In re Montes, 526 B.R. 397

Debtors filed a Chapter 7 case (filed Jan. 17, 2013) that included two real properties: a residence and a commercial property; a Chapter 7 discharge was entered May 6, 2013.
Chapter 7 trustee retained the commercial property as the only remaining asset to liquidate; trustee estimated net realization roughly covering tax liens and other claims.
After a later junior-lien foreclosure action against the residence, debtors filed a Chapter 13 case (Oct. 13, 2014) while the Chapter 7 case remained open but after the Chapter 7 discharge.
Chapter 13 trustee moved to dismiss the Chapter 13 case arguing simultaneous bankruptcies are prohibited or, alternatively, that the filing was in bad faith. Debtors argued simultaneous cases are not per se barred and this filing was to save the residence.
The Chapter 13 would address the mortgages and tax lien on the residence; the Chapter 7 would address general unsecured claims, IRS/TRD tax liens, and the commercial property—no apparent overlap in debts or claim treatment.

Issue	Trustee's Argument	Debtors' Argument	Held
Whether filing a Chapter 13 while a prior Chapter 7 remains open is per se prohibited	Simultaneous cases are prohibited; Chapter 13 should be dismissed	No per se bar; Johnson permits serial filings and simultaneous cases may be allowed	Not per se prohibited where first-case discharge entered and debts do not overlap; dismissal not automatic
Whether a second petition filed before discharge in the first case is valid	Second case filed before discharge is null and must be dismissed	Debtors contend timing here is after discharge	Courts universally: second petition before discharge is impermissible; here discharge preceded Chapter 13, so permissible
Whether same debts can be treated in two pending cases	Debtors cannot treat same debt in two cases; such overlap requires dismissal	Debtors assert no overlapping debts or claim treatment between cases	Treating the same debt in two cases is prohibited (Atkins); here court found no overlap, so allowed
Whether the Chapter 13 should be dismissed for bad faith/abuse	Motion to dismiss alternatively argued bad faith filing to delay creditors	Debtors say filing was a good-faith attempt to save the house; new counsel would have filed Chapter 11/13 originally	No bad faith finding on the record; court will scrutinize plan confirmation and stay motions; denial conditioned on filing amended plan or motion to convert within 10 days

Johnson v. Home State Bank, 501 U.S. 78 (1991) (Code does not categorically prohibit serial Chapter 7→13 filings)
Freshman v. Atkins, 269 U.S. 121 (1925) (a debtor may not maintain concurrent proceedings for the same debts)
Law v. Siegel, 134 S. Ct. 1188 (2014) (courts should adhere to Code text and limits on equitable doctrines)
In re Young, 237 F.3d 1168 (10th Cir. 2001) (discussion of Chapter 20/serial filings)
In re Sidebottom, 430 F.3d 893 (7th Cir. 2005) (general agreement that concurrent actions regarding the same debts are impermissible)