In re Lopez Llanos, 578 B.R. 700

Debtor previously filed and had two Chapter 13 petitions dismissed (2008, 2009). He received confidential settlement proceeds from Toyota in September 2016 and agreed to deliver title to a Toyota vehicle as part of the settlement but did not timely do so.
Debtor filed the instant Chapter 13 petition on October 4, 2016, 27 days after receiving the settlement payment and without disclosing the Civil Case, the Settlement Agreement, the Settlement Proceeds, or the Toyota vehicle in his initial schedules and Statement of Financial Affairs.
The Central District of California had ordered the Debtor to deliver the vehicle and clear title and found the Debtor responsible for its preservation and storage costs; the Debtor failed to inform that court of the bankruptcy filing.
The Chapter 13 Trustee repeatedly flagged nondisclosure, missing documents (tax returns, income evidence), and a non-confirmable plan; the Trustee recommended against confirmation.
Toyota and Puerto Rico Housing moved to dismiss under 11 U.S.C. § 1307(c) (bad faith, concealment, and unreasonable delay prejudicial to creditors). The bankruptcy court held a hearing and granted dismissal with a two-year bar to refile.

Issue	Plaintiff's Argument (Toyota/PR Housing)	Defendant's Argument (Debtor)	Held
Whether petition filed in bad faith / concealment of assets	Debtor concealed Civil Case, settlement proceeds, and vehicle; nondisclosure shows bad faith	Debtor argued confidentiality of settlement and that title was held by a bank; denied bad-faith serial filing label	Court found material concealment and late amendment only after exposure; petition was filed in bad faith and dismissal warranted
Whether Debtor breached ongoing duty to disclose prepetition assets and claims	Duty to report all assets/causes of action; omission was material and ongoing duty violated	Debtor relied on confidentiality and asserted lack of ownership/title clarity	Court held disclosure duty absolute and Debtor failed to comply; concealment not cured by late amendment
Whether debtor’s delay/preparation caused unreasonable delay prejudicial to creditors under §1307(c)(1)	Debtor failed to produce required records, amend schedules timely, or propose a confirmable plan for over a year	Debtor argued compliance improvements and confidentiality concerns	Court found unreasonable delay prejudicial to creditors and cause for dismissal
Whether dismissal should include a bar to refile and the appropriate length	Requested two-year bar given serial filings, concealment, and prejudice	Debtor offered explanations and requested no bar	Court exercised equitable authority and dismissed with a two-year bar to refile

Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365 (2007) (bad-faith filings may render a debtor ineligible for Chapter 13 protection)
Law v. Siegel, 134 S. Ct. 1188 (2014) (§105 equitable powers limited to those consistent with the Bankruptcy Code)
In re Oak Knoll Associates, L.P., 835 F.3d 24 (1st Cir. 2016) (§105 relief must preserve rights provided elsewhere in the Code)
In re Zizza, 875 F.3d 728 (1st Cir. 2017) (emphasizing clarity of SOFA questions about prior suits)
In re Crawford, 841 F.3d 1 (1st Cir. 2016) (debtor’s schedules and SOFA are submitted under oath; strict disclosure duty)
Howard v. Lexington Invs., 284 F.3d 320 (1st Cir. 2002) (equitable dismissal/conversion appropriate when continued delay prejudices creditors)
In re Bouchard, 560 B.R. 385 (Bankr. D.R.I. 2016) (material omissions in schedules/SOFA and late amendments do not cure prior concealment)