Cite as: Keith M. Lundin, Lundin On Chapter 13, § 110.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
BAPCPA added a new requirement for confirmation in § 1325(a)(7) that “the action of the debtor in filing the petition was in good faith.”1 This new confirmation requirement supplements the old good-faith test in § 1325(a)(3) that “the plan has been proposed in good faith and not by any means forbidden by law.”2
Good faith is not defined in either old § 1325(a)(3) or new § 1325(a)(7). The focus of the good-faith requirement in § 1325(a)(3) has always been that “the plan” has been proposed in good faith. This did not stop pre-BAPCPA cases from more broadly interpreting § 1325(a)(3) to examine the debtor’s conduct at all stages of the Chapter 13 case, including the motivation of the debtor in filing the petition in the first instance.3 New § 1325(a)(7) is differently focused on the action of the debtor “in filing the petition.” If history is a guide, the new section will not change the expansive interpretation of good faith in the pre-BAPCPA case law.
BAPCPA uses the concept of good faith somewhat indiscriminately in other new sections of the Bankruptcy Code. For example, under new § 362(c)(3)(C), there is a presumption that a bankruptcy case is not filed in good faith for purposes of terminating the automatic stay if a prior case for an individual debtor was dismissed within a year based on the debtor’s failure to file required documents, failure to pay adequate protection or failure to perform a confirmed plan or there has been no substantial change in the financial circumstances of the debtor since the dismissal of the prior case.4 There is a similar presumption that filing is not in good faith when an individual debtor files a third case within a year of two prior filings.5
These new presumptions of a lack of good faith relate to the automatic stay but use the same “good faith” words as new § 1325(a)(7). Are similar concepts intended by Congress? There is no legislative history to provide guidance to the meaning of good faith in new § 1325(a)(7).
There is also a “bad faith” consideration in new § 707(b)(3). To determine whether the filing of a Chapter 7 petition is an abuse under § 707(b), if the presumption in § 707(b)(2)(A)(i) does not arise or is rebutted, the court is instructed to consider “whether the debtor filed the petition in bad faith.”6 Will new § 1325(a)(7) preclude confirmation of a plan when a Chapter 13 case is converted from Chapter 7 to Chapter 13 after a finding of bad faith under § 707(b)(3)(A)?
The problem is that good faith has become a worn-out phrase in Chapter 13 cases, completely overworked by use in too many places in the Code. One of the advertised goals of BAPCPA was to reduce the discretion of bankruptcy judges.7 The addition of a new good-faith filing requirement to the conditions for confirmation in § 1325(a)(7) will not reduce the exercise of discretion by bankruptcy judges. Good faith is an undefined concept that has taken more than 25 years to flesh out as it is used in § 1325(a)(3). Multiplying the uses of this undefined phrase is only going to lead to more confusing case law and more litigation in Chapter 13 cases.
Prior to BAPCPA, the debtor’s good faith or bad faith in filing the Chapter 13 petition was often challenged by motion to dismiss.8 The appellate courts had no trouble finding a “bad faith” ground for dismissal of a Chapter 13 case that measured the motivations of the debtor in filing the petition. It is not obvious that § 1325(a)(7) adds anything new.
1 11 U.S.C. § 1325(a)(7).
2 11 U.S.C. § 1325(a)(3), discussed beginning at § 103.1 In General.
3 See discussion beginning at § 103.1 In General.
4 11 U.S.C. § 362(c)(3)(C), discussed in § 432.1 [ When Does § 362(c)(3) Apply? ] § 60.1 When Does § 362(c)(3) Apply?.
5 See 11 U.S.C. § 362(c)(4)(D), discussed in § 432.1 [ When Does § 362(c)(3) Apply? ] § 60.1 When Does § 362(c)(3) Apply?.
6 11 U.S.C. § 707(b)(3)(A).
7 See § 363.4 [ Three: Don’t Trust Judges ] § 3.4 Three: Don’t Trust Judges.
8 See §§ 65.3 [ Conversion or Dismissal ] § 55.3 Conversion or Dismissal and 334.1 [ Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings ] § 152.4 Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings.
Asset Mgmt. Holdings, LLC v. Hernandez (In re Hernandez), ( ) ()
Asset Mgmt. Holdings, LLC v. Hernandez (In re Hernandez), ( ) ()(Not bad faith per se to file Chapter 13 shortly after discharge in a Chapter 7 case when none of the usual bad-faith factors from HSBC Bank USA v. Blendheim (In re Blendheim), 803 F.3d 477 (9th Cir. Oct. 1, 2015) (Paez, Bybee, Callahan), are present.).
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  for its intended purpose
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.).
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.'").
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.").
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 . . . .").
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.).
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).).
RRR, Inc. v. Toggas, No. 11-1622 (BAH), 2014 WL 12802263, at *3 (D.D.C. Jan. 31, 2014) (Howell) (District court makes finding of fact that Chapter 13 filing one hour before start of bench trial in fraudulent conveyance action is a bad-faith filing; consequences of that finding are left to the bankruptcy court. “Mrs. Toggas and Mr. Toggas filed their bankruptcy petitions in order to bring the bench trial to a halt and to forestall any judgment against them in the instant case. This tactical maneuver was timed for the day that had been set two months earlier for the trial to begin and was fundamentally unfair to the plaintiff, who had diligently prepared for trial. . . . Mr. Toggas’ bankruptcy petition was filed in bad faith and to delay the plaintiff’s pursuit of the relief sought in the instant matter.”).
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.).
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.).
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 Sarfraz, No. 17-12840-KHK, 2019 WL 1111401 (Bankr. E.D. Va. Mar. 8, 2019) (Kindred) (After conversion from Chapter 7 to Chapter 13, bad faith bars confirmation under § 1325(a)(3) and § 1325(a)(7). Factors indicative of bad faith include a large debt declared nondischargeable under § 523(a)(2)(A) during the Chapter 7 case and numerous amendments to schedules that appear manipulative. Decision seems to be driven in large part by perception that conversion was an attempt to “sidestep” the financial consequences of fraudulent behavior that led to the nondischargeable judgment during the Chapter 7 case. It is not obvious that the § 523(a)(2)(A) judgment of nondischargeability in the prior Chapter 7 case would be “sidestepped” by conversion to Chapter 7 given the exception to discharge in § 1328(a).).
In re Curtis, No. GG 18-02814-jtg, 2019 WL 325806, at *4 (Bankr. W.D. Mich. Jan. 23, 2019) (Gregg) (Bankruptcy court dismisses Chapter 13 petition for lack of good faith when purpose of bankruptcy case was to disrupt district court proceeding that would determine whether debtor’s assets were available to victims of former spouse’s sexual misconduct with minors. “The Debtor’s motive is . . . demonstrated by her efforts to frustrate the jurisdiction of the District Court prior to her bankruptcy filing. . . . [T]he timing of the Debtor’s bankruptcy also persuades the court that she lacks the requisite good faith. Although filing for bankruptcy on the eve of, for example, a debtor’s examination is not necessarily indicative of a lack of good faith, it is certainly probative of a lack of good faith. . . . [T]he Debtor has relatively few other creditors, all of whom were apparently being paid by the Debtor in the months leading to her bankruptcy filing. . . . As such, the Debtor’s case is essentially nothing more than a two-party dispute[.]”).
In re Chapman, No. 17-30427 JPS, 2019 WL 262198 (Bankr. M.D. Ga. Jan. 17, 2019) (Smith) (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 totality-of-circumstances analysis, Chapter 13 petition was not filed in bad faith for § 1325(a)(7) purposes. Former spouse has substantial claims but Chapter 13 filing to deal with claims that may or may not be domestic support obligations is not itself bad faith. Debtor’s inability to pay amounts agreed to in separation agreement was caused by inconsistent income and deployments in National Guard, not lack of good faith.).
In re Garzon, No. 18 B 26026, 2018 WL 6287986 (Bankr. N.D. Ill. Dec. 3, 2018) (Goldgar) (Plan and Chapter 13 case are filed in bad faith when debtor is not eligible for discharge because of recent Chapter 7 discharge and current case was filed to stall payment to former spouse and to stop state court contempt. Debtor intends to dismiss and file another Chapter 13 case in which he will be eligible for discharge.).
In re Havens, No. 16-12994-FJB, 2018 WL 4801905, at *5–*6 (Bankr. D. Mass. Oct. 1, 2018) (Bailey) (Understatement of income was deliberate attempt to reduce amount that would be necessary to satisfy projected disposable income test in § 1325(b) and constitutes bad faith for § 1325(a)(3) purposes. However, understating income was not bad faith for § 1325(a)(7) purposes
In re Pfetzer, 586 B.R. 421, 424–29 (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)
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 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 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 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 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 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 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 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 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.").
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 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 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 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 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 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.).
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 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.).
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.).
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 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).).
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 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 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 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 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 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 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.").
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 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.).
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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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(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 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 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 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 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 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.).
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 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 Bland, No. 06-1159, 2008 WL 2002647 (May 6, 2008) (Flatley) (Lack of good faith arises under § 1325(a)(7) when debtor did not disclose that her son had embezzled from debtor's business and debtor would not cooperate to locate son; denial of confirmation is not appropriate remedy when debtor is judgment proof and $50 monthly plan payment will be funded by nonfiling spouse's gift; appropriate remedy is dismissal of Chapter 13 case under §§ 105(a) and 1307(c).).
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.).
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 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).").
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.").
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.).
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.").
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.).