§ 104.2     Frequency of Filing Bankruptcy—Chapter 20 and Beyond
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 104.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

The frequency of filing bankruptcy is often cited as a factor bearing on a debtor’s good faith.1 Frequency of filing became a component of good faith because multiple and successive bankruptcy filings by the same or related debtors are a problem in some judicial districts.2 When the debtor has previous bankruptcy experience, some courts apply an elevated burden of proof or otherwise impose more intense good-faith scrutiny.3 If there have been more than two bankruptcy cases and if the current bankruptcy case comes within a year or less of the last, good faith will be a substantial burden of proof in most jurisdictions.

[2]

Assessment of the debtor’s good faith in the filing of multiple or successive Chapter 13 cases has inspired some courts to generate a special list of factors. As explained by the district court in In re Oglesby,4 the meaning of good faith in the context of successively filed bankruptcy petitions includes these considerations:

 

 1.
the length of time between the prior case and the present one;
 

 

 

 

 2.
whether the successive cases were filed to obtain the favorable treatment afforded by the automatic stay;
 

 

 

 

 3.
the effort made to comply with the prior case plans;
 

 

 

 

 4.
the fact that Congress intended the debtor to achieve its goals in a single case; and
 

 

 

 

 5.
any other facts the court finds relevant relating to the debtor’s purposes in making successive filings.5
 

 

 

[3]

When a Chapter 13 case is filed immediately after discharge in a Chapter 7 case—a so-called Chapter 20—another court offered a slightly different list of factors in addition to the usual good-faith considerations:

 

 1.
The proximity in time of the chapter 13 filing to the chapter 7 filing.
 

 

 

 

 2.
Whether the debtor has incurred some change in circumstances between the filings . . . .
 

 

 

 

 3.
Whether the two filings accomplish a result that is not permitted in either chapter standing alone.
 

 

 

 

 4.
Whether the two filings treat creditors in a fundamentally fair and equitable manner or whether they are . . . an abuse of the purpose and spirit of the Bankruptcy Code.6
 

 

 

[4]

When a series of filings includes conversion from Chapter 7 to Chapter 13, one court added yet another good-faith factor: “[T]he actual financial performance of the debtor since the inception of his case, including at the time of his motion to convert from a chapter 7 to a chapter 13 through the confirmation hearing.”7 When conversion from Chapter 7 to Chapter 13 looked like a strategy to wrest administration of the bankruptcy estate from an energetic Chapter 7 trustee, assessment of the debtors’ goals and motives in conversion was cited as another factor bearing on confirmation of any plan the debtors might propose.8

[5]

Not all these additional good-faith factors for frequent filers are useful. It will always be true that a successive bankruptcy case is filed, at least in part, to “obtain the favorable treatment afforded by the automatic stay.” If Congress “intended the debtor to achieve its goals in a single case,” then why did Congress specifically provide in § 349(a) that dismissal of a bankruptcy case does not “prejudice the debtor with regard to the filing of a subsequent petition under this title, except as provided in § 109(g) of this title”?9 The filing of a Chapter 13 case after a Chapter 7 case will almost always “accomplish a result that is not permitted in either chapter standing alone” because the chapters are fundamentally different with respect to the rights and powers of creditors and debtors. That bankruptcy courts should consider “any other facts . . . relating to the debtor’s purposes in making successive filings” is simply to restate the totality-of-the-circumstances approach to determining whether a Chapter 13 plan is filed in good faith.10

[6]

It can be argued that the frequency of bankruptcy filing should not be written into § 1325(a)(3) because there are other specific sections of the Bankruptcy Code that regulate refiling by individual debtors. Section 109(g) prohibits an individual debtor from refiling bankruptcy within 180 days of the dismissal of a prior bankruptcy case under certain circumstances.11 Section 349(a) states clearly that the dismissal of a bankruptcy case does not “prejudice the debtor with regard to the filing of a subsequent petition under this title, except as provided in § 109(g) of this title.”12

[7]

In Johnson v. Home State Bank,13 the Supreme Court cited § 109(g) in support of its holding that a debtor can use a Chapter 13 case to manage a lien that survived discharge in a prior Chapter 7 case. The “Chapter 20” phenomenon antedated Johnson.14 Although the Supreme Court in Johnson did not consider whether successive filings impact the confirmation test in § 1325(a)(3), Johnson acknowledges that successive filings are contemplated by the Code, when not prohibited by § 109(g). At least one court concluded before Johnson that with the enactment of § 109(g) in 1984, Congress defined the circumstances in which repetitive filings are abusive, and even a series of four Chapter 13 cases is permitted if each successive case is not prohibited by § 109(g).15

[8]

Good-faith cases decided after Johnson generally hold that multiple or successive bankruptcy filings are not per se bad faith for purposes of § 1325(a)(3); but the circumstances of each refiling are relevant to the debtor’s good faith in the most recent case. For example, in Society National Bank v. Barrett (In re Barrett),16 the U.S. Court of Appeals for the Sixth Circuit affirmed confirmation of the debtor’s third Chapter 13 case notwithstanding evidence of misconduct during the prior bankruptcy cases. The debtor filed three Chapter 13 cases between January of 1987 and November of 1988 to stop foreclosures. Citing the Supreme Court’s decision in Johnson, the Sixth Circuit found that “serial filings are not, in and of themselves, improper, unless they fall within one of the enumerated categories of prohibited serial filings.”17 Because the serial filing in Barrett was not prohibited by § 109(g), the Sixth Circuit held that the bankruptcy court appropriately undertook a more general “totality of the circumstances” analysis of the debtor’s good faith. That the debtor’s circumstances changed during the prior cases supported the bankruptcy court’s finding of good faith in the third filing.

[9]

Other courts agree with the Sixth Circuit that after Johnson, if § 109(g) does not prohibit the most recent Chapter 13 filing, then good faith includes consideration of the debtor’s filing history, but the factor should not alone be determinative.18 When the filing history reveals only that the debtor converted a prior Chapter 7 case to Chapter 13 before entry of discharge or that the debtor dismissed a prior bankruptcy case before discharge and then filed a Chapter 13 petition, the courts are even less inclined to find that the Chapter 13 filing is indicative of bad faith.19

[10]

If the debtor is eligible to refile under § 109(g), a creditor objecting to good faith should be prepared to demonstrate that the pattern of refiling is accompanied by other evidence of bad faith.20 The bankruptcy court’s findings with respect to good faith will be reviewed under the clearly erroneous standard.21 This puts a premium on the evidence presented by the creditor at the hearing on confirmation.

[11]

A debtor with previous bankruptcy experience should be prepared with evidence of changed circumstances justifying refiling. In Barrett, the Sixth Circuit found that circumstances changed during the two prior Chapter 13 cases and a Chapter 7 case. The debtor’s most recent plan to pay the objecting creditor in full and to assume personal liability notwithstanding discharge in the prior Chapter 7 case were indicators of good faith.22 In one extreme case, a bankruptcy court confirmed the debtor’s fourth Chapter 13 plan, finding that changed circumstances overcame unfair treatment of a home mortgage during three prior Chapter 13 cases, all of which were dismissed for nonpayment.23

[12]

Changed circumstances may be proved by showing that the debtor’s income has increased24 or that the debtor’s budget or debts have modulated through nonbankruptcy efforts. A medical catastrophe,25 loss of a job or unexpected debt after discharge in a Chapter 7 case can support the debtor’s good faith in the filing of a Chapter 13 case.26 That the sheriff is about to sell the debtor’s home to satisfy a debt declared nondischargeable in a prior Chapter 7 case is a changed circumstance supporting good faith in a second filing under Chapter 13.27 When priority claims were filed in amounts larger than expected and an unscheduled creditor filed a claim that extended the plan beyond 60 months, it was not bad faith for the debtor to dismiss a Chapter 13 case and immediately file a second Chapter 13 petition.28 That refiling allows the debtor to take advantage of lower values for depreciating property is not bad faith when other circumstances have changed to justify dismissal of the prior case and refiling of a new Chapter 13 case.29 The failure of the debtor to prove changed circumstances is often stated as the basis for a finding of lack of good faith in a Chapter 13 case filed soon after a Chapter 7 discharge.30

[13]

Good faith can be difficult to show when the purpose of the Chapter 13 case is to deal with reaffirmation agreements from a previous Chapter 7 case. When Chapter 13 is filed soon after a Chapter 7 case in which the debtor reaffirmed some debts, the successive cases look like a plot to cherry pick creditors that the debtor wants to pay while sandbagging the rest in the Chapter 7 case. Courts are understandably skeptical when the debtor volunteers to remain personally liable to some creditors, then immediately files a Chapter 13 case to change the deals just made. By filing Chapter 7 first, the debtor precluded participation by creditors not favored with reaffirmation agreements. The subsequent Chapter 13 case allows the debtor to modify the favored claims through the plan without the consent that was necessary for the reaffirmations. This picture provokes good-faith objections to confirmation.

[14]

In Johnson,31 the Supreme Court condoned the filing of a Chapter 13 case to manage liens that survived discharge in a prior Chapter 7 case. A Chapter 13 case filed with the intent to manage a reaffirmation agreement differs from Johnson only in that a reaffirmation agreement creates a voluntary exception to discharge, after the protective process described in § 524(c). This process includes either an affidavit from debtor’s counsel that the reaffirmation agreement “does not impose an undue hardship on the debtor or a dependent of the debtor”32 or, in the case of an individual debtor not represented by an attorney, court approval of the reaffirmation agreement as “not imposing an undue hardship on the debtor or a dependent of the debtor.”33 The reported cases demonstrate that debtors recently emerged from Chapter 7 cases all too often discover that they have reaffirmed debts beyond their reasonable ability to pay. Johnson could be read expansively to offer Chapter 13 as a solution to improvident reaffirmations.

[15]

It has been held that it is not bad faith for a Chapter 13 plan to modify a secured claim that was reaffirmed in a prior Chapter 7 case.34 Another court offered a supplemental list of factors to assess the good faith of a plan that modifies a reaffirmation agreement: Did the debtor enter into the reaffirmation agreement with the intention of filing a subsequent Chapter 13 case? How much time has elapsed since the Chapter 7 discharge? Did the debtor make payments and perform under the reaffirmation agreement for a period of time? How do the terms of the reaffirmation agreement compare to the debtor’s proposed Chapter 13 plan?35

[16]

When the prior bankruptcy was a Chapter 13 case dismissed for nonpayment, courts will expect evidence of improved ability to fund any subsequent plan. If the prior case was not funded by an order to the debtor’s employer, then counsel should insist that the subsequent plan be funded by income deduction order.36 If the debtor’s spouse, whether filing or not filing, has a stable source of income, the subsequent plan might be funded by a deduction order to the spouse’s employer as a sign of greater commitment.

[17]

If the prior default was caused by a concrete event—an automobile accident, illness or loss of job—bring the termination letter from the prior employer or copies of the medical bills. When the prior default can be blamed on events beyond the debtor’s control, changed circumstances become the logical defense to a good-faith objection to refiling.37

[18]

The creditor with a good-faith objection based on serial filings should bring to the confirmation hearing evidence of the prior filings and dismissals. Too often, the history of prior bankruptcies revealed on the most recent petition is not accurate. With a little research, counsel can very effectively challenge the debtor’s good faith by proving unrevealed prior bankruptcy cases.38 The court files for the debtor’s prior bankruptcy cases may be archived and may take some effort to locate and produce. Sometimes the Chapter 13 trustee’s records of the debtor’s bankruptcy history will be more complete and available than the court’s. It is persuasive evidence of lack of good faith that the debtor has shopped from one counsel to another, filing each case with different information in the statement and schedules. To develop this evidence, counsel must persist in uncovering the prior paperwork.

[19]

In serial filing situations, creditors should be prepared to show the prejudice caused by multiple automatic stays and truncated efforts at collection. One reported decision suggests that a debtor’s good faith under § 1325(a)(3) may turn in part on whether creditors have been diligent. In In re Thorsted,39 the debtor filed a Chapter 7 case, discharged personal liability to a secured claim holder, negotiated (unsuccessfully) for two years without making payments to the creditor, and then filed a Chapter 13 case. That the debtor made no payments to the secured claim holder during the two years before the Chapter 13 case was “persuasive of bad faith,” but because of “insufficient and conflicting evidence on who made what offers of cure, when those offers were made, and whether those offers were reasonable,” the court discounted the bad payment history in the good-faith calculus. With respect to the creditor’s lackadaisical collection efforts between the two bankruptcy cases, the court observed: “The failure of the creditor to pursue its remedies either in the Chapter 7 proceeding or in the long interval between the Chapter 7 and Chapter 13 proceedings causes us to question whether the two filings were a significant impediment to the creditor’s rights.”40

[20]

Thorsted suggests that a debtor’s good faith during a series of bankruptcy filings may be affected by how creditors act toward the debtor. Diligence by creditors thwarted at every turn by the filing and refiling of bankruptcy cases enhances the likelihood of findings of bad faith. Creditors that sleep on their rights are less appealing victims and may realize less protection from the good-faith test at confirmation for a serial filer.

[21]

Good faith is tested when the filing of more than one Chapter 13 case by related debtors suggests manipulation. Discussed elsewhere as a ground for dismissal,41 enterprising debtors have conspired with spouses, with family members and with total strangers to file multiple and successive bankruptcy cases to fluster collection efforts. Good faith at confirmation is sometimes the unraveling of the scheme.42 An interesting twist on this theme is In re Smith.43

[22]

In Smith, a husband and wife filed separate Chapter 13 petitions one day apart. The couple owned valuable real property as tenants by the entireties. Together the plans proposed to pay all joint creditors in full, but separate creditors would be paid 33 percent through the husband’s plan and 35 percent through the wife’s. Under Missouri law, the entireties property was not liable for the separate debts of either debtor. Both plans satisfied all of the economic tests for confirmation. However, the court found bad faith in the orchestrated filing of separate Chapter 13 cases when the effect was to insulate substantial equity and discharge all debts:

[T]he proximity of the filings and the blatant attempt to retain a large amount of non-exempt equity [$24,174] evidences a concerted effort to manipulate of [sic] the Bankruptcy system to the disadvantage of creditors. When comparing the amount of equity in Debtors’ residence to the aggregate amount of unsecured debt, the Court strongly believes that Chapter 13 is not the only avenue of financial relief available to the Debtors. The Court found no Chapter 13 cases . . . where married debtors sought to . . . shield entirety equity from individual creditors by filing separate Chapter 13 petitions. To find good faith in this case would be to allow married debtors with a substantial amount of equity in property held in tenancy by the entirety to recklessly incur debt without regard to its consequences; they could simply file separate Chapter 13 petitions and pay their creditors a minimum amount. Although the Bankruptcy Code technically exempts entirety equity in this anomalous case, the Court concludes that such a strategy constitutes an abuse of the provisions, purpose and spirit of the Bankruptcy Code and therefore, fails to satisfy § 1325(a)(3).44
[23]

Multiple and successive bankruptcy filings provoked a good-faith challenge and a unique remedy in In re Taylor.45 The debtor in Taylor filed Chapter 13 seven days after discharge in a Chapter 7 case and on the same day that her husband filed a separate Chapter 7 case. Only two creditors were listed. The bankruptcy court found no change in circumstances between Mrs. Taylor’s Chapter 7 case and her new Chapter 13 filing. Mr. Taylor’s choice to file a separate petition was strategic and revealing: “Had he chosen to join Mrs. Taylor in filing the chapter 13 petition, there would have been additional creditors who would have been paid and who would not have been discharged in his chapter 7 proceeding.”46 If Mrs. Taylor’s earlier Chapter 7 petition had been a joint Chapter 13 petition, “all creditors would have received a distribution.”47 Characterizing the multiple filings as “fundamentally unfair . . . inequitable . . . attempted manipulation of the Bankruptcy Code,”48 the bankruptcy court sustained the good faith objection in Mrs. Taylor’s Chapter 13 case and fashioned a remedy to avoid rewarding the debtors: Mrs. Taylor’s Chapter 13 case was converted to Chapter 7; Mrs. Taylor’s prior Chapter 7 case was reopened and consolidated with her current case and with Mr. Taylor’s Chapter 7 case; all creditors scheduled in any of the three cases were then entitled to share in distributions.49


 

1  See, e.g., Mason v. Young (In re Young), 237 F.3d 1168 (10th Cir. 2001); Gier v. Farmers State Bank (In re Gier), 986 F.2d 1326 (10th Cir. 1993); Society Nat’l Bank v. Barrett (In re Barrett), 964 F.2d 588 (6th Cir. 1992); Pioneer Bank of Longmont v. Rasmussen (In re Rasmussen), 888 F.2d 703 (10th Cir. 1989); Downey Sav. & Loan Ass’n v. Metz (In re Metz), 820 F.2d 1495 (9th Cir. 1987); Neufeld v. Freeman, 794 F.2d 149 (4th Cir. 1986); Flygare v. Boulden, 709 F.2d 1344 (10th Cir. 1983); Johnson v. Vanguard Holding Corp., 708 F.2d 865 (2d Cir. 1983); Kitchens v. Georgia R.R. Bank & Trust Co. (In re Kitchens), 702 F.2d 885 (11th Cir. 1983); United States v. Estus (In re Estus), 695 F.2d 311 (8th Cir. 1982); Deans v. O’Donnell, 692 F.2d 968 (4th Cir. 1982); Keach v. Boyajian (In re Keach), 243 B.R. 851 (B.A.P. 1st Cir. 2000); Davis v. Mather (In re Davis), 239 B.R. 573 (B.A.P. 10th Cir. 1999); Smyrnos v. Padilla (In re Padilla), 213 B.R. 349 (B.A.P. 9th Cir. 1997); Gayton v. Haney, 61 B.R. 612 (B.A.P. 9th Cir. 1986); Street v. Lawson, 55 B.R. 763 (B.A.P. 9th Cir. 1985); United States v. Smith (In re Smith), 199 B.R. 56 (N.D. Okla. 1996); In re Oglesby, 158 B.R. 602 (E.D. Pa. 1993); In re Torres Lopez, 138 B.R. 348 (D.P.R. 1992); In re Beauty, 42 B.R. 655 (E.D. La. 1984); In re Soost, 290 B.R. 116 (Bankr. D. Minn. 2003); In re Shula, 280 B.R. 903 (Bankr. S.D. Ala. 2001); In re Terry, 279 B.R. 240 (Bankr. W.D. Ark. 2002); In re Barnes, 275 B.R. 889 (Bankr. E.D. Cal. 2002); In re White, 273 B.R. 279 (Bankr. M.D. Fla. 2001); In re Ault, 271 B.R. 617 (Bankr. E.D. Ark. 2002); In re Holder, 263 B.R. 622 (Bankr. N.D. Ala. 2001); In re Quiles, 262 B.R. 191 (Bankr. D.R.I. 2001); In re Manthey, 262 B.R. 89 (Bankr. N.D. Cal. 2001); In re Taylor, 261 B.R. 877 (Bankr. E.D. Va. 2001); In re Haskell, 252 B.R. 236 (Bankr. M.D. Fla. 2000); In re Mattson, 241 B.R. 629 (Bankr. D. Minn. 1999); In re Dixon, 241 B.R. 234 (Bankr. M.D. Fla. 1999); In re Cavaliere, 238 B.R. 247 (Bankr. W.D.N.Y. 1999); In re Martin, 233 B.R. 436 (Bankr. D. Ariz. 1999); In re Nottingham, 228 B.R. 316 (Bankr. M.D. Fla. 1998); In re Craig, 222 B.R. 266 (Bankr. E.D. Va. 1998); In re Mathenia, 220 B.R. 427 (Bankr. W.D. Okla. 1998); In re Davis, 218 B.R. 177 (Bankr. E.D. Okla. 1998); In re Cushman, 217 B.R. 470 (Bankr. E.D. Va. 1998); In re Britt, 211 B.R. 74 (Bankr. M.D. Fla. 1997); In re Day, 208 B.R. 358 (Bankr. E.D. Pa. 1997); In re Presley, 201 B.R. 570 (Bankr. N.D. Fla. 1996); In re Smith, 200 B.R. 213 (Bankr. E.D. Mo. 1996); In re Corino, 191 B.R. 283 (Bankr. N.D.N.Y. 1995); In re Oliver, 186 B.R. 403 (Bankr. E.D. Va. 1995); In re Strauss, 184 B.R. 349 (Bankr. D. Neb. 1995); In re Lindsey, 183 B.R. 624 (Bankr. D. Idaho 1995); In re Eason, 181 B.R. 127 (Bankr. N.D. Ala. 1995); In re Harlan, 179 B.R. 133 (Bankr. W.D. Ark. 1995); In re Watson, No. 93-50486, 1994 WL 1886769 (Bankr. S.D. Ga. Mar. 21, 1994) (unpublished); In re Coburn, 175 B.R. 400 (Bankr. D. Or. 1994); In re Aguirre, 174 B.R. 233 (Bankr. E.D. Mich. 1994); In re Oglesby, 161 B.R. 917 (Bankr. E.D. Pa. 1993); In re Carsrud, 161 B.R. 246 (Bankr. D.S.D. 1993); In re Neill, 158 B.R. 93 (Bankr. N.D. Ohio 1993); In re Thorsted, 157 B.R. 5 (Bankr. E.D. Va. 1993); In re Standfield, 152 B.R. 528 (Bankr. N.D. Ill. 1993); In re Caldwell, 151 B.R. 131 (Bankr. S.D. Ohio 1992); In re Cormier, 147 B.R. 285 (Bankr. D. Me. 1992); In re Jahnke, 146 B.R. 830 (Bankr. E.D. Cal. 1992); In re Belden, 144 B.R. 1010 (Bankr. D. Minn. 1992); In re Govan, 139 B.R. 1017 (Bankr. N.D. Ala. 1992); In re Huerta, 137 B.R. 356 (Bankr. C.D. Cal. 1992); In re Farrington, 129 B.R. 271 (Bankr. M.D. Fla. 1991); In re Sieg, 120 B.R. 533 (Bankr. D.N.D. 1990); In re Cisneros, 110 B.R. 531 (Bankr. D. Colo. 1990); In re McGrue, 108 B.R. 592 (Bankr. N.D. Ohio 1989); In re Hotujac, 102 B.R. 733 (Bankr. W.D. Mo. 1989); In re Jacobs, 102 B.R. 239 (Bankr. E.D. Okla. 1989); In re Weber, 114 B.R. 194 (Bankr. D. Neb. 1988); In re Ross, 95 B.R. 509 (Bankr. S.D. Ohio 1988); In re Breon, 94 B.R. 576 (Bankr. D. Minn. 1988); In re Russo, 94 B.R. 127 (Bankr. N.D. Ill. 1988); In re Easley, 72 B.R. 948 (Bankr. M.D. Tenn. 1987); In re Terrill, 68 B.R. 441 (Bankr. C.D. Ill. 1987); In re Caldwell, 67 B.R. 296 (Bankr. E.D. Tenn. 1986); In re Smith, 43 B.R. 319 (Bankr. E.D.N.C. 1984); In re McMonagle, 30 B.R. 899 (Bankr. D.S.D. 1983).

 

2  See § 334.1 [ Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings ] § 152.4  Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings. See, e.g., In re Kinney, 51 B.R. 840 (Bankr. C.D. Cal. 1985) (Chronicle of 10 case filings including multiple Chapter 13 cases by related family members.); National Home Equity Corp. v. Villareal, 46 B.R. 284 (Bankr. C.D. Cal. 1984); Snow v. Jones, 41 B.R. 263 (Bankr. C.D. Cal. 1984) (Sanctions against debtor and counsel where debtor filed six petitions, including four Chapter 13s, in an effort to defeat foreclosure.); Cashman Inv. Corp. v. Robinson (In re Bradley), 38 B.R. 425 (Bankr. C.D. Cal. 1984); Community Thrift & Loan v. Davis (In re Wong), 30 B.R. 87 (Bankr. C.D. Cal. 1983).

 

3  See, e.g., In re Soost, 290 B.R. 116, 130 (Bankr. D. Minn. 2003) (In a “cumulated bankruptcy filing”—a Chapter 7 case followed rapidly by a Chapter 13 petition—debtor faces a “heightened burden of production, to more exhaustively demonstrate that he is acting in good faith in proposing his plan.”); In re Taylor, 261 B.R. 877 (Bankr. E.D. Va. 2001) (An elevated good-faith requirement applies in “Chapter 20” filings.); In re Cushman, 217 B.R. 470, 476 (Bankr. E.D. Va. 1998) (“While it is clear that chapter 20’s are not prohibited per se, such cases are not favored and must be closely scrutinized.”); In re Corino, 191 B.R. 283, 290 (Bankr. N.D.N.Y. 1995) (“Debtor’s four bankruptcy filings over an eight year period . . . certainly raise[s] the specter of bad faith.” After analysis of many factors, court rejects good-faith challenge to fourth Chapter 13 case filed to deal with criminal and civil judgments for embezzlement.); In re Caldwell, 151 B.R. 131, 132 (Bankr. S.D. Ohio 1992) (“[A]ny debtor who proposes a Chapter 13 plan soon after a Chapter 7 filing must be prepared to meet all tests for confirmation in Chapter 13 on a heightened scrutiny basis as employed generally in this district for plans which propose nominal repayment to general unsecured creditors. . . . [D]ebtors must be prepared to withstand increased scrutiny of their budgets, their disposable income and their good faith. . . . Absent a marked change in circumstances, the scrutiny level will increase as the interval between the two cases decreases. Additionally, if the filing dates for the two cases are within a twelve-month period, this Court will require an opportunity for objection for all unsecured creditors whose claims were discharged in the initial Chapter 7 case. Further, those parties must be told specifically that no repayment is proposed for them.”); In re Huerta, 137 B.R. 356 (Bankr. C.D. Cal. 1992) (Successive filings are not per se bad faith, but a second filing puts an additional burden on the debtor to demonstrate good faith.).

 

4  158 B.R. 602 (E.D. Pa. 1993).

 

5  158 B.R. at 607. See In re Oglesby, 161 B.R. 917, 923, 924 (Bankr. E.D. Pa. 1993) (On remand, court confirms fourth case by debtor with 11 dependent children and two dependent grandchildren where first case failed because of “inadequate counsel,” and second and third cases failed because the debtor became ill and was disabled to complete payments. “[T]here is no good faith filing requirement in Chapter 13 cases. With respect to the requirement that a plan be proposed in good faith set forth in § 1325(a)(3) . . . ‘the scope of good faith inquiry must be limited to those factors which address (1) whether the debtor has deliberately misinformed the court of facts material to confirmation of the plan; (2) whether the debtor intends to effectuate the plan as proposed and (3) whether the proposed plan is for a purpose not permitted under the Bankruptcy Code.’” Fourth plan survives good-faith analysis because “the debtor has been honest and forthright, . . . has disclosed all material facts[,] . . . intends to effectuate her Plan, . . . [and] has done so now for nine months . . . and . . . the Plan . . . is feasible for her to perform.”). See also In re Huerta, 137 B.R. 356, 368 (Bankr. C.D. Cal. 1992); In re Schuldies, 122 B.R. 100, 103 (Bankr. D.S.D. 1990).

 

6  In re Cushman, 217 B.R. 470, 477 (Bankr. E.D. Va. 1998). Accord In re Taylor, 261 B.R. 877, 884–85 (Bankr. E.D. Va. 2001) (“[A] ‘chapter 20’ ordinarily ought not be permitted when the debtor improperly seeks to accomplish indirectly through sequential filings, first under chapter 7 and then chapter 13, that which he cannot achieve directly under either chapter. . . . There was no change in the circumstances of either Mrs. Taylor or Mr. Taylor between the date of her two filings.”); In re Waters, 227 B.R. 784, 787–88 (Bankr. W.D. Va. 1998) (Confirms 24-month plan filed one month after discharge in Chapter 7 case when only debt is car lien that survived discharge. Applying four additional factors for determining good faith in the Chapter 20 context from In re Cushman, 217 B.R. 470 (Bankr. E.D. Va. 1998), and In re Craig, 222 B.R. 266 (Bankr. E.D. Va. 1998), “the debtor in this case has not abused the provisions, purpose, or spirit of the Bankruptcy Code through her successive petition filings. . . . The debtor’s initial Chapter 7 petition resulted from her recent unemployment and the breakdown of her marriage. After later finding employment, the debtor developed a need for transportation; however, she also gained a means to fund a Chapter 13 plan and consequently a means to pay for that transportation. Accordingly, the filing of the debtor’s subsequent Chapter 13 petition can be explained by a reasonable change in circumstances occurring after her original petition. . . . The debtor in this case actually attempted negotiations with Chrysler to reaffirm her debt and keep her vehicle during her Chapter 7 case. . . . [T]he debtor’s plan is intended to pay Chrysler their oversecured claim in full, including interest, costs and attorney’s fees, over a 24-month period.”).

 

7  In re Terry, 279 B.R. 240, 246 (Bankr. W.D. Ark. 2002).

 

8  See, e.g., In re Barnes, 275 B.R. 889, 901 (Bankr. E.D. Cal. 2002) (“[T]his case was converted to chapter 13 in order to derail the former chapter 7 trustee’s administration of the bankruptcy estate. The conversion was part of a stratagem to prompt a dismissal of the case in order to protect unscheduled assets that could not be exempted. When the ploy failed, the debtors proposed a plan which they knew, or should have known, had no chance of confirmation. To propose such a plan is bad faith.”). See also § 325.1 [ Absolute Right of Debtor? ] § 148.2  Absolute Right of Debtor? for discussion of “bad faith” as a bar to conversion from Chapter 7 to Chapter 13.

 

9  See discussion of repeat filers beginning at § 22.1  Eligibility of a Simultaneous Filer.

 

10  See § 197.1 [ Smell Tests ] § 109.1  Smell Tests.

 

11  See § 25.1  180-Day Bar to Eligibility in 11 U.S.C. § 109(g)—In General§ 25.2  11 U.S.C. § 109(g)(1)—Willful Failure to Abide by Court Order or to Appear in Proper Prosecution and § 25.3  11 U.S.C. § 109(g)(2)—Voluntary Dismissal after Request for Relief from Stay.

 

12  11 U.S.C. § 349(a). See §§ 20.1 [ Court-Imposed Restrictions on Eligibility to Refile ] § 24.1  Court-Imposed Restrictions on Eligibility to Refile and 339.1 [ Court-Imposed Conditions and Restrictions on Dismissal ] § 153.3  Court-Imposed Conditions and Restrictions on Dismissal.

 

13  501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991).

 

14  See, e.g., In re Farrington, 129 B.R. 271 (Bankr. M.D. Fla. 1991) (It is a bad-faith Chapter 20 filing when Chapter 13 case is filed after discharge but before closing of prior Chapter 7 case. Filing of a Chapter 13 case while a Chapter 7 case is pending is not per se prohibited by the Code, but it is a factor in the totality-of-circumstances determination for good-faith purposes.); In re Sieg, 120 B.R. 533 (Bankr. D.N.D. 1990) (It was bad faith when debtor reopened Chapter 7 case after discharge and converted to Chapter 13 to compromise student loan claims that survived discharge in the Chapter 7 case. Although neither conversion from Chapter 7 to Chapter 13 nor a successive filing is per se bad faith, both are factors to consider.); In re Weber, 114 B.R. 194 (Bankr. D. Neb. 1988) (It is not per se bad faith to modify or violate a reaffirmation agreement entered into during a previous Chapter 7 case.).

 

15  See In re Ford, 78 B.R. 729 (Bankr. E.D. Pa. 1987); In re Samuel, 77 B.R. 520 (Bankr. E.D. Pa. 1987).

 

16  964 F.2d 588 (6th Cir. 1992).

 

17  964 F.2d at 591.

 

18  See, e.g., Mason v. Young (In re Young), 237 F.3d 1168, 1178 (10th Cir. 2001) (“Chapter 20 conversions may raise questions about the motives of the debtors seeking such conversions . . . . [W]e are satisfied . . . that no improper motive was present and that the bankruptcy court properly allowed the conversion.”); Keach v. Boyajian (In re Keach), 243 B.R. 851, 870 (B.A.P. 1st Cir. 2000) (“It was error for the bankruptcy judge here to take a jaundiced view of the Debtor’s second filing because it was made while the prior Chapter 7 case remained open. The Code contains no mandate against such a second filing. . . . As we have also seen, some courts, like the bankruptcy court here, require a change in circumstances to justify the second filing. Such a requirement satisfies the concern that a debtor have an honesty of purpose in filing the second case.”); Davis v. Mather (In re Davis), 239 B.R. 573 (B.A.P. 10th Cir. 1999) (That the debtor filed Chapter 13 after discharge but before closing of prior Chapter 7 case is one factor indicative of a lack of good faith.); United States v. Smith (In re Smith), 199 B.R. 56, 58–60 (N.D. Okla. 1996) (“The fact of successive filings does not, by itself, constitute bad faith. . . . [T]he Bankruptcy Court presided over the prior Chapter 7 filing, and consequently was aware of the details . . . .” District court affirms confirmation of 2% plan that discharges a large debt that survived prior Chapter 7 case.); In re Soost, 290 B.R. 116 (Bankr. D. Minn. 2003) (Although debtor is not prohibited from filing a Chapter 13 petition soon after a Chapter 7 case, debtor faces a “heightened burden” to demonstrate good faith in proposing the plan in the subsequent Chapter 13 case.); In re Shula, 280 B.R. 903, 906 (Bankr. S.D. Ala. 2001) (“‘Two successive Chapter 13 cases are not necessarily reflective of bad faith, especially if in the interim there has been a change in the debtor’s financial condition so as to warrant a second try.’”); In re White, 273 B.R. 279, 283 (Bankr. M.D. Fla. 2001) (Second Chapter 13 petition a month after dismissal of prior Chapter 13 case is not outcome determinative of good-faith objection. “[J]ust because this is a ‘serial filing’ is not indicative that the present case was filed in bad faith.”); In re Ault, 271 B.R. 617 (Bankr. E.D. Ark. 2002) (Not per se lack of good faith that debtor filed a Chapter 13 case after discharge was denied in a prior Chapter 7 case.); In re Dixon, 241 B.R. 234 (Bankr. M.D. Fla. 1999) (Pro se debtors’ conversion to Chapter 13 to prevent Chapter 7 trustee from receiving settlement proceeds from a personal injury action that the debtors failed to schedule is a factor in good-faith analysis, but five-year plan appears to be a good-faith attempt to repay creditors.); In re Martin, 233 B.R. 436 (Bankr. D. Ariz. 1999) (That prior Chapter 7 case was dismissed within the first month after filing is not outcome determinative of good faith in subsequent Chapter 13 case. Debtor explained that Chapter 13 was filed to avoid the surrender of property, to pay an IRS debt and to avoid litigating a claim that might be nondischargeable in a Chapter 7 case.); In re Cushman, 217 B.R. 470, 476 (Bankr. E.D. Va. 1998) (“While it is clear that chapter 20’s are not prohibited per se, such cases are not favored and must be closely scrutinized.” Applying four special factors in the Chapter 20 context, debtor with post–Chapter 7 discharge income sufficient to maintain regular payments on surviving car loan is unable to show good faith.); In re Corino, 191 B.R. 283, 290 (Bankr. N.D.N.Y. 1995) (“Debtor’s four bankruptcy filings over an eight year period . . . certainly raises the specter of bad faith.” After review of United States v. Estus (In re Estus), 695 F.2d 311 (8th Cir. 1982) factors, court rejects good-faith challenge to fourth Chapter 13 case filed to deal with criminal and civil judgments for embezzlement.); In re Eason, 181 B.R. 127, 135–36 (Bankr. N.D. Ala. 1995) (That the debtor filed a Chapter 13 case the day before the Chapter 7 trustee filed his final report in a prior no-asset liquidation implicates good-faith analysis because “[s]erial filings raise the question of whether a debtor’s current bankruptcy filing is made in good faith.” Based on a lack of evidence, “this court does not find a lack of good faith.”); In re Watson, No. 93-50486, 1994 WL 1886769 (Bankr. S.D. Ga. Mar. 21, 1994) (unpublished) (Medical bills and a lost job prevented debtor from completing prior case, and refiling is not in bad faith though the effect is to lower the value of collateral at confirmation in the second case.); In re Coburn, 175 B.R. 400, 404–05 (Bankr. D. Or. 1994) (“The debtors have sought relief under chapter 13 of the Bankruptcy Code once before. They did not receive a discharge. . . . It is difficult for the court to make any use of this fact. The Code specifies in § 109(g) the circumstances under which a debtor is barred from serial filings. The creditor does not contend that § 109(g) was violated.”); In re Thorsted, 157 B.R. 5, 10 (Bankr. E.D. Va. 1993) (“Since a ‘Chapter 20’ filing is not specifically mentioned as cause for dismissal, the U.S. Supreme Court has discerned that Congress did not intend to categorically ‘foreclose the benefit of Chapter 13 to a debtor who previously has filed for Chapter 7 relief.’ See Johnson v. Home State Bank, . . . Filing a ‘Chapter 20’ to reorganize a secured debt after the in personam obligation has been discharged is not per se evidence of bad faith. . . . The evidence of failure to make payments for over 2 years is persuasive of bad faith, but is weakened by insufficient and conflicting evidence on who made what offers of cure, when those offers were made, and whether those offers were reasonable. The failure of the creditor to pursue its remedies either in the Chapter 7 proceeding or in the long interval between the Chapter 7 and Chapter 13 proceedings causes us to question whether the two filings were a significant impediment to the creditor’s rights.”); In re Cormier, 147 B.R. 285 (Bankr. D. Me. 1992) (Filing a Chapter 13 petition while a prior Chapter 13 case remains pending is an indication of bad faith, but not per se bad faith. The proper approach is to consider whether there has been a change in circumstances between the first and second petition sufficient to warrant a finding of good faith.); In re Govan, 139 B.R. 1017, 1020 (Bankr. N.D. Ala. 1992) (Citing Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991), Code does not condition eligibility for Chapter 13 after the filing of a prior Chapter 7 or Chapter 13 petition. “Even though serial filings do not adversely affect the eligibility of the debtor, the fact of successive filings should be considered as a factor when the court determines the issue of good faith.”).

 

19  See, e.g., In re Cavaliere, 238 B.R. 247, 249 (Bankr. W.D.N.Y. 1999) (Converting from Chapter 7 to Chapter 13 after the filing of a nondischargeability complaint but before entry of discharge is not indicative of bad faith but is simply a debtor’s right to conversion under § 706(a). Court distinguishes “Chapter 20” situation, in which Chapter 13 case is filed after discharge in Chapter 7 case. “Such instances are distinguishable, in that they can potentially represent an effort to derive conjunctively the benefits of both Chapter 13 and Chapter 7, and thereby to avoid the full impact of the burdens attributable to each of these respective chapters.”); In re Martin, 233 B.R. 436 (Bankr. D. Ariz. 1999) (That prior Chapter 7 case was dismissed within the first month after filing is not outcome determinative of good faith in subsequent Chapter 13 case. Debtor explained that Chapter 13 was filed to avoid the surrender of property, to pay an IRS debt and to avoid litigating a claim that might be nondischargeable in a Chapter 7 case.). See also In re Ault, 271 B.R. 617 (Bankr. E.D. Ark. 2002) (Not per se lack of good faith that debtor filed a Chapter 13 case after discharge was denied in a prior Chapter 7 case.).

 

20  See, e.g., In re Barnes, 275 B.R. 889 (Bankr. E.D. Cal. 2002) (Plan was not filed in good faith when Chapter 7 case was converted to Chapter 13 to end administration of the bankruptcy estate by the Chapter 7 trustee and conversion was shown to be a strategy by the debtor to prompt dismissal of the Chapter 13 case in order to protect unscheduled assets that could not be exempted.); In re Quiles, 262 B.R. 191 (Bankr. D.R.I. 2001) (Paralegal with 11 years’ experience preparing bankruptcy cases fails good faith when Chapter 13 plan filed a few months after discharge in a Chapter 7 case proposes to strip off a second mortgage with no payments to any creditors.); In re Haskell, 252 B.R. 236, 243 (Bankr. M.D. Fla. 2000) (“Debtor’s sincerity is questionable based on his degree of effort in this case and previous cases, which is a strong factor in this Court’s decision. This is Debtor’s third Chapter 13 case, Debtor has continually been behind in making his payments to the Chapter 13 Trustee, and Debtor was $11,700.00 in arrears at the June 29, 2000 confirmation hearing.”); In re Mattson, 241 B.R. 629 (Bankr. D. Minn. 1999) (Third Chapter 13 case filed to defeat collection of state court judgment for racial discrimination and reprehensible conduct lacks good faith and is dismissed with bar to refiling for nine months.); In re Keach, 225 B.R. 264 (Bankr. D.R.I. 1998) (Bad faith when debtor files Chapter 13 while Chapter 7 case is still pending to deal with large fraud judgment that survived discharge, debtor’s circumstances have not changed and debtor made no payments on the nondischargeable claim before filing Chapter 13 case.), rev’d, 243 B.R. 851 (B.A.P. 1st Cir. 2000); In re Craig, 222 B.R. 266 (Bankr. E.D. Va. 1998) (Bad faith in Chapter 20 context where only purpose of Chapter 13 filed one month after discharge in Chapter 7 case is to strip down car lender’s lien that survived Chapter 7 discharge.); In re Mathenia, 220 B.R. 427 (Bankr. W.D. Okla. 1998) (Lack of good faith where debtor’s and debtor’s spouse filed a series of Chapter 7 and Chapter 13 cases that had the effect of discharging $46,000 of nonpriority, unsecured debt while the nonfiling spouse pays for a $19,000 car.); In re Davis, 218 B.R. 177 (Bankr. E.D. Okla. 1998) (Bad faith where Chapter 13 case was filed while Chapter 7 case was still pending, purpose of Chapter 13 was to deal with nondischargeable judgments, Chapter 7 trustee had filed an adversary proceeding to revoke discharge in the Chapter 7 case and plan proposed to transfer unspecified real property in satisfaction of nondischargeable claims.); In re Oliver, 186 B.R. 403 (Bankr. E.D. Va. 1995) (Confirmation was denied on good-faith grounds where case was filed within a year of closing of a prior Chapter 7 case and evidence demonstrated that debtor made no effort to pay creditors with nondischargeable claims between the previous discharge and the filing of the Chapter 13 case.); In re Lindsey, 183 B.R. 624, 628–29 (Bankr. D. Idaho 1995) (Confirmation was denied on good-faith grounds in fourth bankruptcy case (two Chapter 11s and one prior Chapter 13); plan proposed $125 per month for 54 months for a total of less than $7,000 and the liquidation of real property to pay approximately $450,000 to creditors. “The debtor has sought relief under the Code on numerous occasions. . . . [D]espite numerous filings [she has] only obtained a single confirmed plan. She defaulted on the payments due under that confirmed Chapter 11 plan. Nor has she made any real effort to service her unsecured debt. . . . The amended plan proposed by the debtor would entail extraordinary administrative burdens on the trustee as compared to most Chapter 13 plans because the plan requires the trustee to oversee the sale of commercial real property. The debtor’s schedules are obviously inaccurate. . . . [I]ncome is understated or the debtor’s business expenses are overstated or both. . . . [T]he amended plan would allow her to continue to hold her commercial property rent free while interest and property taxes continue to accrue. . . . The numerous delays made by the debtor in filing her amended plan and proceeding with the sale of the property demonstrate the debtor’s lack of sincerity in seeking Chapter 13 relief.”).

 

21  See Society Nat’l Bank v. Barrett (In re Barrett), 964 F.2d 588, 592 (6th Cir. 1992) (“Because the serial filing at issue here does not fall within one of the categories expressly prohibited by statute, the clearly erroneous standard of review remains applicable.”).

 

22  Society Nat’l Bank v. Barrett (In re Barrett), 964 F.2d 588 (6th Cir. 1992).

 

23  In re Smith, 43 B.R. 319 (Bankr. E.D.N.C. 1984). Accord In re Corino, 191 B.R. 283, 290–91 (Bankr. N.D.N.Y. 1995) (Rejects good-faith challenge to fourth Chapter 13 case filed to deal with criminal and civil judgments for embezzlement. Debtor was convicted and sentenced to two years’ imprisonment for embezzling $101,917.33 from a bank in 1985. Debtor filed four Chapter 13 cases between 1987 and 1995. Fourth plan proposed 10% dividend over five years. “[T]he present case concerns a widowed mother who is seeking financial redemption for an acknowledged misdeed committed more than ten years ago. As a consequence of embezzling funds from [the bank], Debtor has already served time in prison, has forfeited a savings account and since 1989 has paid [the bank] approximately $6,500 pursuant to various wage garnishment orders. . . . Debtor offered credible testimony that she has attempted to negotiate a repayment plan with [the bank]. . . . [D]espite Debtor’s egregious pre-filing conduct, . . . Debtor has demonstrated a good faith effort to satisfy her creditors’ claims. Debtor not only appeared repentant, but her efforts in negotiation and her proposal to pledge all of her disposable income to a five year plan demonstrates a willingness to pay her debt to [the bank].”); In re Oglesby, 161 B.R. 917 (Bankr. E.D. Pa. 1993) (On remand, court confirms fourth case by debtor with 11 dependent children and two dependent grandchildren where first case failed because of “inadequate counsel,” and second and third cases failed because the debtor became ill and was disabled to complete payments.).

 

24  See, e.g., Society Nat’l Bank v. Barrett (In re Barrett), 964 F.2d 588 (6th Cir. 1992) (Improvement in employment that will permit debtor to retire objecting mortgage holder’s claim in full is a change of circumstances supporting good faith at confirmation of debtor’s third Chapter 13 case.); Downey Sav. & Loan Ass’n v. Metz (In re Metz), 820 F.2d 1495 (9th Cir. 1987) (Changed circumstances, including an increase in income, support good faith in confirmation of second Chapter 13 plan filed after dismissal of first Chapter 13 case that was filed the day after discharge in a prior Chapter 7 case.); Mason v. Young (In re Young), 237 B.R. 791, 799 (B.A.P. 10th Cir. 1999) (Conversion of Chapter 13 case to Chapter 7 case while § 523(a)(6) adversary proceeding was pending by creditor with $300,000 judgment for punitive damages for violation of civil rights was not conclusive of bad faith because “the bankruptcy court found that [the debtor] originally filed for Chapter 7 because he did not have employment with sufficient compensation to allow him to fund a feasible Chapter 13 plan. Once [the debtor] acquired a higher paying job, he converted to Chapter 13.”); In re Waters, 227 B.R. 784, 787–88 (Bankr. W.D. Va. 1998) (“The debtor’s initial Chapter 7 petition resulted from her recent unemployment and the breakdown of her marriage. After later finding employment, the debtor developed a need for transportation; however, she also gained a means to fund a Chapter 13 plan and consequently a means to pay for that transportation. Accordingly, the filing of the debtor’s subsequent Chapter 13 petition can be explained by a reasonable change in circumstances occurring after her original petition.”).

 

25  See, e.g., In re Shula, 280 B.R. 903, 906 (Bankr. S.D. Ala. 2001) (That the cost of the debtor’s medicines substantially increased during prior Chapter 13 case was a changed circumstance that justified dismissal and refiling to take advantage of the depreciated values of collateral between the filing of the first case and confirmation of a plan in the subsequent case.); In re Watson, No. 93-50486, 1994 WL 1886769 (Bankr. S.D. Ga. Mar. 21, 1994) (unpublished) (When medical bills prevented debtor from completing the first case, it was not bad faith to dismiss and refile notwithstanding that refiling resulted in lower values for depreciated collateral.). But see In re Cushman, 217 B.R. 470, 478 (Bankr. E.D. Va. 1998) (Debtor’s evidence that she would “face in the near future . . .  significant dental and medical treatment, which, although largely covered by her health insurance, may cause her to miss a substantial period of work without pay” was insufficient to overcome evidence of bad faith when debtor filed Chapter 13 two and one-half months after discharge in Chapter 7 case and the debtor’s post–Chapter 7 discharge income was sufficient to maintain regular payments on surviving car loan that debtor proposed to strip down in the Chapter 13 case.).

 

26  See Smyrnos v. Padilla (In re Padilla), 213 B.R. 349, 354 (B.A.P. 9th Cir. 1997) (Bankruptcy court was not clearly erroneous in rejecting good-faith objection to 4% plan filed three months after judgment under § 523(a)(6) in prior Chapter 7 case. Debts incurred after Chapter 7 discharge were “for the most part incurred involuntarily,” and the debtor’s circumstances “did change between the two filing dates.”).

 

27  Keach v. Boyajian (In re Keach), 243 B.R. 851, 870 (B.A.P. 1st Cir. 2000) (“The Debtor here did have a change in circumstances, although the bankruptcy court thought otherwise. . . . [A creditor] was about to have the sheriff sell the Debtor’s home. And the [creditor’s] debt had been declared nondischargeable under section 523(a)(2)(A). There is therefore no lack of good faith because of this second filing even under an expansive view of good faith.”).

 

28  In re Manthey, 262 B.R. 89, 91 (Bankr. N.D. Cal. 2001) (“[T]his is not a case where a debtor has abused the bankruptcy system by repeated filings. Two problems arose in the prior case which made its continuance pointless. Those problems are not an impediment to this case. The court finds no bad faith in what appears to be nothing more than a common-sense use of the Bankruptcy Code as intended by Congress.”).

 

29  See In re Shula, 280 B.R. 903, 906 (Bankr. S.D. Ala. 2001) (Not bad faith that debtor dismissed prior Chapter 13 case and immediately refiled to take advantage of the depreciated value of a car. In first case, Ford Motor Credit Company’s collateral was valued at $13,000. About a year after confirmation, the debtor voluntarily dismissed and a month later refiled, valuing the car at $8,600. “If there was no change in the debtor’s financial condition, a second Chapter 13 case filed closely after the dismissal of the first case would be indicative of bad faith. However, there has been a change in Ms. Shula’s circumstances. . . . Ms. Shula’s second filing took advantage of the fact that the value of her vehicle has decreased considerably. . . . [T]he lower value of the car in 2001 was one of the reasons (if not the principal one) Ms. Shula dismissed her first case and believed she could propose a feasible second case. . . . [T]he fact that the debtor is taking advantage of her legal rights is not, by itself, sufficient to support a finding of bad faith.”); In re Watson, No. 93-50486, 1994 WL 1886769 (Bankr. S.D. Ga. Mar. 21, 1994) (unpublished) (Not bad faith to dismiss a Chapter 13 case and then refile when medical bills and a lost job prevented debtor from completing the first case, notwithstanding that refiling results in a lower allowed value for a car lender’s collateral.).

 

30  See, e.g., In re Taylor, 261 B.R. 877, 885 (Bankr. E.D. Va. 2001) (That “[t]here was no change in the circumstances of either Mrs. Taylor or Mr. Taylor between the date of her two filings” is one reason why it was bad faith for Mrs. Taylor to file a Chapter 13 petition seven days after discharge in Chapter 7 case and on the same day that Mr. Taylor filed a separate Chapter 7 case.); In re Keach, 225 B.R. 264 (Bankr. D.R.I. 1998) (Bad faith where debtor files Chapter 13 while Chapter 7 case is still pending to deal with $180,000 fraud debt that survived discharge. Plan proposes less than 2% dividend to unsecured claim holders. Debtor has not shown any change in circumstances. Debtor made no payments on the nondischargeable claim before filing the Chapter 13 case and seeks to accomplish a result that would not be possible under either the Chapter 7 or the Chapter 13 case standing alone.), rev’d, 243 B.R. 851 (B.A.P. 1st Cir. 2000); In re Craig, 222 B.R. 266 (Bankr. E.D. Va. 1998) (Applying strict scrutiny appropriate in Chapter 20 situation, bad faith when there was no adverse change in circumstances and purpose of Chapter 13 seems to be strip down of car lender’s lien that survived discharge. The only changes in circumstance between Chapter 7 discharge and Chapter 13 filing were favorable to the debtor.); In re Cushman, 217 B.R. 470, 477–79 (Bankr. E.D. Va. 1998) (Debtor with post–Chapter 7 discharge income sufficient to maintain regular payments on surviving car loan failed to show good faith in Chapter 13 filing two and one-half months after discharge in Chapter 7 case. “[H]er schedules of income and expenses show a significant disposable income and this court is simply perplexed why the debtor was continuing to suffer financial hardship when she was relieved of the burden of most of her debts as a result of her chapter 7 discharge. . . . [T]here is no indication that her future employment would be anything but stable. . . . [T]he debtor has not shown any significant change in circumstances.”); In re Aguirre, 174 B.R. 233, 235–36 (Bankr. E.D. Mich. 1994) (Chapter 13 filed one day after discharge in a Chapter 7 case is not filed in good faith where there are no changed circumstances, the plan only deals with one secured claim holder that refused reaffirmation, and the debtor had the ability to pay 71% of the general creditors in the prior Chapter 7 case. “Although so-called chapter 20’s are not per se forbidden . . . when the debtors have the ability in their first case to make a meaningful repayment to their unsecured creditors, and choose not to, they ought to be precluded, absent special or changed circumstances, from ‘gaming’ the system by turning the ‘7’ into a ‘20.’ . . . There being no special or changed circumstances to explain the chapter 13 on the heels of a chapter 7 discharge, the Court finds that the Debtors intended to avoid the obligation of paying unsecured creditors while obtaining the benefits of chapter 13 nonetheless and therefore that the plan was not filed in good faith.”).

 

31  See above in this section.

 

32  11 U.S.C. § 524(c)(3)(B).

 

33  11 U.S.C. § 524(c)(6)(A)(i).

 

34  In re Hotujac, 102 B.R. 733 (Bankr. W.D. Mo. 1989).

 

35  In re Weber, 114 B.R. 194 (Bankr. D. Neb. 1988).

 

36  See § 248.1 [ Order to Debtor’s Employer ] § 125.1  Order to Debtor’s Employer.

 

37  See, e.g, In re Manthey, 262 B.R. 89, 91 (Bankr. N.D. Cal. 2001) (Not bad faith that debtor filed a second Chapter 13 petition when prior case was dismissed because a larger than expected priority claim and an unscheduled creditor extended the prior plan beyond 60 months. “Two problems arose in the prior case which made its continuance pointless. Those problems are not an impediment to this case.”); In re Hughes, 98 B.R. 784, 791 (Bankr. S.D. Ohio 1989) ($100 per month for three years toward judgment in excess of $100,000 is not bad faith when “the debtor, through no active fault of her own, finds herself faced with enormous debts because of the reprehensible conduct of her husband.”).

 

38  See § 179.2 [ Accuracy of Petition, Schedules, Statement and Testimony ] § 104.3  Accuracy of Petition, Schedules, Statement and Testimony for discussion of inaccuracies in the petition, statement and schedules as evidence of lack of good faith.

 

39  157 B.R. 5 (Bankr. E.D. Va. 1993).

 

40  157 B.R. at 10.

 

41  See § 334.1 [ Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings ] § 152.4  Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings.

 

42  See, e.g., In re Mathenia, 220 B.R. 427, 433 (Bankr. W.D. Okla. 1998) (Lack of good faith when debtor’s 7%, 36-month plan in combination with debtor’s prior Chapter 7 case, and nonfiling spouse’s separate Chapter 7 case will discharge $46,000 of nonpriority, unsecured debt while the nonfiling spouse pays for a $19,000 car. Debtor and nonfiling spouse jointly bought $19,000 Isuzu Rodeo 11 days before nonfiling spouse filed Chapter 7 petition. Nonfiling spouse reaffirmed the Isuzu, agreeing to pay $439.12 for 72 months. Debtor filed separate Chapter 13 case four months later. Counting prior Chapter 7 case by debtor, “[a]s a result of this series of events, which appear to have been carefully orchestrated, debtor and his spouse have discharged over $46,000 in nonpriority unsecured obligations in their two Chapter 7 bankruptcy cases filed in 1993 and 1997. . . . At the same time, debtor and his spouse will have . . . a replacement vehicle valued at more than $19,000, which they clearly could not afford. . . . . [T]hey will have paid less than $700 to their unsecured creditors. These are not the honest but unfortunate debtors which the Bankruptcy Code was designed to protect and to provide with a ‘fresh start.’ These debtors could be the poster children for the standard creditors’ argument, to which this court does not subscribe, that bankruptcy is too easy, is constantly taken advantage of by unscrupulous debtors, and operates against the interest of society in general, not to mention creditors in particular. . . . It is simply not right for debtors to voluntarily obligate themselves for the purchase of property which they clearly can not afford . . . and then expect to retain the property and force their unsecured creditors to pay for their folly.”).

 

43  200 B.R. 213 (Bankr. E.D. Mo. 1996).

 

44  200 B.R. at 218.

 

45  261 B.R. 877 (Bankr. E.D. Va. 2001).

 

46  261 B.R. at 887.

 

47  261 B.R. at 887.

 

48  261 B.R. at 888.

 

49  See also §§ 314.1 [ On Postpetition Claims ] § 142.5  On Postpetition Claims and 326.1 [ Effects of Conversion from Chapter 7 to Chapter 13 ] § 148.3  Effects of Conversion from Chapter 7 to Chapter 13.