520 B.R. 476
Bankr. E.D. Pa.2014Background
- Debtor Mario L. Blanco filed a chapter 13 case on March 4, 2014; case dismissed by the court on September 2, 2014 following the Trustee’s Motion to Dismiss for cause and insufficient plan funding.
- Deutsche Bank, via Ocwen, held mortgage claims on multiple properties and sought relief from the automatic stay; Bank and others objected to confirmation of the Debtor’s plan.
- The Debtor’s plan funded at about $9,000 over 60 months but secured arrears exceeded $500,000, with several mortgage lenders asserting pre-petition arrears and post-petition installments.
- The Debtor challenged Deutsche Bank’s standing to object to the plan, and later sought to reconsider the dismissal; the court held the plan underfunded and the delay prejudicial to creditors.
- The court concluded dismissal under 11 U.S.C. § 1307(c)(1) was appropriate after six months with no plausible rehabilitative plan, and denied reconsideration for lack of new evidence or legal change.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissal for unreasonable delay was proper | Blanco contends the case should continue to allow reorganization | Trustee argues plan underfunded and infeasible, delaying creditors | Dismissal upheld |
| Whether the plan feasibly funded the arrearages | Plan adequately funded with $9,000 and anticipated post-petition payments | Funds insufficient for $500,000+ arrears and post-petition installments | Plan underfunded; dismissal appropriate |
| Whether reconsideration was properly denied | Reconsideration needed due to notice issues and new arguments | Court reasonably denied reconsideration for lack of new evidence or law | Reconsideration denied |
Key Cases Cited
- In re American Capital Equipment, LLC, 688 F.3d 145 (3d Cir. 2012) (bankruptcy court discretion on dismissal/feasibility reviewed for abuse of discretion)
- In re Dempsey, 247 F. App’x 21 (7th Cir. 2007) (unreasonable delay and feasibility considerations in Chapter 13 cases)
- In re Slaughter, 191 B.R. 135 (Bankr. W.D. Wis. 1995) (trustee’s role in seeking dismissal for cause under §1307(c))
- In re Wile, 310 B.R. 514 (Bankr. E.D. Pa. 2004) (timely plan and creditor rights balancing in Chapter 13)