured creditors as a result of her direct payment on her student loans and her retention of her Scottsdale lot reflected a lack of good faith on her part.").

In re Corbin, No. 4:05-bk-06707-JMM, 2007 WL 1232162, at *2 (Bankr. D. Ariz. Apr. 20, 2007) (unpublished) (Marlar) (Plan fails disposable income test based on budget recalculation by court and plan fails good faith under § 1325(a)(3) because debtor proposes 8% interest to car lender when contract interest rate was 6.54%. "Under non-bankruptcy law, the debt to the secured creditor calls for 60 monthly payments . . . at a 6.54% annual interest rate. Under the plan, that obligation unnecessarily accelerates payment and increases the interest rate. This auto debt, in order for the plan to be accorded good faith, can be remedied by simply leaving it unimpaired and paying it 'outside' the plan. Such payment would then alter Schedule J, and such payment would be placed in the monthly expense category. The plan can be so modified.").

California

Central District of California

Mycek v. Danielson (In re Mycek), No. 5:15-cv-00369-JGB, 2013 WL 9994332 (C.D. Cal. Oct. 22, 2013) (Bernal) (Drummond v. Welsh (In re Welsh), 711 F.3d 1120 (9th Cir. Mar. 25, 2013) (Ripple, Trott, Paez), applies to good-faith determination for debtor with CMI less than applicable median family income; remand required for bankruptcy court to reconsider finding of lack of good faith.).

In re Paasch, 331 B.R. 919, 923 (Bankr. C.D. Cal. Oct. 6, 2005) (Bufford) (A Chapter 13 plan to be funded by postpetition borrowing cannot be confirmed because the plan is not proposed in good faith. The debtor proposed to amend his Chapter 13 plan to pay administrative and priority claims in full and 4.93% to unsecured creditors. This plan would require payments of $2,399 per month, but the debtor acknowledged he could only afford payments of $508 per month. The debtor proposed to borrow from one of his customers in order to fund the amended plan, proposing to repay this loan after the completion of the Chapter 13. The trustee objected. "Paasch's proposal in this case would barely make a start toward the fresh start contemplated by Chapter 13. Upon completion of the plan, Paasch would still owe nearly $50,000 in new debt undertaken to pay off his old debt. Furthermore, it is not apparent how Paasch could pay this new debt. Given his present monthly disposable income of $508, it would take ten additional years to pay off the new loan. This total of thirteen years far exceeds the statutory limit of five years for a Chapter 13 plan and comes close to the situation of indentured servitude that debtors frequently suffered under Chapter XIII. . . . There is no provision in Chapter 13 that explicitly prohibits a debtor from borrowing money for Chapter 13 plan payments. However, the court finds that a Chapter 13 plan that proposes to fund more than 70% of the payments by borrowing money fails the 'good faith' test, and cannot be confirmed.").

Eastern District of California

Brooks v. Brooks, No. 2:09-cv-01514-MCE, 2010 WL 1416702, at *6 (E.D. Cal. Apr. 5, 2010) (unpublished) (England) (Although debtors originally failed to schedule a valuable cause of action, amended plan was proposed in good faith that provided 100% payment of unsecured claims from proceeds of pending cause of action and if action was not successful, debtors would remain liable for 100% payment, or case would be dismissed. Original plan was not proposed in good faith - before debtors amended schedules to show pending lawsuit with value of $750,000. "There is no evidence before this Court that the Debtors personally misrepresented any facts in their proposed reorganization plan. Nor is there evidence that they unfairly manipulated the Bankruptcy Code. The Debtors complied with court orders and submitted a feasible and equitable amended plan which the bankruptcy court properly confirmed.").

In re Pasley, 507 B.R. 312 (Bankr. E.D. Cal. Mar. 21, 2014) (Lee) (Citing Villanueva v. Dowell (In re Villanueva), 274 B.R. 836 (B.A.P. 9th Cir. Feb. 26, 2002) (Brandt, Klein, Marlar), not bad faith to reduce plan term from 60 months to 44 months when mortgage modification eliminated arrearage that was cause for extension of original plan. Section 1329 permits modification to reduce plan term, debtors with CMI less than median family income cannot be coerced into 60-month plan and Law v. Siegel, 134 S. Ct. 1188 (Mar. 4, 2014), precludes use of general equitable powers to require a longer plan as a demonstration of "fairness" to creditors.).

In re Obst, No. 11-38102-E-13, 2012 WL 8255526, at *6 (Bankr. E.D. Cal. June 18, 2012) (unpublished) (Sargis) (Plan not proposed in good faith when motive was to stall foreclosure litigation and plan did not propose paying mortgage. "If the Debtor sought to stay [mortgagee] outside of the automatic stay in a bankruptcy case, he would have been required to post a bond under [applicable California or federal procedure].").

In re Frazier, 448 B.R. 803, 813 (Bankr. E.D. Cal. Mar. 31, 2011) (Sargis) (Chapter 13 case filed nine days after discharge in prior Chapter 7 case survives good-faith analysis notwithstanding that filing stopped foreclosure and plan will strip off a wholly unsecured junior mortgage. "The Debtors in this case are not merely filing a perfunctory Chapter 13 Plan where no creditors are paid or arrearage cured. This is not a situation as in [In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman),] . . . with nominal payments and no substantive reorganization by the consumer debtor. . . . The present case provides an entirely different situation. The Debtors have committed to a 60-month plan . . . with plan payments totaling $164,580.00. Through the plan the debtors will cure a $20,000.00 arrearage on the Bank of America secured claim and save their residence from foreclosure. The Debtors will also pay the prepetition claim of $4,500.00 secured by the Debtors' car and an Internal Revenue Service prepetition nondischargeable claim of $16,417.00.").

In re Lopez, No. 10-16785-B-13, 2010 WL 9489203 (Bankr. E.D. Cal. Dec. 9, 2010) (unpublished) (Lee) (Not good faith that plan would keep travel trailer and accelerate payment of $11,000 debt at expense of unsecured creditors that would receive nothing under plan.).

In re Lavilla, 425 B.R. 572, 582, 579 (Bankr. E.D. Cal. Mar. 23, 2010) (Lee) (Debtors ineligible for another Chapter 7 discharge did not fail good-faith test as matter of law but did fail to carry burden of proving good faith in both filing and plan proposal. "The Objection shifts to the Debtors the burden of producing evidence to show that they are acting in good faith. The court cannot consider the 'totality of the circumstances' if the Debtors fail to produce any evidence to explain their circumstances. At a minimum, the Debtors should explain the reasons why they are already in need of another 'fresh start,' which they cannot get in chapter 7." "The Trustee is essentially asking the Debtors to bargain for their right to be in chapter 13 in the first place. Obviously, the court cannot order the Debtors to pay 100% to their unsecured creditors as there is no basis in the Bankruptcy Code or in case law for such a result. The Trustee is therefore asking this court to impose some arbitrary new confirmation test, a 'price tag' applicable only to chapter 13 debtors who are not eligible for a chapter 7 discharge; to declare that under these circumstances, the plan cannot satisfy the 'good faith' test unless the debtors pay at least 'x' dollars or 'y' percent to their unsecured creditors.").

In re Lavilla, 425 B.R. 572, 577, 582 (Bankr. E.D. Cal. Mar. 23, 2010) (Lee) (It is not per se bad faith for debtors ineligible for Chapter 7 discharge to convert to Chapter 13, but confirmation was denied because debtors failed to produce any proof of good-faith filing. "The good faith requirements under subsections 1325(a)(3) (good faith plan) and 1325(a)(7) (good faith bankruptcy petition) are closely related and are frequently based on the same factors." When debtors seek "post-BAPCPA equivalent of the old 'super discharge,' i.e., a discharge of unsecured debts that cannot be discharged in chapter 7[,]" to overcome bad-faith objection, debtors must produce some proof.).

In re Lavilla, 425 B.R. 572 (Bankr. E.D. Cal. Mar. 23, 2010) (Lee) (Not per se bad faith for debtors ineligible for Chapter 7 discharge to pay only trustee's commission, one secured claim and debtors' attorney fees, with nothing to unsecured creditors, but confirmation denied when debtors failed to produce any proof of good faith.).

In re Barberena, No. 08-14946-B-13, 2009 WL 330248 (Bankr. E.D. Cal. Jan. 28, 2009) (unpublished) (Lee) (Partially funding payment to secured creditor by sale of property lacks good faith when plan reduces interest rate and makes de minimis payment pending sale.).

In re Gonzalez, No. 08-15277-B-13, 2008 WL 5068837, at *3 (Bankr. E.D. Cal. Nov. 25, 2008) (Lee) (Neither petition nor plan was filed in good faith as required by § 1325(a)(7) and (a)(3); successive petitions does not alone demonstrate lack of good faith but totality of circumstances does. "'Frequently, in the chapter 13 context there will be an overlap between the good-faith inquiries [petition filing and plan proposal] because the debtor's plan must be filed within a very short time after the case has commenced.'" Only purpose for filing present petition and plan is to prevent collection by unsecured creditors, not for any good faith reorganization purpose.).

In re Rathburn, No. 05-19213 A13, 2006 WL 3462578 (Bankr. E.D. Cal. Nov. 28, 2006) (unpublished) (Confirmation of debtors' third amended plan denied based on lack of feasibility and lack of good faith. Under Smyrnos v. Padilla (In re Padilla), 213 B.R. 349, 352 (B.A.P. 9th Cir. 1997), good faith for plan confirmation required case-by-case analysis, and lack of good faith not based on single act; rather, "cumulative effect" of debtors' lack of disclosure, "moving target presented by debtors' expenses," and sale of an asset without court approval justified finding lack of good faith.).

In re Ramos, No. 05-91824-A-13G, 2006 WL 2850409 (Bankr. E.D. Cal. Sept. 29, 2006) (unpublished) (McManus) (Applying totality-of-circumstances test from Goeb v. Heid (In re Goeb), 675 F.2d 1386 (9th Cir. 1982), 60-month plan is proposed in good faith that pays 10% of $213,849.13 claim for embezzlement when debtor pleaded guilty, received a three-year prison sentence, is now working two jobs and there is no realistic likelihood that creditors would receive more outside bankruptcy.).

Northern District of California

Ingram v. Burchard, 482 B.R. 313 (N.D. Cal. Sept. 28, 2012) (Rogers) (Lien-stripping, attorney-fee-only plans may be appropriate under rare circumstances, but totality of circumstances supported denial of confirmation for lack of good faith.), aff'g No. 11-13216, 2012 WL 10812 (Bankr. N.D. Cal. Jan. 3, 2012) (Jaroslovsky) (Plan lacked good faith that paid only attorney and trustee fees; debtors could easily pay something to creditors by extending length of plan beyond 36 months.).

Ingram v. Burchard, 482 B.R. 313 (N.D. Cal. Sept. 28, 2012) (Rogers) (Lien-stripping, attorney-fee-only plan can be confirmed; but, applying totality of circumstances, this plan failed good-faith test.).

United States Bank, N.A. v. Boardman, No. C 11-04788 JW, 2012 WL 3778868 (N.D. Cal. Aug. 30, 2012) (unpublished) (Ware) (Plan was filed in good faith: bankruptcy court did not err in treating $400,000 prepetition transfer from debtor's mother as loan given absence of evidence of gift intent.), reconsideration denied, No. C 11-04788 CRB, 2012 WL 5914264 (N.D. Cal. Nov. 26, 2012) (Breyer).).

Heal v. Burchard, No. C 10-00397, 2010 WL 3834017 (N.D. Cal. Sept. 28, 2010) (unpublished) (Seeborg) (Attorney-fee-only plan that would strip off wholly unsecured mortgage and make payments for only eight months was not proposed in good faith.), aff'g No. 09-13026, 2010 WL 55895, at *1 (Bankr. N.D. Cal. Jan. 4, 2010) (Jaroslovsky) (In a Chapter 13 case that "test[s] the limits of the majority decision in [Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. June 23, 2008) (Pregerson, Siler, Bea)]," lack of good faith precludes confirmation of eight-month plan that pays unsecured creditors nothing, pays attorney fees and strips off (without payment) a wholly unsecured junior mortgage. "[A]t some point simple principles of good faith limit [Kagenveama's] application. . . . [T]he debtors have not met the good faith requirement of § 1325(a)(3) because their plan is so short and because it accomplishes nothing other than something forbidden in Chapter 7; while either factor alone might not result in denial of confirmation, the two factors together render the plan unconfirmable.").

In re Payne, No. 16-50543-HLB, 2017 WL 6759070 (Bankr. N.D. Cal. Dec. 29, 2017) (Blumenstiel) (Petition was not filed in good faith for purposes of § 1325(a)(7) when debtor, a lawyer, failed to schedule large debts to former partner arising from dissolution of law firm. Plan, as amended, was filed in good faith for purposes of § 1325(a)(3) when evidence supported debtors’ efforts to pay, including reallocation of payments from secured debts to unsecured debts as secured debts would be paid during term of plan.).

In re Hogan, No. 14-10879, 2015 WL 1221579 (Bankr. N.D. Cal. Mar. 13, 2015) (Jaroslovs) (Plan that would allow debtors to continue decade-long litigation for personal gain was not proposed in good faith.).

In re Jean, No. 13-12072, 2014 WL 1312367 (Bankr. N.D. Cal. Mar. 31, 2014) (Jaroslovsky) (Distinguishing Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. Mar. 26, 1999) (Fletcher, Tashima, Bryan), not bad faith that plan deals with prepetition judgment requiring surrender of property.), aff'd, No. NC-14-1198-KuPaJu, 2014 WL 6609697 (B.A.P. 9th Cir. Nov. 21, 2014) (unpublished) (Kurtz, Pappas, Jury)).).

In re Feiling, No. 11-71474 MEH, 2013 WL 2451333 (Bankr. N.D. Cal. June 6, 2013) (Hammond) (Plan was proposed in good faith that would pay former spouse's property settlement claim more than would be paid in a Chapter 7 case. That claim would not be dischargeable in Chapter 7 did not necessarily establish lack of good faith.).

In re Enabnit, 490 B.R. 404, 411 (Bankr. N.D. Cal. Jan. 17, 2013) (Johnson) (Citing dissent in Drummond v. Welsh (In re Welsh), 465 B.R. 843 (B.A.P. 9th Cir. Feb. 17, 2012) (Perris, Pappas, Hollowell), aff'd, 711 F.3d 1120 (9th Cir. Mar. 25, 2013) (Ripple, Trott, Paez), plan lacks good faith when unsecured creditors will not be paid in full but debtors will pay nearly $2,000 per month for a timeshare in Hawaii that may not be a secured debt. "The record does not show why Debtors need the property, why it makes sense for them to retain it, or other options they might consider that do not cost almost $2,000 per month.").

In re Gumanday, No. 11-13655, 2012 WL 1222604, at *1 (Bankr. N.D. Cal. Apr. 11, 2012) (Jaroslovsky) (Not bad faith that debtor, an electrician, had difficulty finding employment and wife operated tanning salon business purchased from objecting creditors. "Their Chapter 13 filing was a logical response to economic hard times and their plan represents a good faith effort to reorganize with meaningful payments proposed to their creditors.").

In re Thompson, No. 10-10415, 2011 WL 3903399 (Bankr. N.D. Cal. Sept. 6, 2011) (Jaroslovsky) (Bad faith included that case was filed for purpose of delaying judgment creditor's collection effort. Debtor had been unsuccessful in confirming plan for 19 months.).

In re Tran, 431 B.R. 230 (Bankr. N.D. Cal. June 25, 2010) (Jellen) (Although debtor ineligible for Chapter 13 discharge can strip wholly unsecured junior mortgage, if sole reason for filing Chapter 13 was to strip off lien that was unavoidable in Chapter 7 because of Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992), filing would be in bad faith. Under totality of circumstances, one debtor was unfairly manipulating Bankruptcy Code to skirt Dewsnup—confirmation was denied and case dismissed. Unrelated second case was not filed in bad faith because of justifications other than lien stripping.), aff'd, No. 03035 CW, 2011 WL 3862010 (N.D. Cal. Aug. 31, 2011) (Wilken).).

In re Drocco, No. 09-71696 TG, 2010 WL 703113, at *4 (Bankr. N.D. Cal. Feb. 25, 2010) (Tchaikovsky) ("Court is unlikely to confirm" a plan that pays only trustee's fee and minimal debtor's attorney fees, with nothing to general creditors.).

Nelson v. Meyer (In re Nelson), No. 05-10660, 2006 WL 2091899 (Bankr. N.D. Cal. July 26, 2006) (unpublished) (Jaroslovsky) ("After observing Nelson's actions in this and her prior bankruptcy cases, the court finds that Nelson filed this case in a cynical attempt to manipulate the Bankruptcy Code. There is no doubt in the court's mind that when Nelson stipulated to denial of her discharge in the Chapter 7 case she had already formed the intent to buy her discharge back on the cheap in Chapter 13.").

Nelson v. Meyer (In re Nelson), No. 05-10660, 2006 WL 2091899 (Bankr. N.D. Cal. July 26, 2006) (unpublished) (Jaroslovsky) (Debtor made misrepresentations in schedules by failing to list former employees who allege that she was personally liable for unpaid overtime.).

Nelson v. Meyer (In re Nelson), No. 05-10660, 2006 WL 2091899 (Bankr. N.D. Cal. July 26, 2006) (unpublished) (Jaroslovsky) (After waiver of discharge in Chapter 7 case, debtor filed Chapter 13 "in a cynical attempt to manipulate the Bankruptcy Code. There is no doubt in the court's mind that when Nelson stipulated to denial of her discharge in the Chapter 7 case she had already formed the intent to buy her discharge back on the cheap in Chapter 13. Nelson's intentions are to obtain a discharge without ever having to answer for her unlawful conduct. The legal effect of confirmation would be to discharge, with no justice or compensation to her creditors, a debtor who a few months prior to filing was denied a discharge. This is not the spirit of Chapter 13.").

In re Osborn, 346 B.R. 204, 206 (Bankr. N.D. Cal. May 30, 2006) (Jaroslovsky) (Transmutation of real property from community property to joint tenancy was intended to shelter assets from creditors, but transfer was not concealed and did not reduce amount to which creditors are entitled in Chapter 13 case. "There is certainly every indication that [the transmutation from community property to joint tenancy] was done in order to reduce the consequences to Osborn's wife if Perkins obtained a judgment against Osborn. However, a fraudulent transfer is not per se bad faith so as to make an otherwise confirmable plan unconfirmable. None of Osborn's actions were taken in secret or concealed from Perkins or the Chapter 13 trustee. So long as Osborn's creditors are not faring worse under his Chapter 13 plan than they would fare under a hypothetical Chapter 7, the requirements of the Bankruptcy Code are met. Osborn's plan calls for large monthly payments and a significant dividend to creditors. Viewing all of the circumstances as a whole, the court finds good faith.").

Southern District of California

Buechel v. Billingslea, No. 14cv2179-GPC(NLS), 2015 WL 3874443 (S.D. Cal. June 23, 2015) (Curiel) (Chapter 20 case filed to delay adversary proceeding pending in closed Chapter 7 case was filed in bad faith and warranted sanction of attorney fees against debtor and disciplinary sanction against debtor's counsel for improper filing and willful failure to comply with bankruptcy court's orders.).

In re Nioko, No. 10-03092-MM13, 2013 WL 298069 (Bankr. S.D. Cal. Jan. 22, 2013) (unpublished) (Bowie) (Not good faith to propose 37-month plan when applicable commitment period is 60 months and unsecured creditors will be paid nothing. Debtors had positive projected disposable income after adjustment for Local Standards Ownership deduction that was disallowed because car was owned free of debt.).

In re Morris, No. 09-06014-PB13, 2012 WL 2341537, at *6-*7 (Bankr. S.D. Cal. June 7, 2012) (unpublished) (Mann) (Trustee proved good faith in modified plan that increased payments to unsecured creditors based on substantial increase in income. "Trustee met his burden of proof concerning his good faith in proposing the Modified Plan. Increasing payments to unsecured creditors is his function in the bankruptcy system and performing that function cannot constitute bad faith. . . . It was appropriate for Trustee to take into account the known increase in Debtors' income by 2011 in increasing the payments to creditors as of 2010. . . . The Court finds no lack of good faith here since it is highly unusual for debtors' expenses to nearly double in two years.").

In re Bommarito, No. 06-01718-M13, 2007 WL 7216514 (Bankr. S.D. Cal. Jan. 3, 2007) (unpublished) (Bowie) (Purchase of $17,000 pick-up truck three days after discharge in prior Chapter 7 case and six months before filing current Chapter 13 petition is not per se bad faith when debtor did not anticipate large medical expenses that precipitated Chapter 13 filing; that debtor is not eligible for discharge in Chapter 13 case because of § 1328(f) does not render current filing per se lacking in good faith.).

Hawaii

In re Horowitz, No. 16-00239, 2016 WL 5106985, at *2–*3 (Bankr. D. Haw. Sept. 16, 2016) (Faris) (Plan lacked good faith when only purpose was to manage litigation by the debtor against one former business partner. “Dr. Horowitz filed this case in order to secure a forum in which he can litigate and attack state court decisions against him and in favor of Mr. Sulla . . . . Dr. Horowitz has no need for relief under chapter 13. . . . It is hard to imagine how Dr. Horowitz could propose a confirmable plan that would also serve his overriding goal of relitigating his dispute with Sulla[.]”).

In re Cashman, No. 11-00178, 2011 WL 1565189 (Bankr. D. Haw. Apr. 25, 2011) (Faris) (Not bad faith that plan would pay for two cars that were co-owned by debtors but with respect to which loans were to debtors' parents. That debtors were not personally liable did not establish lack of good faith. Although cars were worth less than loan balances, debtors needed cars for work transportation.).

Idaho

In re Broadbent, 531 B.R. 840, 845-46 (Bankr. D. Idaho June 8, 2015) (Pappas) (Applying Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. Mar. 26, 1999) (Fletcher, Tashima, Bryan), and Fidelity & Casualty Co. of New York v. Warren (In re Warren), 89 B.R. 87 (B.A.P. 9th Cir. Aug. 16, 1988) (Volinn, Meyers, Jones), not bad faith that debtor retained a portion of future tax refunds and excluded live-in girl friend's income from calculation of disposable income. "[I]t is not bad faith for Debtor to retain up to $1,621 of his annual tax refunds. Debtor . . . has included one-twelfth of the tax refund as income each month, thereby effectively accounting for it in calculating his plan payments. . . . [N]owhere does the Code require that a live-in significant other's income be counted in analyzing a chapter 13 plan, as is the case for a non-filing spouse. . . . [T]he Court declines to equate Cassandra's status in this case with that of a non-filing spouse. . . . [I]f a non-spouse's contribution is not stable and regular enough to be counted toward a debtor's eligibility for chapter 13, logic and consistency dictate that it is also not worthy of inclusion on the debtor's schedule I and factored into computing required plan payments. . . . [I]t surely cannot be said that a live-in significant other's income must always be included on schedule I under every circumstance, and that it amounts to bad faith for a debtor to do otherwise. . . . [W]hen Debtor was asked at the hearing to speculate about what would occur if he were to ask Cassandra to contribute cash to fund plan payments, Debtor testified that she would likely 'pack her bags.'").

In re Westing, No. 09-03594-TLM, 2010 WL 2774829, at *4 (Bankr. D. Idaho July 13, 2010) (unpublished) (Myers) (Plan was not proposed in good faith because debtors failed to disclose business income, business assets and postpetition acquisition of interest in new video rental business. Debtors' "apparent unwillingness to be completely forthcoming in their schedules and during the course of this case does not suggest good faith.").

In re Westing, No. 09-03594-TLM, 2010 WL 2774829 (Bankr. D. Idaho July 13, 2010) (unpublished) (Myers) (Plan was not proposed in good faith when debtors excluded Social Security income from projected disposable income. Plan would pay minimal amount to unsecured creditors while accumulating $78,000 for debtors over life of plan from Social Security income. Although Social Security income may be deducted from CMI under § 101(10A)(B), when good faith is raised, burden is on debtors to demonstrate why Social Security income was not dedicated to plan payments.).

In re Westing, No. 09-03594-TLM, 2010 WL 2774829 (Bankr. D. Idaho July 13, 2010) (unpublished) (Myers) (Plan was not proposed in good faith when debtors excluded Social Security income from projected disposable income, notwithstanding exclusion of Social Security from CMI. Plan would pay minimal amount to unsecured creditors while accumulating surplus of $78,000 for debtors from Social Security over life of plan. Although Social Security income may be deducted from CMI under § 101(10A)(B), when good faith is challenged, burden is on debtors to demonstrate why Social Security income was not dedicated to plan payments.).

In re Gibson, No. 09-01196-JDP, 2009 WL 2868445, at *3 (Bankr. D. Idaho Aug. 31, 2009) (Pappas) (Contributions to 401(k) plan that began just prior to Chapter 13 filing are excluded from disposable income and do not necessarily evidence bad faith. Debtors initiated $600 monthly contribution to 401(k) plan in a Chapter 13 case that would pay approximately $16,000 to unsecured creditors. "[A] debtor may not completely shelter available resources in a retirement plan at the expense of his creditors. . . . Reasonable, measured planning for retirement is responsible and should be encouraged provided the amount of plan contributions are [sic] balanced and proportionate to amounts being paid on debt.").

In re Varner, 08-20806-TLM, 2009 WL 1468707 (Bankr. D. Idaho May 22, 2009) (Myers) (Further hearing necessary to determine good faith when plan satisfies disposable income test but because of surrendered collateral, there is income available to pay unsecured creditors.).

In re Hieter, 414 B.R. 665, 672-73 (Bankr. D. Idaho Mar. 13, 2009) (Pappas) (Debtors cannot satisfy good-faith requirement in § 1325(a)(7) when current case was filed six days after dismissal of prior Chapter 13 case and prior case was filed while debtors were ineligible for discharge under § 1328(f); debtors had no intention of completing confirmed plan in prior case but were buying time until they could refile and be eligible for discharge. Debtors received discharge in Chapter 7 case filed on November 24, 2004. Prior Chapter 13 case was filed on February 6, 2008, and debtors confirmed a plan that was not in default when case was voluntarily dismissed on December 17, 2008. Current case was filed on December 23, 2008. "[W]hile serial chapter 13 bankruptcy filings are not expressly prohibited, . . . good faith requirements offer a stop-gap to what cases will, or will not, proceed. . . . While, arguably, Debtors' creditors may not be substantially disadvantaged should they be allowed to confirm and complete their proposed plan, Debtors' tactics present a potential for harm to the bankruptcy system, and the public's trust in that system. . . . Debtors had no intention of using [the prior] plan to solve their financial difficulties . . . . [T]hey pursed [sic] the Feb. 2008 case solely to obtain the benefit of the automatic stay, while biding their time until they were eligible for discharge under § 1328(f). . . . Debtors concede that they dismissed the Feb. 2008 case and refiled the Dec. 2008 case solely in order to receive a discharge. . . . Debtors are implicitly admitting that they filed the Feb. 2008 case merely to take advantage of the automatic stay and other benefits of being in chapter 13, while at the same time knowing they did not intend to complete their confirmed plan. . . . Debtors experienced no significant changes in their financial circumstances during 2008. . . . Debtors' conduct amounts to an unfair manipulation of the bankruptcy system . . . and thus constitutes bad faith. . . . [T]hey can not [sic] show this case was filed in good faith as required by § 132[5](a)(7)." Bad faith for § 1325(a)(7) purposes established cause for dismissal under § 1307(c), and dismissal was conditioned that the debtors were ineligible to refile Chapter 13 for 13 months—the time they spent in the prior and current Chapter 13 cases that would otherwise count toward the four years in § 1328(f).).

In re Stitt, 403 B.R. 694, 705 (Bankr. D. Idaho Nov. 7, 2008) (Pappas) (Considering Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. June 23, 2008) (Pregerson, Siler, Bea), BAPCPA did not eliminate totality-of-circumstances review of good-faith factors when debtor otherwise satisfies projected disposable income test. De minimis payment plan fails good-faith analysis when debtor lives in an "upside down" $300,000 house located more than 100 miles from his work, the debtor's one-horse breeding enterprise loses money and the debtor "has not attempted to prove that adequate, cheaper housing is not available to him in areas nearer to his principal place of employment.").

In re Irving, No. 08-00125-JDP, 2008 WL 4185946, at *2 (Bankr. D. Idaho Sept. 8, 2008) (Pappas) (Postpetition move to another state, resulting in diminished income and increased living expenses, is evidence of lack of good faith. "Given her decision to relocate, without a better explanation, Debtor has not shown that her use of chapter 13 is motivated by a genuine intent to deal fairly with her creditors.").).

In re Meek, 370 B.R. 294 (Bankr. D. Idaho June 27, 2007) (Myers) (Citing Fidelity & Casualty Co. of New York v. Warren (In re Warren), 89 B.R. 87 (B.A.P. 9th Cir. Aug. 16, 1988) (Volinn, Meyers, Jones), good faith in § 1325(a)(3) is independent of "best efforts" test in § 1325(b); applying totality-of-circumstances test, plan passes good-faith analysis notwithstanding that plan does not satisfy disposable income test.).

In re Penland, No. 05-00172, 2005 WL 4704990, at *5-*8 (Bankr. D. Idaho Nov. 8, 2005) (unpublished) (Pappas) (Debtors earning more than $120,000 a year from law practice and salary as a banker unfairly manipulated bankruptcy process to pay only $59,625 toward $220,000 in unsecured debt. With respect to $500,000 in exempt retirement funds: "[I]n conducting this good faith analysis, the Court is confounded by the lack of evidence that Debtors at least considered whether they could access these funds to deal with their debts. . . . [A]ccount loan programs exist allowing Debtors to access these funds or to borrow enough to temporarily deal with their debt issues, repaying such loans with future contributions." "Mr. Penland testified his income is declining because of the policies adopted by his worker's compensation insurance clients. . . . Mr. Penland should be expected to react to these changes in his practice to maximize his potential income. . . . Mr. Penland's financial circumstances should be motivated to guide his practice in a different, positive direction. He cannot expect his creditors to go unpaid while he either loses money or clients in his practice. . . . Locking in plan payments based upon his current, below-market level of earnings seems particularly unfair to creditors." With respect to the budget for expenses: "absent compelling circumstances, it is doubtful Chapter 13 debtors should ever be allowed to spend over $5,200 per month in ordinary living expenses." "[T]he Court concludes Debtors have attempted to manipulate the Bankruptcy Code in such a way as to pay as little of their debt as possible while maintaining the same comfortable lifestyle they enjoyed prior to bankruptcy."), aff'd in part, rev'd in part No. ID-05-1467-HKMa, 2006 WL 6811002 (B.A.P. 9th Cir. Aug. 17, 2006) (Hollowell, Klein, Marlar).).

In re Bowen, 349 B.R. 814, 822 (Bankr. D. Idaho Sept. 27, 2005) (Not per se bad faith that debtors filed Chapter 13 case, converted to Chapter 7 based on ineligibility, discharged enough debt to become eligible for Chapter 13 and then filed a new Chapter 13 case to deal with tax claims that survived discharge in the Chapter 7 case. "Debtors stood no chance of addressing their sizeable and nondischargeable tax obligations without first addressing other debt. That they chose to seek a chapter 7 discharge and then file the chapter 13 case is not an absolute bar to confirmation under the good faith standard.").

In re Bowen, 349 B.R. 814, 822 (Bankr. D. Idaho Sept. 27, 2005) (Tax protestor gets second chance to amend plan that would pay approximately $245,000 over 60 months on account of tax claims. "The Court must consider the good faith of Debtors in their Plan now proposed to deal with their debts, not just their lack of good faith in incurring the debt.").

In re Bowen, 349 B.R. 814 (Bankr. D. Idaho Sept. 27, 2005) (Debtors can repay 401(k) loans and "cure" negative impact on creditors by contributing lump sum of $50,000 to Chapter 13 plan at end of 60 months by borrowing from same 401(k) plan. Further evidence is needed to determine whether lump-sum payment is "sufficient accommodation" for impact of repaying 401(k) loan through plan. Debtors claimed that adverse tax impact of not repaying 401(k) loan would render plan unfeasible.).

In re Parker, No. 04-40037, 2005 WL 4705288, at *5 (Bankr. D. Idaho Feb. 9, 2005) (unpublished) (Not bad faith that debtor pled guilty to forgery, served a short jail sentence and is subject to a $30,000 restitution order that will be managed through Chapter 13 plan. "Though burdened by the restitution judgment, through the Plan, Debtors can protect their essential, albeit modest, assets, while paying as much as they can afford toward their creditors' claims. To the Court, this is a proper use of Chapter 13.").

In re Hiatt, No. 04-00647, 2004 WL 4960385 (Bankr. D. Idaho Nov. 16, 2004) (unpublished) (Plan that is unclear when payments will be made to the trustee and uncertain when trustee must make annual payments to some creditors imposes an unacceptable burden on the trustee and administrative costs on all creditors indicative of a lack of good faith.).

In re Hiatt, No. 04-00647, 2004 WL 4960385 (Bankr. D. Idaho Nov. 16, 2004) (unpublished) (Evidence of bad faith that debtors converted $60,000 of unencumbered assets into annuity contracts within 45 days of filing second bankruptcy case and transferred rights in promissory notes to third parties and related individuals.).

In re Hult, No. 03-42140, 2004 WL 4960363, at *6 (Bankr. D. Idaho Feb. 18, 2004) (unpublished) (Pappas) (Twenty-nine-year-old single father with custody of four-year-old daughter who lives with and takes care of 85-year-old grandfather proposed in good faith a plan that would pay one co-signed unsecured debt in full and nothing to other creditors; plan protects grandfather whose only income is Social Security and permits debtor to continue toward a consumer sciences degree in college. While the plan is "unusual . . . it reflects a creative and statutorily sound attempt to restructure debt obligations; it protects Debtor's grandfather; and it provides a means by which Debtor can enjoy long-term success by allowing him to obtain his college degree. The totality of the circumstances does not reflect any bad faith.").

In re Rang, No. 01-42029, 2003 WL 25273707 (Bankr. D. Idaho Jan. 27, 2003) (unpublished) (Pappas) (Court finds good faith notwithstanding conversion to Chapter 13 from Chapter 7 after creditors filed dischargeability complaints alleging that debtor embezzled $3 million; creditors failed to put on any evidence, and debtor testified that motivation to convert to Chapter 13 was financial aspects of a divorce.).

Montana

In re Ewing, 583 B.R. 252 (Bankr. D. Mont. Feb. 28, 2018) (Hursh) (Chapter 13 plan was filed in good faith when only evidence of bad faith is timing of petition to stop state court lawsuit brought by debtor’s grandfather. Objecting grandfather introduced no evidence of bad faith other than timing and plan was debtor’s best effort to pay creditors, including grandfather.).

In re Launderville, No. 11-61117-13, 2011 WL 4900022 (Bankr. D. Mont. Oct. 14, 2011) (Kirscher) (Plan allowing 24 months for debtor to sell nonresidential ranch and satisfy secured creditor was proposed in good faith under totality of circumstances test in Leavitt v. Soto (In re Leavitt), 171 F.3d 1219, 1224-25 (9th Cir. Mar. 26, 1999) (Fletcher, Tashima, Bryan). Secured creditor was protected by equity cushion and by surrender of lots not sold within two years.).

In re Rankin, No. 10-62340-13, 2011 WL 204764 (Bankr. D. Mont. Jan. 21, 2011) (Kirscher) (Applying totality-of-circumstances test under Leavitt v. Soto (In re Leavitt), 171 F.3d 1219 (9th Cir. Mar. 26, 1999) (Fletcher, Tashima, Bryan), delay in amending schedules "invited scrutiny" but did not evidence bad faith. Policy of liberal amendments of schedules overcame allegation that debtor unduly delayed amendments.).

In re Prigge, 441 B.R. 667, 679 (Bankr. D. Mont. Mar. 4, 2010) (Kirscher) (Bankruptcy court abstains from § 1325(a)(3) good-faith determination pending amended plan when proposed plan does not satisfy disposable income test and good faith becomes issue at confirmation only if debtor first overcomes disposable income test objection; if debtor amends plan to commit 401(k) contributions to unsecured creditors, then "a significantly greater distribution to unsecured claims . . . would affect the good faith analysis.").

In re O'Connor, No. 08-60641-13, 2008 WL 4516374, at *18-*19 (Bankr. D. Mont. Sept. 30, 2008) (unpublished) (Kirscher) (When plan satisfies disposable income test and deminimus payment to unsecured creditors is only challenge to confirmation, plan cannot be rejected for lack of good faith under § 1325(a)(3). "[T]his Court concludes that post-BAPCPA, '[t]he disposable income a debtor decides to commit to his plan is not the measure of his good faith in proposing the plan' . . . . Since neither the record nor the Trustee's objection identify any factor other than the amount of the plan payment to support a finding that the Debtors' Plan fails to meet the good faith requirement, and there is no dispute that the Debtors properly computed the plan payment under the means test, the Court finds the Debtors' Plan may not be denied confirmation based upon the good faith plan requirement of § 1325(a)(3). . . . [T]he failure to include the boat expense in Form 22C when paying a monthly plan payment greater than the monthly disposable income amount calculated on line 59 does not establish by itself . . . a failure of the good faith requirement.").

In re Chavez, No. 07-60567-13, 2007 WL 3023145, at *4 (Bankr. D. Mont. Oct. 11, 2007) (unpublished) (Kirscher) ("The Trustee's primary argument with respect to his § 1325(a)(3) good faith objection is that Debtors are able to pay more per month, as reflected on their Schedules I and J, than is reflected in Debtors' Second Amended Chapter 13 Plan. . . . [A]lthough the Trustee has framed his objection as a 'good faith' objection, his objection is in reality a disposable income objection. . . . [W]hether a plan has been proposed in good faith is independent of whether the 'best efforts' test of § 1325(b) is satisfied.").

Nevada

In re Okosisi, 451 B.R. 90, 102 (Bankr. D. Nev. May 16, 2011) (Markell) (So long as case and plan are filed in good faith, debtor not eligible for discharge because of § 1328(f) can strip off wholly unsecured junior mortgage on principal residence. Applying Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer), wholly unsecured junior mortgage is not protected from modification by § 1322(b)(2) and lienholder does not have an allowable secured claim, thus lien retention under § 1325(a)(5)(B) is not implicated. At completion of payments, no-discharge Chapter 13 case would be closed without triggering Code provisions that would undo lien avoidance at conversion or dismissal. "The Debtors have a valid bankruptcy purpose in filing the present chapter 13 case, as the plan accomplishes a reorganization that was not possible in their previous chapter 7 and 'represents their best effort[s] to pay creditors.'").

Oregon

In re Holifield, No. 13-63536-fra13, 2014 WL 948828 (Bankr. D. Or. Mar. 12, 2014) (Alley) (Lack of good faith included that plan would retain real property as property of estate to prevent creditors from protecting claims under state construction lien law.).

In re Green, No. 13-60271-tmr13, 2013 WL 4525290, at *3, *4 (Bankr. D. Or. Aug. 27, 2013) (Renn) (Four unapproved car loans during prior case evidence lack of good faith in subsequent plan. Citing Drummond v. Welsh (In re Welsh), 465 B.R. 843, 856-57 (B.A.P. 9th Cir. Feb. 17, 2012) (Perris, Hollowell, Pappas), aff'd, 711 F.3d 1120 (9th Cir. Mar. 25, 2013) (Ripple, Paez, Trott), "pre-petition conduct impacting the disposable income/means test, if it smacks of bad faith, can be considered" under § 1325(a)(3). Willful disregard of prohibition on unapproved credit in prior Chapter 13 case was bad faith. Trustee objected to $517 vehicle ownership expense for vehicle obtained with unapproved credit in prior Chapter 13 case. "The prohibition on unapproved post-confirmation credit . . . [is] designed to protect the integrity of the Chapter 13 system. In particular, [it] guard[s] against dissipation of assets and allow[s] oversight of financial events that impact the plan's feasibility and/or the need for an amended plan. Purposefully subverting those protections four times . . . should have consequences. . . . Debtors' violations may have been mitigated had they adduced evidence the Trustee would have approved each of the four car loans. However, no such evidence was adduced.").

In re Braswell, No. 13-60564-fra13, 2013 WL 3270752, at *2 (Bankr. D. Or. June 27, 2013) (Alley) (Applying Drummond v. Welsh (In re Welsh), 711 F.3d 1120 (9th Cir. Mar. 25, 2013) (Ripple, Trott, Paez), lack of good faith cannot be based solely on 100% payment of unsecured creditors in 53 months using less than all of debtor's projected disposable income. Form B22C showed $1,651 of monthly projected disposable income and plan proposed to pay unsecured creditors in full in 53 months using plan payment of $500 per month. "Applying the holding of Welsh to the facts of the present case: so long as the repayment requirements of § 1325(b)(1) are met, the court cannot find a lack of good faith solely on the basis that Debtor is paying less per month than the amount of his projected monthly disposable income." When debtor elects to pay unsecured creditors in full under § 1325(b)(1)(A), unsecured claims must be paid in full with interest.).

In re Aslakson, No. 12-62182-tmr13, 2013 WL 1304494 (Bankr. D. Or. Mar. 28, 2013) (Renn) (Evidence of lack of good faith included unlisted assets, understated income and undisclosed debts.).

In re McGinnis, 453 B.R. 770 (Bankr. D. Or. June 9, 2011) (Alley) (Plan was not proposed in good faith when funding relied on medical marijuana-growing business that was illegal under federal law. Although current federal administration was not interfering with medical marijuana operations that were in compliance with state law, operations were still illegal under federal law.).

In re Godfrey, No. 05-46441-rld13, 2007 WL 1039079 (Bankr. D. Or. Mar. 30, 2007) (unpublished) (Although debtor's prepetition transfers to his wife and other family members are suspicious, debtor was credible that his motive was to put property in the ownership status it should have been, and totality of evidence supported finding of good-faith filing.).

In re Godfrey, No. 05-46441-rld13, 2007 WL 1039079 (Bankr. D. Or. Mar. 30, 2007) (unpublished) (Filing on eve of BAPCPA's effective date is not bad faith when debtor seeks superdischarge of § 523(a)(2) debt nondischargeable in prior Chapter 7, since debtor is merely pursuing relief available under current Bankruptcy Code.).

In re Godfrey, No. 05-46441-rld13, 2007 WL 1039079 (Bankr. D. Or. Mar. 30, 2007) (unpublished) (Filing Chapter 13 to seek discharge of debt excepted from discharge under § 523(a)(2) in prior Chapter 7 is not per se bad-faith filing.).

Washington

Western District of Washington

In re Blenheim, No. 09-10283-MLB, 2011 WL 6779709, at *5-*8 (Bankr. W.D. Wash. Dec. 27, 2011) (Barreca) (Debtors can void first mortgage lien after claim was disallowed, and ordinarily plan can strip off wholly unsecured junior lien; but not equitable to treat junior lien as wholly unsecured after voiding first lien and not good faith to pay nothing to unsecured creditors after stripping both liens. Debtors disallowed Litton's proof of claim and then in an adversary proceeding voided Litton's first priority mortgage. Debtors then successfully stripped off second lien and proposed plan that paid nothing to unsecured creditors. Debtors were ineligible for discharge under § 1328(f) because of prior Chapter 7 discharge. "Although this Court does not recognize any inherent barrier to lien stripping in a Chapter 20 case, it is essential that any plan proposing such lien stripping otherwise comply with the traditional requirements for Chapter 13 confirmation. Debtors' Plan fails primarily because it was not proposed in good faith. . . . In the context of Chapter 20 lien strip cases, courts in the Ninth Circuit have articulated and focused on the following four factors: (1) whether debtors have a need for bankruptcy other than to do a lien strip, (2) whether the debtors acted equitably in proposing a plan, (3) whether the debtors are insolvent and are devoting all of their income to the plan, and (4) whether the debtors used serial filings to avoid payment to creditors. . . . Here, . . . Debtors have valid reorganization goals other than lien stripping. . . . [T]o deal with fraud claims . . . [to repay] a secured debt owed to Harbor West for past-due homeowners association dues and other obligations. . . . However, at the time the Order Stripping Second Position Lien was entered, the factual predicates underpinning the Motion to Avoid Second Position Lien were no longer true. The Second Position Lien was no longer junior, nor was it wholly unsecured. Rather, the Second Position Lien was fully secured. . . . Debtors should not have submitted the Order Stripping Second Position Lien . . . . Debtors had a duty of candor to the Court. It was inequitable and not in good faith for Debtors to retain the signed Order Stripping Second Position Lien given the circumstances. . . . Debtors propose to 'have their cake and eat it too,' by incorporating the Order Voiding First Position Lien, and yet based on the amount and priority of that First Position Lien, also stripping the Second Position Lien upon completion of the Plan. Although this Court believes that the case was filed in good faith, this Plan does not pass muster. . . . [P]ermitting confirmation of this Plan which would ultimately void both the First Position and Second Position Liens would bestow an unwarranted windfall on the Debtors, and would be inequitable and constitute an unfair manipulation of the Code.").

In re Smith, 401 B.R. 469, 476-77 (Bankr. W.D. Wash. Nov. 14, 2008) (Snyder) (Applying Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. June 23, 2008) (Pregerson, Siler, Bea), not bad faith to deduct secured debt payments with respect to two houses and a car that will be surrendered through the plan when only evidence of a lack of good faith is that plan satisfies minimum dividend required by projected disposable income test. "Although it is tempting to use a good faith analysis to alleviate what the Court believes to be an unfair result, the Court concludes that this would be an improper use of these Code provisions. The Debtors . . . have no disposable income based on the calculations set forth by the Code. There is no allegation of any misconduct on the part of the Debtors or of misrepresentations in their proposed Plan. Offering a Chapter 13 plan that proposes to pay only what is required by the Code should logically not be a violation of good faith. . . . The Court is not holding that a good faith analysis is no longer applicable to Chapter 13. Rather, the Court holds that it is not bad faith to propose a Chapter 13 plan that commits the least amount of income required by the Code. The Objecting Parties have not provided any evidence that would support a finding of lack of bad [sic] faith, other than it is 'unfair' or 'unreasonable' to allow the Debtors to deduct expenses on surrendered property."), rev'd on other grounds, 418 B.R. 359 (B.A.P. 9th Cir. Oct. 5, 2009) (Montali, Jury, Hollowell).).

J. Tenth Circuit

Anderson v. Cranmer (In re Cranmer), 697 F.3d 1314, 1319 (10th Cir. Oct. 24, 2012) (Murphy, Holloway, O'Brien) ("When a Chapter 13 debtor calculates his repayment plan payments exactly as the Bankruptcy Code and the Social Security Act allow him to, and thereby excludes SSI, that exclusion cannot constitute a lack of good faith."), aff'g 463 B.R. 548, 554 (D. Utah Dec. 7, 2011) (Stewart) (Not bad faith for debtors to exclude social security income from payments to unsecured creditors. "As the Bankruptcy Appellate Panel of the Eight[h] Circuit stated in a similar case: 'It simply was not bad faith for the Debtors to follow the requirements of the Bankruptcy Code and, in so doing, obtain a benefit provided therein.'"), rev'g 433 B.R. 391, 399-400 (Bankr. D. Utah June 28, 2010) (Thurman) (Citing Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464 (June 7, 2010), and notwithstanding 42 U.S.C. § 407, Social Security income is excluded from CMI and from disposable income but must be included in projected disposable income to survive good-faith analysis under § 1325(a)(3). "[T]he Debtor must propose his plan in good faith in order for the Court to confirm the plan. One of the [Flygare v. Boulden, 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour),] factors . . . is the amount of the proposed payments and the amount of the debtor's surplus. Here, the Debtor's payments equal his surplus, but only because he 'backs out' some of the SSI . . . . Although SSI is not included in the Form [B]22C calculation of CMI or DI, it must be included when determining PDI. A plan is not proposed in good faith when the debtor's SSI is excluded from PDI.").

Alexander v. Hardeman (In re Alexander), 363 B.R. 917 (B.A.P. 10th Cir. Mar. 13, 2007) (Bankruptcy court committed no error in considering testimony from insurance adjustor that debtor failed to schedule real estate and vehicles in reaching its determination that plan was not proposed in good faith under § 1325(a)(3).).

Colorado

Zeman v. Waterman (In re Waterman), 469 B.R. 334, 341 (D. Colo. Mar. 13, 2012) (Arguello) (Good-faith test in § 1325(a)(3) requires scrutiny of plans that strip off wholly unsecured liens when the debtor is not eligible for discharge because of § 1328(f), but good faith is not a per se bar. "[B]ankruptcy courts should carefully scrutinize a Chapter 20 debtor's plan to ensure that it was proposed in good faith. However, the fact that some Chapter 20 debtors may not propose their plans in good faith is not reason to bar every Chapter 20 debtor from utilizing the lien stripping tools made available to him by Congress.").

Gemelli v. Zeman (In re Gemelli), No. 10-cv-01486-WJM, 2011 WL 2292203 (D. Colo. June 8, 2011) (Martinez) (Applying good-faith factors in Flygare v. Boulden, 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour), lack of good faith included that plan would directly pay creditor secured by property jointly owned by debtor and his father when debtor had no personal liability on debt. Direct payment of mortgage was detrimental to unsecured creditors.), amended on denial of reconsideration by No. 10-cv-01486-WJM, 2011 WL 6887110 (D. Colo. Dec. 29, 2011) (Martínez).).

In re Khan, No. 14-13514 MER, 2015 WL 739854 (Bankr. D. Colo. Feb. 9, 2015) (Romero) (Evidence of lack of good faith included unsupported claim of ability to make payments that exceeded known income, payment of nondischargeable debt that would leave no money for general unsecureds and multiple unsuccessful modified plans that lacked sincerity.).

In re McGehan, 495 B.R. 37, 43-45 (Bankr. D. Colo. July 19, 2013) (Brooks) (Not bad faith to propose 100% payment of unsecured creditors in five-year plan when projected disposable income would permit shorter payment in full of all creditors. "[E]nactment of the ability to pay test in § 1325(b)(1) narrowed the good faith analysis, subsuming most of the [Flygare v. Boulden, 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour),] factors. . . . Enactment of § 1325(b)(1) closed the door on a substantial or meaningful repayment analysis. In § 1325(b)(1), Congress drew a bright line and determined that debtors can overcome objections to confirmation by committing all of their disposable income or paying all claims in full. There is no requirement that debtors do both. Here, the Debtors have complied with the second prong of § 1325(b)(1) by proposing to pay all claims in full. . . . Simply put, under either the Flygare analysis or the narrow analysis, the amount of the Debtors' payments cannot be the sole and exclusive basis for finding a lack of good faith.").

In re Loeffler, No. 10-39898 HRT, 2011 WL 6736066 (Bankr. D. Colo. Dec. 21, 2011) (Tallman) (Debtor's eve-of-filing relinquishment of right to payment on note, resulting from restaurant stock sale, was not bad faith act in contemplation of bankruptcy when debtor's counsel advised her on transaction. Transaction was effort to convert prior stock sale into employment agreement, under which debtor would work for daughter, who was operating restaurant that was subject of original sale. Confirmation was denied, however, because plan must at least provide that if trustee avoided prepetition transfer, any recovery would be available for distribution to creditors.).

In re Mendoza, No. 09-22395-HRT, 2010 WL 736834, at *5 (Bankr. D. Colo. Jan. 21, 2010) (unpublished) (Tallman) (Exercising "independent duty" to determine good faith under § 1325(a)(3) and (a)(7), that debtors are ineligible for discharge under § 1328(f)(1) puts good faith in doubt when plan proposes to strip off wholly unsecured mortgage that could not be avoided in prior Chapter 7 case. "[I]t appears that Debtors may be seeking to achieve through Chapter 13 what they could not do in Chapter 7. If, in fact, Debtors' Chapter 13 plan is proposed primarily as an end-run around Chapter 7, or a second bite at the bankruptcy apple, their conduct could constitute an abuse of process that precludes confirmation.").

In re Mendoza, No. 09-22395-HRT, 2010 WL 736834, at *5 (Bankr. D. Colo. Jan. 21, 2010) (unpublished) (Tallman) (Plan that strips off wholly unsecured mortgage is suspect with regard to good faith when debtors are ineligible for discharge under § 1328(f)(1) because of recent Chapter 7 discharge. "[I]t appears that Debtors may be seeking to achieve through Chapter 13 what they could not do in Chapter 7. If, in fact, Debtors' Chapter 13 plan is proposed primarily as an end-run around Chapter 7, or a second bite at the bankruptcy apple, their conduct could constitute an abuse of process that precludes confirmation.").

In re Arrigo, 399 B.R. 700 (Bankr. D. Colo. Dec. 4, 2008) (Romero) (When plan satisfies § 1325(b), statements and schedules were accurate and decline in income rebuts trustee's allegations of bad faith, plan is proposed in good faith and can be confirmed.).

In re Sanchez, 394 B.R. 574 (Bankr. D. Colo. Sept. 12, 2008) (Brooks) (Thirty-six month plan fails good faith analysis when debtor with CMI greater than applicable median family income has negative disposable income on Form B22C and 36-month plan would not pay creditors in full; applicable commitment period for a debtor with CMI greater than applicable median family income is 60 months and a 60-month plan must be proposed to satisfy good faith requirement.). Accord In re Pfeiler, No. 07-22817-SBB, 2008 WL 4416759 (Bankr. D. Colo. Sept. 12, 2008) (Brooks).).

In re Williams, 394 B.R. 550, 572-73 (Bankr. D. Colo. Sept. 12, 2008) (Brown) (BAPCPA did not entirely eliminate economic considerations from good faith analysis. "This Court agrees with the intermediate approach. . . . [T]he primary measure of whether the debtor has committed sufficient income to the plan is the [projected disposable income] analysis of § 1325(b). . . . But the passage of BAPCPA did not wholly eliminate consideration of a debtor's ability to pay in the context of a good faith analysis under § 1325(a)(3). . . . [T]he best guidance this Court can offer is the old adage of 'pigs get fat, but hogs get slaughtered.'".).

In re Ford, 345 B.R. 713, 720 (Bankr. D. Colo. June 8, 2006) (Prepetition and postpetition gambling are not conclusive of a lack of good faith when debtor sought help from Gamblers Anonymous and otherwise is sincere about paying creditors. "Debtor testified that she continued to gamble after filing her Chapter 13 petition. The Court wants to emphasize in the strongest terms that it in no way condones this conduct. Even so, the Debtor testified she is seeking help for her gambling addiction through Gamblers Anonymous. Despite her gambling, Debtor has remained current with her payments to the Chapter 13 Trustee. The Court finds no additional acts of bad faith such as the violation of Court orders or perjury. The Court therefore concludes that Debtor's gambling does not indicate bad faith, although it is something if left unchecked could have disastrous consequences on Debtor's efforts to reorganize.").

Kansas

In re Moore, No. 15-12254, 2016 WL 4247041, at *5–*7 (Bankr. D. Kan. Aug. 5, 2016) (Nugent) (“Fee only” case and plan were filed in good faith; debtors in their 70s, well below median income, with only Social Security and little savings who could not afford to pay Chapter 7 retainer, filed small-dividend Chapter 13 plan in good faith. “[T]here is no authority that prohibits attorney fee-only chapter 13 plans. Nor is there a minimum payment requirement. . . . [D]ebtors’ bad health and work limitations suggest special circumstances. . . . There is no evidence that this plan will be more burdensome for the trustee to administer than any other. . . . [T]he policy of the post-BAPCPA Code, as expressed in § 707(b) and § 1325(b)(3), drives debtors to chapter 13 so that their creditors may receive some dividend. The Moores . . . provided for a small dividend to their creditors. Small as it is, that dividend exceeds what these creditors would receive in a chapter 7 or a collection action: nothing. . . . The Moores are like many lower income consumer debtors. They have little, they make little, and they are challenged by health problems. Expecting them to save $2,000 for a chapter 7 case over a period of months while navigating the dangerous waters of collection and repossession, is not reasonable. . . . Barring the Moores from filing chapter 13 because they can only afford to pay their attorney over time, an arrangement no chapter 7 lawyer can make after the 1994 redrafting of § 330(a) as interpreted by the Supreme Court’s decision in [Lamie v. United States Trustee, 540 U.S. 526, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (Jan. 26, 2004)], would effectively bar them from any bankruptcy relief. . . . That is not and should not be the law.”).

In re Dugan, 549 B.R. 790, 797-803 (Bankr. D. Kan. May 3, 2016) (Berger) (Fee-only plan was proposed in good faith. Citing Lamie v. United States Trustee, 540 U.S. 526, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (Jan. 26, 2004), "a Chapter 7 attorney has no right to compensation under § 330. . . . In one study, only 0.8 percent of post-BAPCPA pro se debtors received a discharge. . . . [T]hree circuit courts have found that attorney-fee-only Chapter 13 plans are not per se bad faith. . . . [L]ower income debtor[s'] cases are time consuming. . . . Allowing an attorney-fee-only Chapter 13 plan gives debtors access to the automatic stay and fresh start 'while fairly compensating the attorney for the risk of nonpayment.' . . . Chapter 13 cases are more work to prepare, are more involved, and expose a debtor's attorney to nonpayment. . . . [A] Chapter 13 debtor's attorney is obligated to her clients for three to five years during which much can happen requiring additional attorney time. . . . Debtors' attorney's fees of $2,800 are reasonable based on the Court's experience adjudicating Chapter 13 filings . . . ."). Accord In re Doucet, No. 15-21531, 2016 WL 2603072 (Bankr. D. Kan. May 3, 2016) (Berger); In re Dunson, No. 15-21340, 2016 WL 2604341 (Bankr. D. Kan. May 3, 2016) (Berger).).

In re Wark, 542 B.R. 522, 527-50 (Bankr. D. Kan. Dec. 17, 2015) (Karlin) (U.S. Trustee's good-faith challenge to fee-only Chapter 13 cases is rejected when debtors lack financial ability to pay dividend to unsecured creditors and debtors can't wait months to save up fees for Chapter 7 cases. "The United States Trustee . . . urges this Court to set a high threshold for debtors to choose a Chapter 13 when they are otherwise eligible for a Chapter 7, arguing that debtors should not have this choice. . . . [D]ebtors cannot choose . . . Chapter 13 . . . unless they can show 'special circumstances' justifying the filing of a Chapter 13 petition and plan, and being unable to raise the cash to hire competent counsel is not such a special circumstance in the U.S. Trustee's estimation. . . . [T]his Court instead looks to the totality of the circumstances surrounding each debtor's filing to determine whether these Debtors have filed their Chapter 13 bankruptcy plan in good faith, as required by 11 U.S.C. § 1325(a)(3). . . . Ultimately, for the majority of the cases, the Court finds no fault in the choices Debtors have made, and declines to take the U.S. Trustee's suggestion to supplant Debtors' choices with his own. . . . [T]he U.S. Trustee admits both that Debtors have 'done nothing wrong' and that each Debtor needs bankruptcy relief. . . . Because of the Supreme Court's decision in Lamie v. United States Trustee, [540 U.S. 526, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (Jan. 26, 2004),] . . . attorneys filing Chapter 7 petitions for debtors must collect their fee up front lest the attorney risk that fee being rendered dischargeable as a prepetition debt. . . . The Circuits to consider challenges to fee only plans unanimously agree that fee only Chapter 13 cases are not per se filed in bad faith . . . . [T]he Standing Chapter 13 Trustee . . . cannot say that a fee only case causes any more (or less) administrative work than other Chapter 13 cases. . . . [I]n addition to the significantly higher administrative burdens pro se cases create . . . , they are rarely successful. . . . The U.S. Trustee's position in this case would doom [a debtor] to living her foreseeable future in poverty, and perhaps even in unnecessary ill health. Because she could not afford to pay a lawyer to file a Chapter 7, and because she does not have the education or wherewithal to file her own case, the U.S. Trustee's position is that she must instead simply forgo receiving any bankruptcy relief until she can afford the requisite attorney fee. . . . The U.S. Trustee's position, if adopted, would mire similar debtors in a cycle of poverty. And for what purpose?").

In re Jackson, No. 14-20808-13, 2015 WL 3465762, at *2 (Bankr. D. Kan. May 29, 2015) (Somers) (Plan lacks good faith that would accelerate payment of 910-day car claim to pay in full in five years rather than maintaining slightly lower payments on original contract. Plan proposed to reduce interest rate on 910-day car claim and to increase the monthly payment from $588.59 per month to $608. The effect could be to pay the car claim in full in 60 months instead of the 65 months remaining on the original note. Trustee objected that the plan lacked good faith because paying the debt "outside the plan and without modification" would increase the amount available for unsecured creditors. "[T]he Debtor's plan would unfairly manipulate the Bankruptcy Code by giving him a benefit at the expense of his unsecured creditors . . . . The reduction in the interest rate would result in some savings for the Debtor but would not in any way benefit his unsecured creditors. . . . [T]he proposal to accelerate the debt . . . is nothing more than an accounting maneuver that would enable him to exit bankruptcy with a free and-clear truck . . . . The increase in his monthly payment that will accomplish this for him is money that would otherwise go to his unsecured creditors.").

In re Knowles, 501 B.R. 409, 426 (Bankr. D. Kan. Nov. 4, 2013) (Karlin) (Not good faith to retain Harley at expense of unsecured creditors. "[P]ermitting Debtors to retain and pay for their third vehicle, a Harley Davidson motorcycle, at the expense of any dividend to their unsecured creditors, is not in good faith, but would instead be an unfair manipulation of the Bankruptcy Code.").

In re Roberts, 493 B.R. 584, 594-96 (Bankr. D. Kan. June 20, 2013) (Berger) (Retention of expensive home without more is not bad faith; Anderson v. Cranmer (In re Cranmer), 697 F.3d 1314 (10th Cir. Oct. 24, 2012) (Murphy, Holloway, O'Brien), acknowledged that many of the Flygare v. Boulden, 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour), factors are no longer relevant to good-faith analysis. Debtors' monthly mortgage payment of $3,658 resulted in a 0% dividend to unsecured creditors. "According to the decision in Cranmer, following the provisions of the Bankruptcy Code does not constitute bad faith merely because the outcome is distasteful. . . . [T]he retention of a home with high mortgage note payments, without more, does not support a finding that the plan was not proposed in good faith.").

In re Powell, No. 12-12716, 2013 WL 1829837 (Bankr. D. Kan. May 1, 2013) (unpublished) (Nugent) (Not bad faith that debtor filed 48 days after buying used car and plan reduces interest rate from 10.99% contract rate to "trustee's rate" of 4.75% when case was filed to stop garnishment and debtor is sincere.).

In re Powell, No. 12-12716, 2013 WL 1829837 (Bankr. D. Kan. May 1, 2013) (unpublished) (Nugent) (Not bad faith that debtor filed 48 days after buying car and plan reduces interest rate from 10.99% to 4.75% when case was filed to stop garnishment and debtor is sincere.).

In re Picht, 443 B.R. 874 (Bankr. D. Kan. Feb. 4, 2011) (Berger) (After remand, debtors can surrender residence in good faith in full satisfaction of partially secured lien that survived discharged in prior Chapter 7 case because surrender is authorized under § 1325(a)(5)(C); debtors have no obligation to make any distributions on account of bank's deficiency claim because debtors' in personam liability was discharged.), remanded by 428 B.R. 885 (B.A.P. 10th Cir. May 4, 2010) (Thurman, Rasure, Romero), rev'g No. 08-20677, 2009 WL 1766820 (Bankr. D. Kan. June 20, 2009) (unpublished) (Berger), remanded by 403 B.R. 707 (B.A.P. 10th Cir. Apr. 14, 2009) (Michael, Brown, Starzynski), rev'g and remanding 396 B.R. 76 (Bankr. D. Kan. Sept. 26, 2008) (Berger).).

In re Sandberg, 433 B.R. 837, 847-48 (Bankr. D. Kan. July 19, 2010) (Nugent) (Applying Flygare v. Boulden, 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour), debtors with negative disposable income lack good faith when plan will pay unsecureds $2,900 while luxury boat lender gets $20,000. "Two canons of statutory construction compel the conclusion that good faith remains alive and well as a separate and independent requirement for confirmation, notwithstanding compliance with the disposable income test. First, when Congress adopted BAPCPA, it is presumed to have had knowledge of the existing requirements for confirmation, including the interpretations given by the bankruptcy courts to the good faith requirement. Second, interpretation[s] of statutes that render language superfluous are disfavored. If the good faith test were wholly subsumed by the disposable income and other economic tests for confirmation, § 1325(a)(3) would be superfluous and would have been eliminated. It was not. This suggests that the good faith test is not limited by the objective disposable income test.").

In re Dipman, No. 09-10620, 2009 WL 3633327 (Bankr. D. Kan. Oct. 29, 2009) (unpublished) (Nugent) (Applying factors from Flygare v. Boulden, 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour), evidence of bad faith included that debtor conducted roofing business pre- and postpetition by obtaining deposits from customers without doing work.).

In re Jones, No. 07-10902-13C, 2008 WL 4447041, at *4-*5 (Bankr. D. Kan. Sept. 26, 2008) (unpublished) (Somers) (Postpetition commencement of retirement contributions does not by itself establish a lack of good faith. Debtors originally filed Chapter 7 petition that was challenged as abusive under § 707(b). Debtors converted to Chapter 13 and at about the time of conversion, employer changed retirement plan to require contributions. Debtor commenced contributions somewhat less than maximum amount allowed. "The Court is not convinced the fact the Wife's contributions started postpetition should control the good faith analysis here. . . . [M]oney an employer withholds from an employee's wages to contribute to a retirement plan like the Wife's is neither property of the bankruptcy estate nor disposable income in a Chapter 13 case. This Congressional protection for such contributions could be interpreted to mean a 'good faith' analysis of a debtor's Chapter 13 plan can never rely on the fact the debtor is making such contributions to find a lack of good faith. . . . [T]he Court concludes the fact the Debtors are contributing to a retirement plan can be considered in analyzing their good faith in proposing their plan. Under these Debtors' circumstances, the Court believes their commencement of retirement contributions does not show their plan was not proposed in good faith. Both Debtors are fast approaching retirement age, and also have medical conditions . . . . After the Debtors filed for bankruptcy, the Wife's employer changed its retirement plan . . . . Although the Debtors began making the contributions while they were in bankruptcy, they are contributing only about one-half (or less) of the full amount the Wife could legally contribute to the plan. In other circumstances, a debtor who commences retirement contributions while in a bankruptcy case might be demonstrating a lack of good faith, but that is no so in this case.").

In re Robinson, No. 07-41562-13, 2008 WL 2095349, at *6 (Bankr. D. Kan. May 16, 2008) (Karlin) (Applying totality-of-circumstances test from Flygare v. Boulden, 709 F.2d 1344 (10th Cir. 1983), not bad faith to allow dismissal of Chapter 13 case and to refile 15 days later when first case was mistakenly filed 906 days after debtor acquired car. "[T]his is Debtor's second bankruptcy filing in a matter of just a few months. Although certainly a factor to consider, the Court finds that Debtor is not the type of serial bankruptcy filer that this factor typically addresses. Debtor has not sought repeated relief from the Bankruptcy Courts in an effort to delay or frustrate attempts by her creditors to collect their debts. . . . [A]llowing a bankruptcy case to be dismissed with plans to refile that case upon the passage of the 910 day period does not, without more, demonstrate a lack of good faith. . . . [H]er decision to either wait until the 911th day after buying a car to file, or, having miscalculated the days, dismissing and refiling soon thereafter to take advantage of the 910-day exception, is legitimate pre-bankruptcy planning.").

In re Williams, No. 05-17575, 2007 WL 2081884 (Bankr. D. Kan. July 13, 2007) (Objection to confirmation based on argument that conversion from Chapter 7 to Chapter 13 was bad-faith effort to avoid nondischargeability judgment is rejected because potential claim under § 523(a)(2)(A) would have been denied based on facts presented at objection hearing.).

In re Anderson, 367 B.R. 727, 732 (Bankr. D. Kan. Apr. 13, 2007) (Berger) ("[W]hether a debtor is committing sufficient income to a Chapter 13 plan is determined by § 1325(b), not § 1325(a)(3). Thus, the Court does not consider the debtor's ability to pay in determining good faith because Congress specifically dealt with the debtor's plan payments in § 1325(b).").

In re Lewis, 347 B.R. 769 (Bankr. D. Kan. Aug. 3, 2006) (Somers) (Cramdown of debt secured by van that debtors bought for their adult child is not proposed in good faith because debtors do not use van, daughter was paying debt until filing of Chapter 13 case and shifting cost of van to debtors will require unsecured creditors to pay for daughter's van.).

New Mexico

In re Rodriguez, 487 B.R. 275, 284 (Bankr. D.N.M. Feb. 11, 2013) (Jacobvitz) (Chapter 13 case was filed in good faith—to deal with tax claims and to manage child support—notwithstanding failed prior Chapter 11 case in which debtor did not timely file monthly reports and failed to propose a plan. "Debtor's pre-petition behavior during the pendency of his Chapter 11 Case in failing to comply with the requirements of Chapter 11 is by itself insufficient to establish that the Debtor did not file his Chapter 13 petition in good faith. . . . [T]he Debtor's motive in seeking relief under Chapter 13 in order to deal with significant debts to the taxing authorities, coupled with his concern that if the IRS were to levy on his accounts it would impair the Debtor's ability to take care of his children and make payments to creditors, including child support payments . . . , weighs in favor of finding good faith.").

In re Rodriguez, 487 B.R. 275, 285 (Bankr. D.N.M. Feb. 11, 2013) (Jacobvitz) (Plan was not proposed in good faith when debtor will contribute $42,000 to his own 401(k) plan over life of plan and major unsecured claims are to his own parents and to a former spouse on account of misapplication of retirement funds before the petition. "[T]he Debtor cannot make the proposed voluntary contributions to his retirement account and satisfy the good faith requirement of 11 U.S.C. § 1325(a)(3).").

In re Van Winkle, No. 11-13861-j13, 2012 WL 404956 (Bankr. D.N.M. Feb. 8, 2012) (Jacobvitz) (100% plan was in good faith based on debtor's agreement to waive homestead exemption and sell assets as necessary. Code does not explicitly prohibit funding through asset liquidation, and § 1322(b)(8) permits payment of all or part of claims from property of estate or of debtor. Debtor agreed to waive $60,000 homestead exemption if plan were confirmed.).

In re Molina, 420 B.R. 825, 831 (Bankr. D.N.M. June 29, 2009) (Starzynski) (Plan that only pays attorney's fees can satisfy good-faith requirement notwithstanding that debtor received a Chapter 7 discharge more than four but fewer than eight years ago. "In this case Debtor's filing is obviously outside the [§ 1328(f)(1)] four-year 'blackout' period, and Debtor is literally doing all that the statute requires of her. . . . [The In re Paley, 390 B.R. 53 (Bankr. N.D.N.Y. June 3, 2008) (Littlefield), and In re Sanchez, No. 13-09-10955 MA, 2009 WL 2913224 (Bankr. D.N.M. May 19, 2009) (McFeeley),] courts have added a requirement that Congress did not put into the statute: that a minimal-payment chapter 13 plan that might well pass muster otherwise will not be confirmed if the debtor is not eligible for chapter 7 relief. A court ought to hesitate to add requirements for discharge that Congress did not see fit to include in the statute. . . . This is not to say that a court may not deny confirmation in circumstances not explicitly addressed by Congress. But if the court is in effect requiring of a debtor something that does not appear in the statute, it ought to articulate, as the basis for the added requirement, a specific conflict with a statutory provision or policy clearly inherent within the Code that the added requirement will resolve. For example, a court might well deny for bad faith confirmation of a plan of a debtor who refuses to comply with legitimate discovery requests, on the grounds that the debtor's conduct directly contravenes the overarching principles of transparency and disclosure that inhere in the bankruptcy process.").

In re Molina, 420 B.R. 825 (Bankr. D.N.M. June 29, 2009) (Starzynski) (Disagreeing with In re Paley, 390 B.R. 53 (Bankr. N.D.N.Y. June 3, 2008) (Littlefield), and In re Sanchez, No. 13-09-10955 MA, 2009 WL 2913224 (Bankr. D.N.M. May 19, 2009) (McFeeley), divorced grandmother with net monthly income of $1,393 who cares for six-year-old grandson and has no nonexempt assets clears good-faith hurdle notwithstanding that plan pays attorney's fees but nothing to unsecured creditors and debtor received Chapter 7 discharge more than four but less than eight years before this petition. Applying Flygare v. Boulden (In re Flygare), 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour), debtor needed bankruptcy relief for herself and dependent.).

In re Molina, 420 B.R. 825 (Bankr. D.N.M. June 29, 2009) (Starzynski) (Zero percent plan that only pays attorney's fees survives good-faith analysis notwithstanding that debtor is ineligible for Chapter 7 discharge. Divorced grandmother caring for minor grandson who has minimal income and no nonexempt assets needs Chapter 13 relief.).

In re Molina, 420 B.R. 825 (Bankr. D.N.M. June 29, 2009) (Starzynski) (Disagreeing with In re Paley, 390 B.R. 53 (Bankr. N.D.N.Y. June 3, 2008) (Littlefield), and In re Sanchez, No. 13-09-10955 MA, 2009 WL 2913224 (Bankr. D.N.M. May 19, 2009) (McFeeley), zero percent plan that pays attorney's fees and nothing else survives good-faith objection when debtor is eligible for Chapter 13 discharge but not for Chapter 7 discharge; plan satisfies the disposable income test and other tests for confirmation, and the debtor needs bankruptcy relief for herself and her dependent grandson.).

In re Sanchez, No. 13-09-10955 MA, 2009 WL 2913224, at *2 (Bankr. D.N.M. May 19, 2009) (McFeeley) (Plan paying attorneys' fees but nothing to unsecured creditors lacked good faith notwithstanding that debtors were not eligible for Chapter 7 discharge and had no financial ability to pay more. "[E]ven though their budget indicates that they have no ability to make greater monthly payments, the plan fails to meet the requirements of good faith because the confirmation would, in effect, grant the Debtors the benefits of the automatic stay and yet another discharge without a corresponding burden on the Debtors to repay at least a portion of their debts through payments under a Chapter 13 plan.").

In re Sanchez, No. 13-09-10955 MA, 2009 WL 2913224 (Bankr. D.N.M. May 19, 2009) (McFeeley) (Plan that pays attorneys' fees and nothing to unsecured creditors lacks good faith.).

In re Sanchez, No. 13-09-10955 MA, 2009 WL 2913224 (Bankr. D.N.M. May 19, 2009) (McFeeley) (Plan that pays nothing to unsecured creditors lacks good faith when debtors are ineligible for Chapter 7 discharge but can't pay more than attorneys' fees through Chapter 13 plan.).

In re Soos, No. 13-09-10557 MA, 2009 WL 2913226, at *3 (Bankr. D.N.M. May 6, 2009) (unpublished) (McFeeley) (Claiming a transportation ownership expense deduction for an unencumbered car is not bad faith under § 1325(a)(3). "'It seems fundamentally inconsistent to characterize an expense amount as reasonably necessary in section 1325(b)(3), yet conclude under [§] 1325(a)(3) that it is bad faith for the debtor to claim it.' Courts evaluating the good faith requirement of 11 U.S.C. § 1325(a)(3) have consistently held that a finding of bad faith cannot be based solely on the fact that the debtor's plan proposes to pay only what is required under the Code, despite an apparent ability to pay more. . . . This is not to say that compliance with the requirements under 11 U.S.C. § 1325(b)(3), by definition, satisfies the good faith requirement under 11 U.S.C. § 1325(a)(3). . . . [E]xpenses taken in compliance with 11 U.S.C. § 1325(b) are presumed to be taken in good faith under 11 U.S.C. § 1325(a)(3), but . . . the 'presumption of good faith can be negated by aggravating circumstances.'"), rev'd, No. 10-2007, 2011 WL 1570814 (10th Cir. Apr. 27, 2011) (unpublished) (Holloway, Anderson, Tacha).).

In re Keenan, 364 B.R. 786 (Bankr. D.N.M. Mar. 27, 2007) (Starzynski) (Applying case-by-case analysis and factors in Flygare v. Boulden, 709 F.2d 1344, 1347-48 (10th Cir. 1983), plan was proposed in good faith, and debtors were credible in testimony and use of appraisal values.).

Oklahoma

Eastern District of Oklahoma

In re Weeks, No. 10-81320-TRC, 2011 WL 144141 (Bankr. E.D. Okla. Jan. 18, 2011) (Cornish) (It was not bad faith that between dismissal of prior Chapter 13 case and filing of current case, debtors dissolved their logging corporation and transferred corporate assets to themselves. Debtors had made preconfirmation plan payments and demonstrated ability to complete plan that proposed to pay secured creditor in full over 60 months.).

Northern District of Oklahoma

In re Kenney, 399 B.R. 516, 521-22 (Bankr. N.D. Okla. Dec. 22, 2008) (Michael) (When debtors modify plan before confirmation to surrender home and reduce plan payment, higher amounts paid to trustee consistent with original plan are disposable income that must be paid to unsecured creditors to satisfy good faith test in § 1325(a)(3). Original plan called for payments of $2,380 per month most of which was to deal with home mortgage. Seven months after petition but before confirmation, debtors determined they could not afford home and modified plan to surrender home. Modified plan proposed to credit more than $23,000 already paid to trustee against $690 payment in modified plan. Bankruptcy court determined that modified plan violated good faith requirement in § 1325(a)(3). "Debtors had far more disposable income in the first four months of the case, as evidenced by the sums actually paid to the Trustee. This disposable income must be paid to creditors under the plan. Debtors' failure to do so supports a finding that the Fourth Plan has not been filed in good faith, and the Court so finds. . . . [T]hat Debtors later chose to surrender the Residence is irrelevant.").

Utah

In re Wareham, 553 B.R. 875, 880 (Bankr. D. Utah July 6, 2016) (Thurman) (Applying Gier v. Farmers State Bank of Lucas, Kansas (In re Gier), 986 F.2d 1326 (10th Cir. Feb. 5, 1993) (Logan, Tacha, Ebel), and Flygare v. Boulden, 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour), inaccuracies in budget must be corrected so plan can survive § 1325(d) analysis, but otherwise petition and plan were filed in good faith for § 1325(a)(3) and § 1325(a)(7) purposes. “At the plan confirmation stage, the factors of both Flygare and Gier are non-exhaustive factors that can be considered to analyze § 1325(a)(3), (7) and § 1307.”).

In re Jensen, 496 B.R. 615, 623-24 (Bankr. D. Utah July 26, 2013) (Thurman) (Distinguishing Anderson v. Cranmer (In re Cranmer), 697 F.3d 1314 (10th Cir. Oct. 24, 2012) (Murphy, Holloway, O'Brien), good-faith analysis includes consideration of voluntary retirement contributions that are excluded from projected disposable income; debtors' concern with future solvency of Social Security system supports finding of good faith notwithstanding commencement of voluntary retirement contributions three months before petition. "[T]here are significant differences between SSI and voluntary retirement contributions such that a good faith inquiry is warranted in this case. . . . [T]he Debtors commenced the contributions fewer than three months prior to bankruptcy, and over the length of the Plan, the Debtors will make approximately $32,500 in retirement contributions while providing an estimated dividend of only 11% on unsecured claims . . . . The Debtors' . . . explanation provides a plausible reason for their action. On the one hand, any growing problems with Social Security did not become a matter of public knowledge overnight, but on the other hand, the 2012 presidential election did push those problems to the forefront of the national consciousness. The Court makes no comment or finding as to whether the Debtors' concern about the future viability of Social Security has any merit, only that they had a concern that prompted their action. . . . When a debtor commences voluntary retirement contributions close to the petition date in an amount that leaves a relatively small dividend to unsecured creditors, the Trustee and the Court will be concerned about the debtor's good faith.").

In re Kofford, No. BR 12-29134, 2012 WL 6042861 (Bankr. D. Utah Dec. 4, 2012) (Thurman) (Failure to prorate retirement loan deductions for projected disposable income test purposes and to reallocate repayment amounts as loans are retired is indicative of bad faith.).

In re Underhill, 425 B.R. 614, 618-20 (Bankr. D. Utah Mar. 1, 2010) (Mosier) (That presumption of lack of good faith arises under § 362(c)(4) in third bankruptcy case within a year does not per se establish a lack of good faith at confirmation under § 1325(a)(7). "The express language of § 362(c)(4)(D) limits its application to § 362(c)(4)(B). . . . If the Court were to ignore the words 'for purposes of subparagraph (B),' the terms would be reduced to surplusage. . . . Even if § 362(c)(4)(A) applies and there is no stay in effect because the debtor has failed to seek an order that the stay take effect under § 362(c)(4)(B), a confirmed chapter 13 plan that provides for the curing of a prepetition default on a secured creditor's claim precludes a secured creditor from enforcing its lien with respect to the prepetition default. . . . Section 362(c)(4) was enacted to discourage bad faith filings by depriving repeat filers of the protection of the automatic stay unless they can demonstrate that their petitions were filed in good faith. The Court finds no language in the statute that allows it to conclude that Congress intended that the provisions of § 362(c)(4) preclude confirmation of a chapter 13 plan if a secured creditor objects to confirmation. . . . Although the Court has ruled that the presumption found in § 362(c)(4)(D) does not apply to § 1325 and does not per se render the Debtor's Plan unconfirmable, the Court has not found Debtor's petition and Plan were filed in good faith. . . . Once an objection to a debtor's plan has been filed, the debtor must produce some affirmative evidence of good faith under § 1325(a)(3). . . . [T]he Debtor failed to present evidence in support of confirmation of his Plan. . . . The Debtor has failed to meet his burden of proof that he has satisfied the requirements of § 1325(a)(3) and (7) and the Plan cannot be confirmed.").

In re Martin, 373 B.R. 731, 735-36 (Bankr. D. Utah May 8, 2007) (Thurman) (Although secured debt deduction of $21,350 for luxury ski boat is permitted by § 707(b)(2)(A), it is substantially indicative of lack of good faith under § 1325(a)(3). Citing factors from Flygare v. Boulden (In re Flygare), 709 F.2d 1344 (10th Cir. June 1, 1983) (Holloway, McKay, Seymour): "The Debtors' intention to retain their Ski Boat raises particular good faith concerns . . . . It seems fundamentally inappropriate that a debtor might file for bankruptcy relief and obtain a discharge while still enjoying a luxury item such as a recreational ski boat and trailer. . . . Simply because an item is an allowable expense on Form B22C does not shelter it from scrutiny under the Court's good faith analysis. . . . [G]ood faith is distinct and independent from the requirements of § 1325(b).").

In re Hildreth, No. 05-80005, 2006 WL 4846383, at *2 (Bankr. D. Utah May 31, 2006) (Although "a recently purchased automobile will generally raise red flags as to the Debtor's good faith under § 1325(a)(3)[,]" vehicle purchased five months before filing when debtor had no contemplation of bankruptcy is not bad faith.).

In re Tomasini, 339 B.R. 773, 779-80 (Bankr. D. Utah Mar. 8, 2006) (The good faith required to obtain an extension of the automatic stay under § 362(c)(3) and the good faith to obtain confirmation of a plan under § 1325(a)(7) differ, and a debtor that fails to satisfy the good-faith requirement for extension of the stay may nonetheless establish the plan is proposed in good faith. The debtor's repeat filing led to the debtor's application for an extension of the stay. The court denied the application, holding that the debtor had failed to establish, by clear and convincing evidence, that the case had been filed in good faith. When the court considered confirmation of the plan, the trustee argued that confirmation was impossible because the court had previously found a lack of good faith. "At first glance, the terms of § 1325(a)(7) seem to echo those of § 362(c)(3)(B). But these two provisions are substantially dissimilar in their context. The entirety of § 362(c)(3) indicates a focus on a debtor's creditors. By providing a debtor with an automatic stay lasting for 30 days only, § 362(c)(3) serves as a boon to creditors. Further, a debtor seeking approval of a Motion to Extend must carry his or her burden of showing that the filing was in good faith with respect to each creditor to be stayed. Thus, the focus of a good faith analysis under § 362(c)(3) must consider a creditor's perspective. . . . In contrast to § 362(c)(3), the context of the good faith analysis under § 1325 seems to place far more emphasis on the nature of the debtor. . . . Accordingly, the Court determines that in determining whether a debtor filed in good faith, a court should apply the totality of the circumstances test differently depending on whether the motion at issue is a Motion to Extend or a motion to confirm a Chapter 13 plan." Further, a debtor who fails to satisfy the clear and convincing evidence test of § 362(c)(3) may be able to satisfy the preponderance of the evidence standard under § 1325(a)(7).).

In re Tomasini, 339 B.R. 773, 777-82 (Bankr. D. Utah Mar. 8, 2006) (Failure to overcome presumption of lack of good faith on a motion to extend automatic stay under § 362(c)(3) does not preclude finding that Chapter 13 petition was filed in good faith for purposes § 1325(a)(7); totality-of-circumstances test applies in both situations, but focus under § 362(c)(3) is on creditors and focus at confirmation under § 1325(a)(7) is on debtor. Debtor moved to extend automatic stay under § 362(c)(3). Court denied motion, applying totality-of-circumstances analysis, including seven factors from In re Galanis, 334 B.R. 685 (Bankr. D. Utah 2005). Chapter 13 trustee objected to confirmation on ground that court already determined petition was not filed in good faith. "Although the language of § 362(c) is similar to § 1325(a)(7), these provisions are not identical. Section 362(c)(3)(B) requires a showing that the debtor filed 'in good faith as to the creditors to be stayed.' . . . Section 1325(a)(7) requires a showing that the debtor filed 'in good faith.' Missing from the latter provision is any mention of creditors. . . . [T]he focus of a good faith analysis under § 362(c)(3) must consider a creditor's perspective. . . . [T]he good faith analysis under § 1325 seems to place far more emphasis on the nature of the debtor. . . . [I]f the good faith analyses under §§ 362(c)(3) and 1325(a)(7) were identical, a debtor who was subject to the higher burden of proof of clear and convincing evidence under § 362(c)(3) could still go forward to confirmation even if the Motion to Extend were denied. . . . But if the debtor was 'fortunate' enough to have only a burden of 'a preponderance of the evidence' in a Motion to Extend, the Court's denial of that motion would bar confirmation if the analyses under §§ 362(c)(3) and 1325(a)(7) were identical. . . . [T]he better reading of the Code and of these provisions is that §§ 362(c)(3) and 1325(a)(7), although both governed by a totality of the circumstances test, are not governed by identical analyses. . . . Under Galanis, the Court considers the totality of the circumstances to determine whether the debtor filed in good faith by looking to: '1) the timing of the petition; 2) how the debt(s) arose; 3) the debtor's motive in filing the petition; 4) how the debtor's actions affected creditors; 5) why the debtor's prior case was dismissed; 6) the likelihood that the debtor will have a steady income throughout the bankruptcy case, and will be able to properly fund a plan; and 7) whether the Trustee or creditors object.'" Hearing on confirmation continued to permit debtor to present evidence with respect to motivation in filing second case.).

In re Villegas, No. 03-40485, 2004 WL 3623504 (Bankr. D. Utah Oct. 5, 2004) (unpublished) (Fifty-five-month plan supports good faith when debtors pay $420 monthly in private school tuition for two children while proposing 32% to unsecured creditors.).

In re Villegas, No. 03-40485, 2004 WL 3623504 (Bankr. D. Utah Oct. 5, 2004) (unpublished) (Thirty-two percent to unsecured creditors that would receive nothing in Chapter 7 supports good faith notwithstanding $420 per month in private school tuition.).

Wyoming

In re Strahan, No. 10-20244, 2011 WL 1299987, at *4 (Bankr. D. Wyo. Mar. 31, 2011) (McNiff) (Plan in sixth bankruptcy case was not filed in good faith. Nominal payment to unsecured creditors made the court "doubt their sincerity in wanting to gain a fresh start as much as the Debtors appear to be using this Chapter 13 as a way to discharge a substantial amount of unsecured debt." Debtors also failed to satisfy projected disposable income test and "have not attempted any rehabilitation of their spending ways.").

K. Eleventh Circuit

Rivas v. Bank of N.Y. Mellon (In re Rivas), No. 16-13199-G, 2017 WL 1032574, at *3 (11th Cir. Jan. 5, 2017) (unpublished) (Citing § 1325(a)(3) and without mention of § 1325(a)(7), petition was filed in bad faith. Evidence of bad faith included filing to obtain a mortgage modification, four bankruptcy filings in a short period of time and filing on the eve of foreclosure. “Rivas admitted at the bankruptcy court hearing that his goal in filing the bankruptcy petition was to obtain a loan modification. This alone demonstrates that his petition was filed in bad faith, as he did not have an ‘honest intent and genuine desire to utilize the provisions of Chapter [13] for its intended purpose—to effectuate . . . reorganization.’ . . . Rivas’s timing in filing the bankruptcy petition shortly before the trial in the state court foreclosure action was to commence evidenced an intent to ‘delay or frustrate the legitimate efforts of secured creditors to enforce their rights.’ . . . Rivas’s filing of three other bankruptcy petitions in a short period of time was additional evidence of bad faith.”).

Brown v. Gore (In re Brown), 742 F.3d 1309, 1317-19 (11th Cir. Feb. 14, 2014) (Carnes, Hull, Cox) (Bankruptcy court did not clearly err in finding lack of good faith under § 1325(a)(3) and (a)(7) when debtor with only Social Security income would need 17 months to pay attorney fees; that all allowed unsecured creditors would be paid in full after payment of attorney did not change outcome because "abysmal" failure rate of Chapter 13 cases made it unlikely that debtor would complete the plan. Debtor had $1,134 in Social Security disability insurance benefits and average monthly expenses of $1,214. Because of a small amount of rental income, the debtor showed net monthly income of $150. Plan proposed to pay $150 for 36 months. Attorney fees of $2,000 would consume the first 17 months of payments. Balance would go to unsecured creditors. Because only three creditors filed claims, allowed unsecured creditors would be paid in full. Applying factors from Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller): "[T]he bankruptcy court did not clearly err . . . . Brown sought Chapter 13 relief not to adjust debts and preserve assets but to pay his attorney's fees, and . . . Brown was far better off in a Chapter 7, over a Chapter 13, bankruptcy. Brown had no non-exempt assets for the trustee to liquidate . . . . Brown's monthly income was low and barely exceeded his monthly expenses. . . . Brown's Social Security income would not have been subject to garnishment in a Chapter 7 liquidation. These undisputed financial facts heavily favored a Chapter 7, over a Chapter 13, bankruptcy. . . . [T]he only reason Brown filed a Chapter 13 petition and plan was so that Brown's attorney's fees could be paid in installments through a Chapter 13 plan. . . . As to the administrative burden Brown's plan would place on the trustee, another Kitchens factor, the trustee would have worked primarily for the attorney to collect $150 for 17 months. . . . [T]here was a reasonable likelihood that Brown would not complete his Chapter 13 plan and would never pay [allowed unsecured] creditors anything. Brown's monthly income was $1,364 and his monthly expenses were $1,214, leaving $150 in discretionary income. The plan proposed Brown would pay that entire $150 every month to the trustee for three years. This left no margin of error or room for unforeseen expenses. . . . The bankruptcy court emphasized the 'abysmal failure rate of chapter 13 cases,' pointing out that in the Eastern Division of the Northern District of Alabama 'approximately 65% of all chapter 13 cases fail before debtors complete their plans and become eligible for a discharge.' . . . [I]f the bankruptcy court confirmed Brown's Chapter 13 plan, Brown could have simply made the payments to his attorney and then converted his case to a Chapter 7 and received a discharge. . . . Allowing Brown to do so would circumvent the Supreme Court's holding in [Lamie v. U.S. Trustee, 540 U.S. 526, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (Jan. 26, 2004),] that attorney's fees cannot be paid out of the funds of a Chapter 7 estate, absent the approval of the trustee and the court. . . . [T]he bankruptcy court did not apply a categorical rule prohibiting attorney-fee-centric or attorney-fee-only Chapter 13 plans. . . . [N]o one disputed that reasonable compensation to a debtor's attorney may be paid in installments from the debtor's estate in Chapter 13 cases. Here, the bankruptcy court found Brown's Chapter 13 plan was not proposed in good faith because: the totality of the factual circumstances showed Brown was best served by a Chapter 7 bankruptcy; only Brown's attorney benefitted from proceeding under Chapter 13; and Brown was likely to default in his Chapter 13 case and end up without a discharge. . . . [W]e cannot say that the bankruptcy court's findings . . . were clearly erroneous. We offer no opinion as to other attorney-fee-centric Chapter 13 plans. There is no hard and fast rule to be applied."), aff'g Nos. 11-42528-JJR, 11-42825-JJR, 2012 WL 909782 (Bankr. N.D. Ala. Mar. 16, 2012) (unpublished) (Robinson) (Filing lacked good faith when only purpose was funding attorney fees.).

Brown v. Gore (In re Brown), 742 F.3d 1309, 1317-19 (11th Cir. Feb. 14, 2014) (Carnes, Hull, Cox) (Bankruptcy court did not clearly err in finding lack of good faith under § 1325(a)(3) and (a)(7) when debtor with only Social Security income would need 17 months to pay attorney fees; that all allowed unsecured creditors would be paid in full did not change outcome because "abysmal" failure rate of Chapter 13 cases made it unlikely that debtor would complete the plan. Debtor had $1,134 in Social Security disability insurance benefits and average monthly expenses of $1,214. Because of a small amount of rental income, the debtor showed net monthly income of $150. Plan proposed to pay $150 for 36 months. Attorney fees of $2,000 would consume the first 17 months of payments. Balance would go to unsecured creditors. Because only three creditors filed claims, allowed unsecured creditors would be paid in full. Applying factors from Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller): "[T]he bankruptcy court did not clearly err . . . . Brown sought Chapter 13 relief not to adjust debts and preserve assets but to pay his attorney's fees, and . . . Brown was far better off in a Chapter 7, over a Chapter 13, bankruptcy. Brown had no non-exempt assets for the trustee to liquidate . . . . Brown's monthly income was low and barely exceeded his monthly expenses. . . . Brown's Social Security income would not have been subject to garnishment in a Chapter 7 liquidation. These undisputed financial facts heavily favored a Chapter 7, over a Chapter 13, bankruptcy. . . . [T]he only reason Brown filed a Chapter 13 petition and plan was so that Brown's attorney's fees could be paid in installments through a Chapter 13 plan. . . . As to the administrative burden Brown's plan would place on the trustee, another Kitchens factor, the trustee would have worked primarily for the attorney to collect $150 for 17 months. . . . [T]here was a reasonable likelihood that Brown would not complete his Chapter 13 plan and would never pay [allowed unsecured] creditors anything. Brown's monthly income was $1,364 and his monthly expenses were $1,214, leaving $150 in discretionary income. The plan proposed Brown would pay that entire $150 every month to the trustee for three years. This left no margin of error or room for unforeseen expenses. . . . The bankruptcy court emphasized the 'abysmal failure rate of chapter 13 cases,' pointing out that in the Eastern Division of the Northern District of Alabama 'approximately 65% of all chapter 13 cases fail before debtors complete their plans and become eligible for a discharge.' . . . [I]f the bankruptcy court confirmed Brown's Chapter 13 plan, Brown could have simply made the payments to his attorney and then converted his case to a Chapter 7 and received a discharge. . . . Allowing Brown to do so would circumvent the Supreme Court's holding in [Lamie v. U.S. Trustee, 540 U.S. 526, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (Jan. 26, 2004),] that attorney's fees cannot be paid out of the funds of a Chapter 7 estate, absent the approval of the trustee and the court. . . . [T]he bankruptcy court did not apply a categorical rule prohibiting attorney-fee-centric or attorney-fee-only Chapter 13 plans. . . . [N]o one disputed that reasonable compensation to a debtor's attorney may be paid in installments from the debtor's estate in Chapter 13 cases. Here, the bankruptcy court found Brown's Chapter 13 plan was not proposed in good faith because: the totality of the factual circumstances showed Brown was best served by a Chapter 7 bankruptcy; only Brown's attorney benefitted from proceeding under Chapter 13; and Brown was likely to default in his Chapter 13 case and end up without a discharge. . . . [W]e cannot say that the bankruptcy court's findings . . . were clearly erroneous. We offer no opinion as to other attorney-fee-centric Chapter 13 plans. There is no hard and fast rule to be applied.").

Alabama

Middle District of Alabama

In re Crittenden, No. 09-10462, 2009 WL 2424331 (Bankr. M.D. Ala. Aug. 6, 2009) (Williams) (Not bad faith that debtor purchased vehicle prebankruptcy and failed to make full down payment when debtor intended to perform at time of purchase; creditor did not check debtor's credit record and did not establish promissory fraud that would lead to nondischargeability in Chapter 7. Failure to pay balance of down payment was attributable to factors beyond debtor's control.).

In re Crittenden, No. 09-10462, 2009 WL 2424331 (Bankr. M.D. Ala. Aug. 6, 2009) (Williams) (Under totality of circumstances, petition and plan were filed in good faith notwithstanding debtor's prepetition failure to pay full down payment for purchase of vehicle; debtor intended to perform at time of agreement, failure was due to circumstances beyond debtor's control and plan provided for full payment of claim.).

In re Nelson, No. 09-3-852-DHW, 2009 WL 2241567, at *2 (Bankr. M.D. Ala. July 24, 2009) (Williams) (Plan that would pay $2,500 in attorney fees, one secured debt and less than $1,000 to unsecured creditors was not filed in good faith: "[T]he plan will be burdensome to unsecured creditors. . . . [T]he overwhelming majority will receive a mere pittance on their claims. Their monthly checks will be minimal and irksome to process.").

In re Nelson, No. 09-3-852-DHW, 2009 WL 2241567, at *2 (Bankr. M.D. Ala. July 24, 2009) (Williams) (Plan that pays $2,500 in attorney fees, one secured debt and less than $1,000 to unsecured creditors is not filed in good faith. "[T]he plan is not filed in good faith because it is chiefly a means of financing the debtor's attorney's fee.").

In re Burnette, No. 08-30772-DHW, 2008 WL 5045916 (Bankr. M.D. Ala. Sept. 26, 2008) (Williams) (Plan lacks good faith when debtor intentionally sold objecting creditor's vehicle and debt would be excepted from discharge under § 523(a)(6) in Chapter 7.).

In re Foster, No. 08-10562-DHW, 2008 WL 5045913 (Bankr. M.D. Ala. Aug. 25, 2008) (Williams) (Creditor challenging good faith failed to establish that debtor misrepresented intent to continue hauling timber when creditor financed debtor's purchase of 18-wheeler.).

In re Crawford, No. 08-30192-DHW, 2008 WL 2783461, at *3 (Bankr. M.D. Ala. July 16, 2008) (Williams) (Debtor's misleading creditor about location of car prepetition combined with "almost immediate default in performance under the contract" was lack of good faith sufficient to deny confirmation even though debt would not be excepted from discharge in a case under Chapter 7.).

Northern District of Alabama

Brown v. Gore, No. 1:12-CV-02202-RDP, 2012 WL 6609005 (N.D. Ala. Dec. 13, 2012) (Proctor), aff'd, 742 F.3d 1309 (11th Cir. Feb. 14, 2014) (Carnes, Hull, Cox) (Filing lacked good faith when only purpose was to fund attorney fees.), aff'g, No. 11-42528-JJR-13, 2012 WL 909782 (Bankr. N.D. Ala. Mar. 16, 2012) (Robinson) (Plans paying debtors' counsel in installments, and little else, were not filed in good faith notwithstanding some payment to unsecured creditors. Court cites "majority view" that attorney fee-only plans fail good-faith requirement.).

In re White, No. 17-00102-TOM-13, 2017 WL 2198953 (Bankr. N.D. Ala. May 18, 2017) (Mitchell) (Car lender failed to prove misrepresentations of income or other misconduct in connection with prepetition purchase of a car.).

In re White, No. 17-00102-TOM-13, 2017 WL 2198953 (Bankr. N.D. Ala. May 18, 2017) (Mitchell) (Cramdown of interest rate on car loan from 14.95% to 5% is not evidence of bad faith; debtor otherwise did not misrepresent income or defraud car lender in purchase of car a few months before filing Chapter 13 case.).

In re Cook, No. 12-04896-TOM-13, 2013 WL 5574978, at *9 (Bankr. N.D. Ala. Oct. 10, 2013) (unpublished) (Mitchell) (Plan lacks good faith that fails to pay creditors earned income credit the debtor may receive. "Allowing Ms. Cook to retain the exempt EIC to use as she sees fit would create a surplus of income over that which is reasonably necessary for the support of Ms. Cook and her dependents.").

In re Kirk, 465 B.R. 300 (Bankr. N.D. Ala. Jan. 23, 2012) (Robinson) (Plan that delayed payments to secured auto creditor for eight months while paying attorney fees was not in good faith. Additional factor was secured auto debt incurred shortly before filing of case.).

In re Kirk, 465 B.R. 300, 303 (Bankr. N.D. Ala. Jan. 23, 2012) (Robinson) (Plan lacks good faith when auto loan was incurred five months before petition and plan begins periodic payments eight months after confirmation. "[D]elaying payments on the secured claim for eight months to allow the Debtors' attorney's fees to be first fully paid demonstrates a lack of bona fides and an absence of good faith.").

In re Black, No. 11-42344-JJR-13, 2011 WL 6306591, at *1 (Bankr. N.D. Ala. Dec. 16, 2011) (unpublished) (Robinson) ("[C]ounsel admitted that the debtor could not pay a lump-sum attorney fee for a chapter 7 case, and needed to 'finance' those fees over time in a chapter 13 plan. If the latter were the primary reason for this case being filed under chapter 13, it should be dismissed as not being filed in good faith as required under 11 U.S.C. § 1325(a)(7) . . . . Paying legal fees through a chapter 13 plan is permissible and the norm, but it cannot be the paramount reason for a debtor choosing chapter 13 in lieu of chapter 7, especially an under-median-income debtor.").

In re Black, No. 11-42344-JJR-13, 2011 WL 6306591, at *1 (Bankr. N.D. Ala. Dec. 16, 2011) (unpublished) (Robinson) (If need to "finance" attorney fees over time was reason for filing Chapter 13 rather than Chapter 7, "confirmation of the plan should be denied because it was not proposed in good faith as required by § 1325(a)(3). . . . Paying legal fees through a chapter 13 plan is permissible and the norm, but it cannot be the paramount reason for a debtor choosing chapter 13 in lieu of chapter 7, especially an under-median-income debtor.").

In re Beasley, No. 11-40642-JJR13, 2011 WL 4498942, at *3-*4 (Bankr. N.D. Ala. Sept. 27, 2011) (unpublished) (Robinson) (Case was not filed in good faith when debtor ineligible for discharge because of § 1328(f) seeks Chapter 13 relief to manage bad credit decisions. Between Chapter 7 discharge in January 2009 and current Chapter 13 petition in 2011, debtors borrowed $68,000 for three new cars. Plans would pay car loans in full at substantially lower interest rates, and contract interest would accrue and not be discharged. "When presented with a chapter 13 case, such as that now before the Court, in which no discharge is attainable, a critical element of the § 1325(a)(7) good faith analysis is consideration of whether the case furthers the intended, legitimate functions of the bankruptcy system. . . . [B]ecause a discharge is statutorily prohibited, the reasons for nonetheless invoking the court's jurisdiction and protection under the Code must be closely examined. . . . The Debtors' motives are questionable given the short time-frame to again reach eligibility for a chapter 7 discharge. The Court cannot ignore the strong possibility of a dismissal of this chapter 13 case after the expiration of the 4-year waiting period immediately followed by yet a third chapter 7 case. There was a dearth of special circumstances forcing the Debtors to seek bankruptcy relief, aside from their abuse of credit after receiving two chapter 7 discharges. . . . [T]his case is an example of an attempt to use the Bankruptcy Code to facilitate and enable a lifestyle of unnecessary credit purchases unrelated to any circumstance aside from bad credit decisions. . . . Bankruptcy courts should not sanction and enable the squandering of a financial fresh start by allowing a non-discharge-eligible chapter 13 case to proceed without proof of unforeseen, uncontrollable and unfortunate events that reasonably justified the debtor's incurring post-discharge obligations, or which events were the primary cause of post-discharge home mortgage arrears. . . . [G]ood faith can be found in a chapter 13 case that was immediately filed on the heels of a chapter 7 discharge . . . for the purpose of curing home mortgage defaults pursuant to § 1322(b)(5) that remained outstanding after a recently granted chapter 7 discharge. While this Court believes there is a strong argument to be made that chapter 13 relief is no longer available under any circumstances when § 1328(f)(1) prohibits discharge, until the appellate case law further develops, this Court will continue to recognize the limited exceptions discussed above.").

In re Gaddis, No. 11-40050-JJR-13, 2011 WL 11709211, at *2-*3 (Bankr. N.D. Ala. June 20, 2011) (Robinson) (Bad faith for § 1325(a)(3) purposes that debtors filed Chapter 13 three years after prior Chapter 7 discharge and schedules show $37,620 of new debt during interim. Court finds that 100% plan is "illusory" and that debtors are only buying time until they become eligible for another discharge. "This bankruptcy judge believes that with the enactment of BAPCPA, and specifically § 1328(f)(1), most chapter 13 debtors are now prohibited from seeking relief under chapter 13 until the 4-year bar from discharge required by § 1328(f)(1) is satisfied; especially debtors who have incurred substantial post-chapter 7 debts and whose principal purpose for seeking chapter 13 relief is not to cure mortgage arrears that were left over after a recently granted chapter 7 discharge. In any event, § 1328(f)(1) cannot be ignored, and the ineligibility of a debtor to receive a discharge in a chapter 13 case must be considered as a critical factor in a court's determination of whether a chapter 13 case was filed in good faith as required by Section 1325(a)(7), a section also enacted with BAPCPA. . . . Although the Debtors' Plan proposes to pay 100% of unsecured claims over a commitment period of 5 years, that is illusory, and the Court is convinced this case will never last that long. Keeping in mind that the Debtors are not eligible for a discharge, their Plan, even if paid as proposed, will leave them personally liable for substantial sums of interest . . . . And debts owing to creditors who do not timely file proofs of claim will be paid nothing and will likewise not be discharged. . . . The Debtors' probable motive for filing this case was to bide their time under the protection of the automatic stay . . . and later a confirmation order . . . until they become eligible for another chapter 7 discharge.").

In re Hicks, No. 10-41855-JJR-13, 2011 WL 2414419, at *4-*7 (Bankr. N.D. Ala. June 15, 2011) (Robinson) (Plan fails good-faith analysis under § 1325(a)(3) when debtors converted from Chapter 7 after a § 707(b) challenge and then proposed plan that retained four vehicles and claimed excessive expenses. "The enactment of BAPCPA with its attendant means test did not abrogate § 1325(a)(3), and the deduction of an expense associated with a secured claim, although satisfying the mathematical function of the means test, does not insulate a proposed plan from further scrutiny for good faith. . . . The Debtors['] income is above the median, thus under BAPCPA Congress intended them to pay more to unsecured creditors than the minimum they could finesse by taking inflated and dubious deductions. The Debtors[ ] were motivated to seek relief under chapter 13 not because they wished to pay a reasonable sum on their unsecured debts in return for a discharge and financial fresh start, but rather because their original petition seeking relief under Chapter 7 was found to be an abuse—they converted their case to Chapter 13 to avoid dismissal. . . . The Debtors' expenses . . . were larded with monthly payments for a security system and cable. Such may be conveniences, but their related expenses cannot be justified as reasonably necessary for maintenance or support, and should be devoted to unsecured creditors. The Debtors' expenses also included vehicle tags and auto insurance totaling $4,500 per year . . . , a substantial portion of which was obviously attributed to their proposal to retain four vehicles. More significant was the Debtors' attempt to deduct extra classroom expenses, first for non-dependent students in their classrooms, and then for their own children; however, in neither instance did the Debtors substantiate the legitimacy or accuracy of these expenses . . . . Debtors' financial distress was the result of their imprudent and excessive use of credit; their schedules reflect debts for twelve credit cards, a motorcycle and a big screen TV. . . . [W]ithout any explanation or attempt at pretense, the Debtors ignored the unequivocal requirement imposed by § 1326(a)(1[)](C) that chapter 13 debtors pay adequate protection payments to purchase money secured creditors pending plan confirmation.").

In re Lott, No. 10-06061-TOM-13, 2011 WL 1981740, at *6, *7 (Bankr. N.D. Ala. May 23, 2011) (unpublished) (Mitchell) (Applying factors from Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller), § 541(b)(7) exclusion of 401(k) retirement account contributions from property of estate "does not necessarily mean that Congress intended to exclude these retirement account contributions from a Section 1325(a)(3) good faith inquiry." Plan proposed to pay 22% dividend to unsecured creditors over 36 months, while substantially funding 401(k). Debtor did not explain $541.50 monthly charitable contributions, approximately 16% of gross pay. Debtor proposed to retain IRS refunds that would satisfy 50% of unsecured claims. Debtor acquired loan immediately prior to filing without explaining use of funds. 89% of debtor's unsecured claims were credit card debts or apartment rent, "as opposed to significant medical expense debts.").

In re Lott, No. 10-06061-TOM-13, 2011 WL 1981740, at *6, *7 (Bankr. N.D. Ala. May 23, 2011) (unpublished) (Mitchell) (Applying factors of Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller), debtor failed good-faith requirement when plan proposed to pay 22% to unsecured creditors over 36 months while substantially funding 401(k). Section 541(b)(7) exclusion of 401(k) retirement account contributions from property of estate "does not necessarily mean that Congress intended to exclude these retirement account contributions from a Section 1325(a)(3) good faith inquiry." Debtor did not explain $541.50 monthly charitable contributions, approximately 16% of gross pay. Debtor proposed to retain IRS refunds that would satisfy 50% of unsecured claims. Debtor acquired loan immediately prior to filing without explanation as to use of funds. 89% of debtor's unsecured claims were credit card debts or apartment rent, "as opposed to significant medical expense debts.").

In re Lott, No. 10-06061-TOM-13, 2011 WL 1981740, at *5 (Bankr. N.D. Ala. May 23, 2011) (unpublished) (Mitchell) (BAPCPA did not neutralize good-faith factors in Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller). BAPCPA "narrowed the scope of courts' discretion in cases involving 'good faith' issues," by adding bright-line formula for calculating disposable income and by defining applicable commitment period for plans. But amendments did not eliminate requirement that plan be proposed in good faith and added that petition must be filed in good faith to accomplish confirmation. Plan was not proposed in good faith when debtor would fund 401(k) account while only paying 22% to unsecured creditors. Debtor also proposed to retain IRS refunds, which would satisfy 50% of unsecured claims. Debtor failed to explain use of two separate loans obtained immediately prior to filing.).

In re Clark, No. 10-40215-JJR-13, 2010 WL 774141, at *1 & n.4 (Bankr. N.D. Ala. Mar. 5, 2010) (Robinson) (Citing § 1325(a)(7), "[t]he filing of a subsequent chapter 13 case while another is pending, whether or not the debtor intended to avoid the presumption of bad faith and possible loss of the stay under Section 362(c)(3), constitutes bad faith per se. If the Debtors' case was filed in bad faith, no plan may be confirmed, and the case is due to be dismissed." In a footnote: "By filing the 2010 case before the 2008 case was dismissed, the Debtors also avoided the possible application of Section 109(g)(2) . . . . The 2010 filing could be construed as an attempt to sidestep the operation of Section 109(g)(2), further evidencing bad faith." "To demonstrate their good faith, the Debtors filed a Motion to Extend the Automatic Stay . . . on the day after they filed the 2010 case. But when the Debtors filed the 2010 case, they had no case pending in the preceding 1-year that had been dismissed. Thus, Section 362(c)(3) did not apply, the stay would not have expired in 30 days and there was no presumption of bad faith; there was no basis for filing the Motion.").

In re Roberts, 366 B.R. 200, 203 (Bankr. N.D. Ala. Mar. 29, 2007) ("[B]arring specific conflict with the new statute [BAPCPA], there is no indication the factors [of Kitchens v. Georgia R.R. Bank & Trust Co. (In re Kitchens), 702 F.2d 885, 888-89 (11th Cir. 1983), for totality-of-circumstances evaluation of good faith] are not still good law in the Eleventh Circuit.").

In re Roberts, 366 B.R. 200, 204-05 (Bankr. N.D. Ala. Mar. 29, 2007) (As part of good-faith inquiry, debtor had not committed fraud nor had creditor's loss been caused by willful and malicious injury. "Traditionally, creditors objecting to confirmation on good faith grounds have also pleaded this [§ 523(a)(6)] exception to discharge along with allegations of common law fraud." Although BAPCPA added § 523(a)(2) to the Chapter 13 exception to discharge, § 523(a)(6) debts remain dischargeable.).

In re Roberts, 366 B.R. 200, 203 (Bankr. N.D. Ala. Mar. 29, 2007) (BAPCPA added good faith in filing to the plan confirmation requirements of § 1325(a)(7), but still did not define good faith. Court adopted totality-of-circumstances "test to determine good faith or the absence of good faith," citing Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885, 888-89 (11th Cir. 1983). "As pointed out in Baxter v. Johnson (In re Johnson), 346 B.R. 256, 261 (Bankr. S.D. Ga. 2006), BAPCPA subsumes the future application of certain of the Kitchens factors. BAPCPA amendments to the disposable income sections of Section 1325(b), new rules on serial filers, and other code requirements may limit such inquiries.").

Southern District of Alabama

In re Nguyen, No. 09-16004-MAM-13, 2010 WL 2653275, at *2 (Bankr. S.D. Ala. June 30, 2010) (unpublished) (Mahoney) (Chapter 13 case was not filed in good faith based on prepetition hiding of assets and transfers to family members, but debtor was allowed to file amended plan that would account for hidden assets and transfers. Plan was proposed in good faith for § 1325(a)(3) purposes because 100% payment of civil judgment for wrongful importation of counterfeit Louis Vuitton purses and wallets "does not seek any relief not allowed by law." However, applying factors from Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller), prepetition hiding of assets, creation of fake debts and transfers to family members indicated that case was not filed in good faith for § 1325(a)(7) purposes.).

In re Nguyen, No. 09-16004-MAM-13, 2010 WL 2653275, at *2 (Bankr. S.D. Ala. June 30, 2010) (unpublished) (Mahoney) (Plan that would pay 100% of judgment owed United States for wrongful importation of counterfeit Louis Vuitton purses and wallets without interest "does not seek any relief not allowed by law" and therefore meets requirement of § 1325(a)(3); however, prepetition hiding of assets and transfers to family members established lack of good faith in filing of the case.).

Florida

Middle District of Florida

Orcutt v. Crawford, No. 8:10-CV-1925-T-17, 2011 WL 4382479, at *3 (M.D. Fla. Sept. 20, 2011) (Kovachevich) (Applying Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller), factors, failure to disclose motorcycle and vending machines was overcome by totality of circumstances, including plan amendment to pay value of assets. "Motion to Dismiss for lack of good faith is measured by the same standard as an objection to Plan Confirmation for lack of good faith.").

Orcutt v. Crawford, No. 8:10-CV-1925-T-17, 2011 WL 4382479 (M.D. Fla. Sept. 20, 2011) (Kovachevich) (Applying good-faith filing requirement at conversion, plan was proposed and case was converted to Chapter 13 in good faith—notwithstanding omission from schedules of motorcycle and vending machines—when amendment corrected omissions and amended plan proposed to pay value of assets.).

White v. Waage, 440 B.R. 563, 568-69 (M.D. Fla. Sept. 29, 2010) (Kovachevich) (Enactment of projected disposable income test disabled some of the good-faith factors in Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller), but lack of good faith is demonstrated when debtor deducts debt payments on furniture that will be surrendered through plan. "[S]trict compliance with the means test does not necessarily satisfy a debtor's burden of demonstrating good faith in the proposal of his plan. . . . Subsequent code amendments have overridden some of the Kitchens factors; others remain viable. . . . 'Good faith has no role in assessing whether the amount of income paid into the plan is sufficient, but good faith and the remaining Kitchens factors remain relevant to the confirmability of the plan.' . . . Because Appellants' reasonable and necessary expenses were overstated, less than all of Appellants' disposable income was available to creditors. The Court affirms the decision of the Bankruptcy Court to deny confirmation based on the Bankruptcy Court's application of 11 U.S.C. [§] 1325(a)(3) to the words 'to be' in 11 U.S.C. [§] 1325(b)(2) in a case where the Debtors expressly had no intention to pay the expense for surrendered collateral. The Bankruptcy Court indicated that including an amount for surrendered collateral in Appellants' calculation of 'amounts reasonably necessary to be expended' without the present intention to pay that expense amounted to fraud.").

Florida v. Talley, No. 3:07-cv-510-J16, 2008 WL 1711410, at *4-*5 (M.D. Fla. Apr. 10, 2008) (unpublished) (Moore) (Payment of child support "outside" the plan without an income deduction order raises good-faith concerns. "The key to good faith is a finding by the bankruptcy court that the debtor is exercising his best efforts instead of merely abusing the system to delay or avoid payment of legitimate claims. . . . It is difficult to fathom how the Amended Plan could have been offered in good faith. Talley specifically asked the bankruptcy court to change the Amended Plan's child support payment requirement from 'outside of the plan by income deduction order' to simply 'outside of the plan.'").

In re Morris, No. 3:16-bk-3070-PMG, 2017 WL 3503651 (Bankr. M.D. Fla. July 19, 2017) (Glenn) (Proof of good faith for § 1325(a)(3) and (a)(7) purposes included that debtor filed to save home, to pay income taxes and to settle unsecured claims exceeding $79,000. That equitable distribution award to former spouse would be treated as general unsecured claim and that debtor omitted some debts to family members and some transfers during the two years before the petition did not overcome evidence of good faith.).

In re Fazzary, 530 B.R. 903 (Bankr. M.D. Fla. May 21, 2015) (Glenn) (Bad-faith Chapter 20 filing violated Bankruptcy Rule 9011(c) when debtor had no income and no ability to save home from foreclosure through Chapter 13 plan. Finding of bad faith was sufficient sanction to deter similar conduct in the future.).

In re Dang, 467 B.R. 227, 237 (Bankr. M.D. Fla. Mar. 12, 2012) (Glenn) (Chapter 13 debtor ineligible for discharge because of prior Chapter 7 case filed current Chapter 13 case in good faith to strip off wholly unsecured junior mortgage. Prior Chapter 7 case was originally filed as a Chapter 13 case but was converted after the trustee claimed that the debtor was ineligible because of debt limitations. "Debtor's two bankruptcy cases were not filed with a design to circumvent [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992),]'s prohibition against lien stripping in Chapter 7 cases. The Debtor initially filed a Chapter 13 case, and diligently pursued a lien-stripping action . . . until the Trustee moved to dismiss the case. It was not the Debtor's plan to first obtain a Chapter 7 discharge, and then to strip the lien from her homestead in a subsequent Chapter 13 case.").

In re Rodgers, 430 B.R. 910 (Bankr. M.D. Fla. May 19, 2010) (Paskay) (Exempt income, including Social Security benefits, must be taken into account to determine projected disposable income under § 1325(b)(1)(B); plan paying only $100 monthly, while schedules disclosed net income of $2,056.16, was not proposed in good faith.).

In re Goodwin, 328 B.R. 868, 871, 872 (Bankr. M.D. Fla. Aug. 1, 2005) (Confirmation denied of Chapter 13 plan, proposing to pay 20% dividend to unsecured creditors, the bulk of which was a $202,110 judgment declared nondischargeable in a Chapter 7. The Prescotts' debt was declared nondischargeable when the Debtor converted his Chapter 11 case to Chapter 7. The debtor then sought refuge in Chapter 13, and the court dismissed the Chapter 13 case. Five years later, the debtor again filed Chapter 13 and sought to discharge the Prescotts' obligation. "Although there is nothing, per se, illegal or unlawful for a Debtor to seek refuge in a Chapter 13 and try to enjoy the liberal discharge provisions of the Chapter, this may be a red flag and indicate an intent to abuse the provisions, purpose and spirit of the Code. . . . In the present instance, the Prescotts' claim constitutes nearly 100% of the Debtor's scheduled unsecured debts. . . . This is the third attempt by the Debtor to escape the consequences and evade the payment of the Prescott judgment." The court accordingly denied confirmation of the plan in that it failed to satisfy the good-faith requirement of § 1325(a)(3).).

In re Vick, 327 B.R. 477, 487 (Bankr. M.D. Fla. July 15, 2005) (The amount a debtor is proposing to repay creditors in a Chapter 13 plan is a factor to consider in determining good faith. The debtor, an executive/stockholder of a glass company, converted his Chapter 7 case to a Chapter 13 case when his ex-spouse contested the dischargeability of her claim. The debtor's Chapter 13 plan proposed to pay less than 10 cents on the dollar over 36 months, and the debtor deliberately understated his capacity to earn income. The court denied confirmation of the plan and dismissed the case, noting that "[t]he substantiality of the repayment to the unsecured creditors, however, is certainly an important factor to consider in determining good faith. . . . The key to good faith is whether the debtor is exercising his best efforts or, instead, is merely abusing the system to delay or avoid payment of legitimate claims." The debtor, seeking to avoid any obligation to his former spouse, understated his income, spent a tax refund without a court approval, made every attempt to complicate the litigation with his ex-spouse, and had a long history of refusing to pay obligations. His efforts to pay little or nothing in exchange for a discharge are a manifestation of a lack of good faith.).

In re Vick, 327 B.R. 477 (Bankr. M.D. Fla. July 15, 2005) (Confirmation denied and case dismissed for bad faith when debtor had ability and opportunity to make substantial payments on marital obligations, but proposed instead de minimis plan.).

Southern District of Florida

RESFL FIVE, LLC v. Ulysse, No. 16-cv-62900-BLOOM/Valle, 2017 WL 4348897, at *7–*8 (S.D. Fla. Sept. 29, 2017) (Bloom) ($1,900-per-month contribution to retirement account survives good-faith analysis notwithstanding that unsecured creditors will receive only $12,117 under five-year plan. “This Court’s conclusion that voluntary contributions to a tax-deferred annuity do not constitute disposable income does not shield such contributions from the good-faith inquiry. . . . As part of the good faith analysis, the Court may consider factors such as the debtor’s age in relation to his anticipated retirement to determine whether it would be unreasonable to reduce his or her retirement contributions during the length of the plan. . . . Mr. Ulysse had been contributing to a tax-deferred annuity since at least 2011 and . . . those pre-petition contributions were significant. . . . Mr. Ulysse is nearing his retirement age. There is nothing unusual about an individual making contributions or increasing the amount of such contributions as retirement age draws closer . . . . Equity dictates that a debtor who is on the verge of retirement should be allowed to continue making voluntary contributions to a retirement account. Otherwise, the debtor would be deprived of the ability to obtain a fresh start.”).

In re Olivares, No. 16-16959-BKC-LMI, 2016 WL 6810716 (Bankr. S.D. Fla. Nov. 16, 2016) (Isicoff) (Junior lienholder fails in argument that it is bad faith for debtor to seek mortgage modification from senior lender outside of bankruptcy court’s mortgage modification program. Not bad faith that plan depends on contributions from daughter and her boyfriend when objecting creditor produces no evidence of lack of sincerity by daughter or boyfriend.).

In re Blackmon, 459 B.R. 144, 147 (Bankr. S.D. Fla. Sept. 29, 2011) (Olson) (It is not good faith that plans reduce interest rate on 910-day PMSI car claims when cars were acquired shortly before bankruptcy. In consolidated cases, debtors purchased cars 79 days and 75 days before filing Chapter 13. Contract interest rates were 19.95% and 11.65%. Plans would pay claims as fully secured with interest at 5.25%. "The debtors in the above-styled cases purchased and financed vehicles shortly before their bankruptcy filings in contemplation of those filings. They then proposed Chapter 13 plans which would repay the 910-day car claims at less than the contractual interest rates such that the plans are not proposed in good faith. Confirmation of the debtors' Chapter 13 plans are [sic] DENIED without prejudice to proposing new Chapter 13 plans which would repay AmeriCredit in full and at the contract interest rates or which would treat AmeriCredit outside the plan.").

Georgia

Middle District of Georgia

In re Scott, 488 B.R. 246, 257 (Bankr. M.D. Ga. Jan. 11, 2013) (Smith) (Not bad faith that debtor excluded Social Security income from projected disposable income when plan would pay unsecureds more money than they would get under projected disposable income test had Social Security income been included. Debtor appropriately excluded from CMI both the debtor's Social Security income and Social Security income received by the debtor's nonfiling spouse. "This Court is reluctant to adopt a per-se rule that the exclusion of social security benefits can never be considered as a factor in determining good faith.").

In re Sweet, 428 B.R. 917, 921-23 (Bankr. M.D. Ga. Apr. 30, 2010) (Smith) (Retaining large home with mortgage payment equal to 32% of gross monthly income, while paying low percentage to unsecured creditors, was not alone evidence of bad faith. Court rejects trustee's argument that debtors should surrender home and find less expensive housing. Debtors made "commendable effort before bankruptcy to use their personal savings to meet their obligations rather than to incur debt. Debtors find themselves in financial distress because Mr. Sweet lost his job. . . . While there may be instances where the mortgage payment is so large on a home with no equity and the distribution to unsecured creditors is so small that these factors alone will justify a finding of bad faith, the case at bar is not such a case.").

In re Pearson, 398 B.R. 97, 105 (Bankr. M.D. Ga. Dec. 5, 2008) (Hershner) (Plan proposing accelerated payment of secured claims prior to any payment of unsecured creditors lacks good faith. Applying Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. 1983), "the Court should consider the extent of preferential treatment among classes of creditors. Debtors are clearly preferring their secured creditors over their unsecured creditors. Debtors could decide to convert their Chapter 13 case to a Chapter 7 case after paying off their secured creditors but before completing their payments on unsecured claims, thereby leaving their unsecured creditors unpaid.").

In re Beasley, No. 07-40280 JTL, 2007 WL 2986124 (Bankr. M.D. Ga. Oct. 9, 2007) (unpublished) (Laney) (Not bad faith for debtor and spouse to file separate Chapter 13 cases when debtor's plan crams down 910-day PMSI claim because car was intended solely for personal use of spouse and spouse's plan provides that car will be paid for by debtor. Citifinancial could have but didn't object to confirmation in spouse's case, and it cannot be said that car was intended for personal use in debtor's case. It is not bad faith for debtor to do what Bankruptcy Code allows, and Congress created the loophole.).

In re Murphy, 375 B.R. 919 (Bankr. M.D. Ga. June 28, 2007) (Third bankruptcy case filed 915 days after acquiring car was not filed in bad faith when prior Chapter 13 case was dismissed because debtor could not afford car payments under hanging sentence but passage of time relieved debtor of that obligation. Prior case was filed within 910 days of car loan and cramdown of car claim was rejected by different judge in same district.).

In re Roberts, 339 B.R. 807, 812 (Bankr. M.D. Ga. Mar. 17, 2006) (Inaccuracies in schedules were explained by "family issues," including transfers by family members that did not benefit debtor.).

In re Jordan, 330 B.R. 857, 860-61 (Bankr. M.D. Ga. Mar. 25, 2005) (Debtor's mobile home which no longer served as the debtor's residence was subject to "cram-down" in the Chapter 13 plan; the Chapter 13 plan was not proposed in good faith when the sole purpose of filing was to cram down the mobile home for the benefit of the debtor's non-dependent. The debtor's plan proposed to cram down the value of a mobile home which the debtor no longer used as a residence and "rented" to his son for the exact amount of the monthly trustee payments. There was no other collateral under the plan. Because the property was not the debtor's principal residence at the time of the bankruptcy filing, the creditor's rights were not protected from modification under § 1322(b)(2). "It appears the sole purpose of this plan is to save the property, which is not the Debtor's residence and cram-down the debt on the property for the benefit of the non-debtor son. . . . In the present case, the Debtor has failed to establish that this expenditure is necessary for his maintenance or support or that of his dependents. The property is not being used by the Debtor for his residence, nor does it generate any income. Rather, the Debtor's non-dependent son lives there. Further, it appears the son, who is not a dependent nor a debtor, would be the only person to reap the benefits of this plan by enjoying the use of the property at a crammed down value." When the purpose of the Chapter 13 plan is just to restructure the claims of secured creditors in general, it does not serve a legitimate end and confirmation should be denied.).

Northern District of Georgia

In re Huether, No. 17-41142-MGD, 2018 WL 542680 (Bankr. N.D. Ga. Jan. 24, 2018) (Diehl) (Confirmation denied for lack of good faith when zero percent plan would discharge $189,000 of unsecured claims that would be nondischargeable under § 523(a)(15) in a Chapter 7 case. Plan was a “disguised” Chapter 7 case that paid attorney fees and liquidated properties without paying unsecured creditors. That debtor removed fixtures and damaged properties was evidence of a lack of good faith.).

In re Ogden, 570 B.R. 432, 436-38 (Bankr. N.D. Ga. Apr. 26, 2017) (Drake) (Not bad faith that debtor will “save” $920 per month from Social Security income that would be excluded from current monthly income by § 101(10A)(B). That debtor undertook home improvements less than a year before petition and will pay home improvement lender in full through the plan is suggestive but not conclusive of a lack of good faith. “Though the Eleventh Circuit has not dealt with the issue of Social Security income in a Chapter 13 case, the prevailing view among the courts that have dealt with it is that Social Security income does not need to be paid into a Chapter 13 plan. . . . [B]ecause Social Security income is excluded from current monthly income . . . , Social Security income is not considered when calculating how much a debtor has to pay into his Chapter 13 plan. . . . [A] debtor need not disclose the disposition of Social Security income he does not intend to use toward his plan. . . . [R]etaining Social Security income is not sufficient to show a lack of good faith.”).

In re Wade, No. 15-66793-BEM, 2016 Bankr. LEXIS 739 (Bankr. N.D. Ga. Mar. 4, 2016) (Ellis-Monro) (Applying factors from Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller), plan was not filed in good faith for § 523(a)(3) purposes when debtors engineered prepetition sales of property to end up with the residence free and clear of debt while mortgagee and brother ended up with large unsatisfied judgments that would not be paid in full through the plan.).

In re Wade, No. 15-66793-BEM, 2016 Bankr. LEXIS 739, at *12-*13 (Bankr. N.D. Ga. Mar. 4, 2016) (Ellis-Monro) (Applying factors from Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller), and other factors appropriate in § 1325(a)(7) analysis, case was not filed in good faith when debtors engineered prepetition sales of property to end up with residence free and clear while mortgagee and brother ended up with large unsatisfied judgments. "'These same Kitchens factors for subsection (a)(3) are equally relevant to determining whether a petition was filed in good faith under subsection (a)(7). . . . ' . . . [B]ecause the good faith requirement of § 1325(a)(7) was added to the Code in 2005 the analysis should not be identical to that undertaken under § 1325(a)(3). . . . [I]n considering the good faith or lack thereof in filing this case, the Court will also consider 'objective evidence of a fundamentally unfair result and subjective evidence that a debtor filed a petition for a fundamentally unfair purpose.'").

In re Lemming, 532 B.R. 398 (Bankr. N.D. Ga. June 18, 2015) (Diehl) (Plan lacks good faith based on evidence that debtor failed to insure real property, failed to disclose vandalism and insurance proceeds, strategically dismissed prior case and made payments in current case only when forced to do so by trustee's motions to dismiss.).

In re Wade, No. 13-67411-BEM, 2014 WL 3672137, at *5 (Bankr. N.D. Ga. Apr. 30, 2014) (Ellis-Monro) (Not bad faith that debtor filed Chapter 13 plan in part to deal with a dischargeable property division obligation. "[T]o the extent the Debtor filed this case to deal with the Obligations, the Code provides for discharge of property settlements in chapter 13. . . . This being the case, the Court finds that a filing to address settlement obligations does not evidence lack of good faith.").

In re Williams, No. 12-73567-BEM, 2013 WL 2321043 (Bankr. N.D. Ga. Mar. 22, 2013) (Ellis-Monro) (Plan lacks good faith under § 1325(a)(3) when debtor discharged all unsecured debt in recent Chapter 7 case and seeks to strip second mortgage, pay unsecureds nothing and pay attorney fee of $4,200.).

In re O'Neal, No. 11-13535-WHD, 2012 WL 1940594 (Bankr. N.D. Ga. Apr. 13, 2012) (Drake) (Petition filed to deal with marital debt that exceeded debtor's ability to pay was not filed in bad faith; debtor had no reasonable alternative.).

In re O'Neal, No. 11-13535-WHD, 2012 WL 1940594 (Bankr. N.D. Ga. Apr. 13, 2012) (Drake) (Plan filed to pay as much as debtor could toward large marital debt was filed in good faith when debt exceeded debtor's ability to pay and debtor had no reasonable alternative.).

In re Stewart-Harrel, 443 B.R. 219, 224 (Bankr. N.D. Ga. Jan. 25, 2011) (Hagenau) (Evidentiary hearing is necessary to determine whether good faith bars confirmation of plan that pays unsecured creditors in full without interest when debtor could pay creditors faster and with interest. Plan proposed to pay 100% dividend to unsecured creditors in 51 months. Monthly payments exceeded projected disposable income on Official Form B22C, but Schedules I and J showed monthly net income available that would allow plan to pay unsecured creditors in full in 21 months. "The Court is not inclined to issue a per se rule that a failure to pay 100% of available net monthly income is bad faith. . . . An evidentiary hearing will, therefore, be necessary.").

In re Thomas, 443 B.R. 213, 219 (Bankr. N.D. Ga. Dec. 19, 2010) (Murphy) (Although Social Security income is excluded from CMI and from projected disposable income, 0% plan fails good-faith analysis when debtor could pay unsecured creditors in full in 21 months if Social Security income was made available. "A strong tension exists between a court's consideration of a debtor's retention of SSI in the good faith analysis and the explicit statutory treatment that allows debtors to retain SSI. . . . Nonetheless, SSI is income and a debtor should not be allowed to shield all of that income while paying unsecured creditors nothing. Under a plain reading of the Code, Debtor's SSI is excluded from PDI. [Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 177 L. Ed. 2d 23 (June 7, 2010),]'s allowance for judicial discretion when CMI will be substantially higher or lower than the PDI for the plan period is not applicable. Because PDI does not encompass SSI, receipt of SSI during the plan period will not impact PDI . . . . Debtor's plan, however, does not pass the requirement of good faith under § 1325(a)(3). . . . [I]f Debtor contributed all his Schedule J net monthly income to his plan, all unsecured creditors could be paid in full within twenty-one months. Debtor's plan instead creates a surplus of more than two times his plan payment every month without any payment to unsecured creditors. Considering the totality of the circumstances, Debtor's plan is not proposed in good faith; a balance must be struck.").

In re Sherrod, No. 07-12288-WHD, 2008 WL 7842083 (Bankr. N.D. Ga. Apr. 15, 2008) (Drake) (Former spouse's good-faith objection to confirmation was overruled for lack of evidence of bad faith. Whether obligation was nondischargeable domestic support obligation was reserved for determination in adversary proceeding.).

In re Shelton, 370 B.R. 861, 867-69 (Bankr. N.D. Ga. June 11, 2007) (Murphy) (Good-faith test may preclude confirmation of plan that satisfies disposable income test when 0% plan includes that debtor will contribute $655 per month to retirement account and $100 per month for repayment of pension loan. "BAPCPA expressly limited the application of § 541(b)(7) to one particular paragraph, § 1325(b)(2). Section 1325(b)(2) is also limited to a specific application: '[f]or purposes of this subsection.' Had Congress sought to soften the good faith requirement, a statement to that effect is conspicuously absent. . . . Good faith has no role in assessing whether the amount of income paid into the plan is sufficient . . . but good faith and the remaining [Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller),] factors remain relevant to confirmability of a plan. . . . Even if disposable income is not considered, the degree of effort a debtor will expend in completing the plan remains a factor in determining good faith. . . . Debtor proposes a zero percent dividend . . . and a contribution of $655 a month to his retirement plan. The proposed plan would permit Debtor . . . to shelter $39,300 in his retirement account . . . pay nothing to unsecured creditors . . . . Such a grossly disproportionate plan invites scrutiny. Debtor is under no legal or practical compulsion to pay $655 a month to his retirement account. The record is inconclusive as to whether debtor made a similar retirement contribution pre-petition. . . . [F]oregoing or substantially reducing retirement contributions for the length of the plan is unlikely to unreasonably impair Debtor's ability to obtain his fresh start. . . . Achieving an appropriate balance between payment of unsecured creditors and saving retirement funds is the natural end of viewing the totality of Debtor's circumstances. . . . Full and complete disclosure of financial circumstances is required to obtain the privilege of discharging debt through confirmation of a Chapter 13 plan; accordingly, Debtor will be given that opportunity.").

Southern District of Georgia

In re Green, No .17-11119, 2018 WL 1581635 (Bankr. S.D. Ga. Mar. 27, 2018) (Barrett) (Not bad faith for debtor to exclude SSI from disposable income calculation notwithstanding plan that pays nothing to unsecured creditors; evidentiary hearing necessary to determine whether it was bad faith for debtor to incur several debts on the eve of bankruptcy.).

In re Turner, 425 B.R. 918, 923 (Bankr. S.D. Ga. Mar. 17, 2010) (Barrett) (That debtors have four cars and take Form B22C Local Standards deductions for the two cars that are subject to debt could be "manipulation of the B22C form"—reflecting badly on the debtors' good faith. But here, it is "immaterial" because even without the car expense deductions, debtors would have negative disposable income. "[W]hile retaining four vehicles might not be financially prudent, this alone does not rise to the level a [sic] 'bad faith' under [the Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller),] totality of the circumstances test.").

Baxter v. Johnson (In re Johnson), 346 B.R. 256, 262-64 (Bankr. S.D. Ga. July 21, 2006) (Dalis) (BAPCPA altered test for good faith in Kitchens v. Georgia Railroad Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. Mar. 29, 1983) (Tjoflat, Clark, Miller), by changing calculation of income and allowance of expenses for purposes of disposable income test. "I find that § 1325(b), as amended by BAPCPA, does alter the good faith inquiry under § 1325(a)(3) in several important ways. The changes do not entirely eliminate a good faith inquiry into the sufficiency of income. However, they do narrow the scope of judicial discretion. Not all sources of income need be committed to a Chapter 13 plan. By specifically excluding some income from the disposable income analysis, BAPCPA recasts the totality-of-the-circumstances test set forth in Kitchens . . . . Besides income . . . amended § 1325(b) also narrows [the living expenses] element of the good-faith inquiry—at least with respect to above-median-income debtors.").

L. D.C. Circuit

District of Columbia

In re Wise, 476 B.R. 653, 667 (Bankr. D.D.C. Aug. 16, 2012) (Teel) (Not bad faith that debtor excludes Social Security income from projected disposable income; debtor can voluntarily use Social Security income to pay mortgage arrearages and need not continue paying Social Security income to unsecured creditors after mortgage arrearages are paid. "That Wise's plan, as modified, will call for plan payments of $699 per month during the first 15 months and will drop to $71.58 in the last 21 months of the plan (when plan payments will be committed towards paying unsecured creditors) does not demonstrate bad faith. Indeed, it will result in unsecured creditors being paid more quickly than under the second amended plan's provision for constant payments of $333 per month. . . . Wise is paying $699 per month for the first 15 months, via devoting his Social Security income towards making those payments, because he is being forced by § 1322(b)(5) to do so. Nevertheless, the mortgage arrears is a permissible expense in determining projected disposable income. On the income side, the Social Security income he devotes towards plan payments in the first 15 months of the plan is specifically excluded from projected disposable income. By reducing plan payments to $71.58 per month for the last 21 months of the plan, Wise is simply replenishing the Social Security income, excluded from projected disposable income, that he was forced to use for a permissible expense during the first 15 months of the plan. A ruling that this is bad faith would amount to a circumvention of the requirement that projected disposable income exclude Social Security income.").

In re Briscoe, 374 B.R. 1, 20-23 (Bankr. D.D.C. Sept. 4, 2007) (Teel) (Plan that satisfies disposable income test can still fail good-faith test in § 1325(a)(3) when use of allowable expenses demonstrates a lack of good faith. "The means test now incorporated into the 'projected disposable income' requirement accomplishes Congress' goal of removing discretion from the judiciary . . . . Unfortunately, it also introduces a new means for abuse of the system, as opportunistic debtors may be able to claim expenses under the Local or National Standards that they do not actually have. . . . The § 1325(b)(3) calculation of disposable income is but a mechanical test for determining that the debtor is proceeding reasonably, but it does not purport to cover all instances of bad faith that may arise from the debtor's actual financial circumstances. . . . [T]here may be times when a debtor commits so little income to creditors, relative to his true ability (for example, as a result of a windfall) to make payment to them based on his actual expenses, that his proffered plan suggests a subjective intent not to make a good faith effort at repayment at all. . . . It would require . . . a serious discrepancy between the debtor's actual monthly disposable income and the disposable income to be committed to unsecured creditors pursuant to § 1325(b)." The difference between Local Standards housing allowance of $1,012 and actual monthly rent of $446 does not indicate lack of good faith when plan commits $260 per month to unsecured creditors and debtor actually receives only $264 of monthly disposable income.).