The Debtor proposed a Chapter 13 plan in which she sought to pay for a car that was purchased within 910 days of filing her petition (910-vehicle claim) by bifurcating the secured claim under 11 U.S.C. § 506(a)(1), paying the secured value of the car in full, and paying only a small percentage of the unsecured balance. Although the hanging paragraph found after § 1325(a)(9) now prohibits bifurcation under § 506(a)(1) in certain instances, the Debtor and the Chapter 13 Trustee argued that bifurcation is still allowed because the creditor secured by the car failed to file an objection to the Debtor's Chapter 13 plan and, therefore, should be deemed to accept the plan under § 1325(a)(5)(A). The Court found (1) that under the BAPCPA, § 1325(a)(5) can no longer be used to cram down a 910-day vehicle claim; (2) that a creditor's failure to object to a plan is not deemed implied acceptance of that plan when the plan proposes treatment that is contrary to the statute; and (3) a plan that incorrect bifurcates a 910-day vehicle claim does not comply with the provisions of Chapter 13 and, therefore, cannot be confirmed under § 1325(a)(1).
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Title: In re Montoya, 2006 WL 931562 (Bankr.D. Utah) | Date: Apr-10-2006 | Status: PUBLISHED (Judge Boulden) | Case(s): 05-80022
Title: In re Easthope, 2006 WL 851829 (Bankr. D. Utah) | Date: Mar-29-2006 | Status: PUBLISHED (Judge Boulden) | Case(s): 06-20366
A secured creditor moved for an order under § 362(c)(4)(A)(ii) confirming that no stay was in effect arguing that the individual debtor had two cases pending within the previous year. The debtor had one prior Chapter 13 case that was dismissed within the previous year and another prior Chapter 13 case that was closed within the previous year. This earlier Chapter 13 case had been dismissed more than a year prior to the filing of the current case. The secured creditor argued that a case is still “pending” for § 362(c) purposes until it is closed and, therefore, the debtor had two cases pending in the previous year. The Court determined that both the plain meaning of the word “pending” and policy considerations demonstrate that a case is no longer pending once it has been dismissed. Given this definition, the debtor only had one case pending withing the previous year and the 30-day automatic stay did go into effect under § 362(c)(3). The secured creditor's order seeking confirmation that no stay was in effect was, therefore, denied.
Title: In re Jass | Date: Mar-22-2006 | Status: PUBLISHED (Judge Thurman) | Case(s): 05-80088
Section 1325(b)(1)(B) provides that where a creditor or a chapter 13 trustee objects to a proposed plan, the debtor must provide all of his or her "projected disposable income" to unsecured creditors. Section 1325(b)(2) provides a detailed definition for "disposable income." The BAPCPA did not alter the term "projected disposable income," nor did it alter the defined term, "disposable income." The changes did change the definition of "disposable income" to refer to the number resulting from a debtor's Current Monthly Income Form (Form B22C).The debtor proposed a plan which provides to unsecured creditors less than the amount resulting from Form B22C. The chapter 13 trustee objected, arguing that the debtors were bound by their Form B22C. The Court held that the word "projected" modifies the defined term, "disposable income." The Court held that Form B22C will always be the starting point for the Court's inquiry under section 1325(b), and the Court will presume that the number resulting from Form B22C is a debtor's "projected disposable income." Nevertheless, if a debtor can show a substantial change in circumstances such that the numbers reflected on Form B22C are not representative of the debtor's projected finances, the Court held that a debtor may propose a plan commensurate with his or her Schedules I and J. Nevertheless, if a debtor can show a substantial change in circumstances such that the calculation reflected on Form B22C is not representative of the debtor's reasonable foreseeable income and expenses, the Court will consider confirming a plan that proposes payment to unsecured creditors commensurate with proper calculations on Schedules I and J. This ruling should not be considered carte blanch authority for approving any changes, but only in rare situations.
Title: In re Clay | Date: Mar-16-2006 | Status: PUBLISHED (Judge Thurman) | Case(s): 05-80043
The Chapter 13 Trustee objected to the Debtor's proposed chapter 13 plan because it proposed to pay the Debtor's secured creditors directly. The Trustee argued that the Bankruptcy Code does not generally allow a Debtor to make payments directly to a secured creditor. The Trustee also argued that changes to the Bankruptcy Code under the BAPCPA overruled any caselaw which might have allowed for direct payments.Citing to In re Case, 11 B.R. 843 (Bankr. D. Utah 1981), the Court held that before the BAPCPA a debtor could choose to pay a secured creditor directly so long as the creditor is paid pursuant to the terms of the underlying contract. The Court analyzed changes to the Bankruptcy Code under the BAPCPA, and concluded that In re Case was not overruled by the BAPCPA. A debtor may propose a chapter 13 plan to pay secured creditors directly so long as the creditor is paid pursuant to the underlying contract.
Title: In re Tomasini | Date: Mar-8-2006 | Status: PUBLISHED (Judge Thurman) | Case(s): 05-80115
The Court was presented with the issue of whether a Debtor who failed to show that his case was filed in good faith at a hearing on a motion to extend the stay under section 362(c)(3)(B) could obtain confirmation of a chapter 13 plan under 1325(a)(7) by showing good faith for confirmation purposes. The Debtor had a bankruptcy case pending and dismissed within one year of filing the present case. The Debtor moved to extend the automatic stay in this case under section 362(c)(3)(B), arguing that he filed the present case in good faith as to all creditors. The Court denied that motion, finding that the Debtor failed to carry his burden under section 363(c)(3)(B) to show that he filed the present case in good faith as to all creditors by clear and convincing evidence.At the hearing on confirmation of the debtor's chapter 13 plan, the Chapter 13 Trustee argued that the case could not be confirmed because the Court had already found the case was not filed in good faith. The Court determined that the good faith determinations under sections 362(c)(3)(B) and 1325(a)(7) are both governed by a totality of the circumstances analysis, as discussed by the Court's ruling in In re Galanis, 334 B.R. 658 (Bankr. D. Utah 2005) and that a lack of finding of good faith at a motion to extend does not bar the Court's good faith determination at confirmation. The application and focus of the Galanis factors is different when determining good faith at confirmation. The focus of motion to extend must be on creditors, whereas the focus of the Court's good faith determination for purposes of confirmation must be on the debtor.In considering good faith under section 1325(a)(7), the Court determined that it will look first to the debtor's stated motivation in filing from the debtor's perspective. If the debtor's motivation is considered a good faith motivation, the Court will then consider the remaining Galanis factors.
Title: In re Fawson, In re Webster, 338 B.R. 505 (Bankr. D. Utah) | Date: Feb-21-2006 | Status: PUBLISHED (Judge Boulden) | Case(s): 05-80224, 05-80217
Chapter 7 debtors failed to file their payment advices within 45 days of filing their petitions. The debtors filed motions or requests to enlarge the time to file their payments advices (which are required to be filed within 15 days of filing the petition) but these requests were not made until the 45-day time limit articulated in 11 U.S.C. § 521(i)(1) had expired. The Court found that the belated requests for enlargement of time due to excusable neglect were time barred, and that § 521(i)(1) mandates the dismissal of cases when debtors fail to timely comply with the requirements of § 521(a)(1). In the absence of a § 521(i)(3) or (4) motion, and at the expiration of the 45-day time period, the cases were dismissed by operation of the statute effective the 46th day after filing.
Title: In re Galanis, In re Vehikite, 2005 WL 3454411 (Bankr. D. Utah) | Date: Dec-7-2005 | Status: PUBLISHED (Judge Thurman) | Case(s): 05-80037
Under § 362(c)(3) of the BAPCPA, a debtor who had a prior case pending within one year of filing the present case receives an automatic stay lasting for thirty days only, unless the debtor shows that he or she filed the present case in good faith. Each debtor in these cases had a prior case pending within one year of filing their present cases. They each argued that the Court should extend the stay because they filed in good faith. The Court determined that a debtor's good faith under § 362(c)(3) should be governed by a totality of the circumstances test, and looked to some of the factors historically used to determine a debtor's good faith under § 1307(c), as applied in In re Geir , 986 F.2d 1326 (10th Cir. 1993). The Court also considered three additional factors, not traditionally part of the Gier factors: 1) why the debtor's prior case was dismissed; 2) the likelihood that the debtor will be able to fund a chapter 13 plan; and 3) whether the Trustee or any creditors objected to the motion. Under this analysis, the Court determined that each debtor met their burden under § 362(c)(3) to show they filed in good faith, and accordingly, the Court granted the motions in this case.
Title: In re Montoya, 333 B.R. 449 (Bankr. D. Utah) | Date: Nov-23-2005 | Status: PUBLISHED (Judge Boulden) | Case(s): 05-80022
Individual debtor asked the Court to extend the automatic stay beyond the 30-day period provided for in § 362(c)(3)(A). The debtor had a Chapter 13 pending within the preceding one year period and that case was dismissed because the debtor failed to make her ongoing plan payments. Because the debtor's prior case had been dismissed for failing to perform the terms of a plan confirmed by this Court, a presumption arose under § 362(c)(3)(C) that the debtor had "filed not in good faith." After finding that § 362(c)(3)(B) notice was proper, the Court found that the debtor had not met her burden of proving by clear and convincing evidence that the case had been filed in good faith as to the creditors to be stayed, and the Court denied the debtor's motion. In so doing, the Court examined whether the debtor had filed in good faith as to the creditors to be stayed by employing the good faith filing factors articulated in Gier . The Court found that even though some of the Gier factors were less applicable in this context, they still gave the Court guidance in examining whether the present case was filed in good faith as to the creditors to be stayed.
Title: In re Sukmungsa, 2005 WL 3160607 | Date: Nov-23-2005 | Status: PUBLISHED (Judge Boulden) | Case(s): 05-80029
Section 109(h) of the Bankruptcy Code, as enacted by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, provides that individual debtors must either complete a briefing from an approved nonprofit budget and credit counseling agency within 180 days prepetition or request a waiver. In accordance with this statutory bar to bankruptcy relief, Local Rule 1007-2(d)(1) requires the Clerk of Court to dismiss a case if a debtor fails to certify compliance with § 109(h) on the petition. The debtors in this case failed to check either box on the petition certifying such compliance, and an Order of Dismissal was entered. The debtors moved to vacate the Order of Dismissal on grounds of excusable neglect under Fed. R. Civ. P. 60(b) and Fed. R. Bankr. P. 9024. The Court conducted an excusable neglect analysis in accordance with the Supreme Court's decision in Pioneer Investment Services Company v. Brunswick Associates Limited Partnership et al. , 507 U.S. 380 (1993), and found that excusable neglect in failing to certify § 109(h) compliance on the petition had not been shown by either the debtors or debtors' counsel. Most importantly, the Court found that the reason for the omission and the concomitant delay were within the reasonable control of the debtors and their counsel. The inconsistent testimony and documentary evidence demonstrated counsel's failure to make reasonable inquiries under Fed. R. Bankr. P. 9011 and established uncertainty as to whether the debtors had even received the prepetition briefing. Although Rule 9011 sanctions were not imposed, the Court did note counsel's obligations under the Rule to make reasonable inquiries into the underlying factual assertions of filed documents.
Title: In re Green | Date: Nov-15-2005 | Status: PUBLISHED (Judge Thurman) | Case(s): 04-2889
The Chapter 7 Trustee sought to revoke the debtor's discharge because she failed to obey a lawful order of the Court to turn over tax refunds. The Court determined that 11 U.S.C. 727(a)(6) required the Trustee to show more than a failure to comply with an order. Under section 727(a)(6), the Trustee must show that the debtor willfully disobeyed the Court's order. Because the Trustee did not initially direct the debtor to turn over her tax return, the debtor spent the money believing she had no obligation to turn it over. The Court ordered the debtor to turn over the money only after the debtor had spent it. Because the debtor did not have notice of her obligation to turn over the money before she spent it, the Court found that the debtor's failure to comply with its order was not willful, and entered judgment for the debtor.