In re Rodriguez
487 B.R. 275
Bankr. D.N.M.2013Background
- Debtor seeks confirmation of First Amended Chapter 13 plan and motion to continue the automatic stay; Denise Comstock objects to both.
- Hearing held December 20, 2013; issues overlap regarding Debtor’s good faith in filing and in plan.
- Court previously dismissed Debtor’s Chapter 11; prepetition conduct included failure to file monthly operating reports and substantial personal expenditures.
- Debtor's post-Chapter 11 finances show employment as a dentist with $14,664.15 monthly gross and retirement contributions; relief plan contemplates IRS and state tax claims totaling substantial amounts.
- Plan contemplates payment increases and decreases over 56 months; Debtor proposes to fund his own retirement while discharging Comstock’s unsecured claim on plan completion.
- Court finds Debtor filed Chapter 13 in good faith but the plan itself was not proposed in good faith; stay will terminate as to Debtor and Debtor’s property, but not estate property.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the plan proposed in good faith under §1325(a)(3)? | Comstock argues plan lacks good faith due to Debtor’s self-funding retirement and mischaracterization of debts. | Debtor asserts totality of circumstances supports good faith, including reasons for relief and compliance with disposables. | Plan not proposed in good faith; cannot be confirmed. |
| Was the petition filed in good faith under §1325(a)(7)? | Comstock contends prepetition Chapter 11 conduct and lack of substantial change reflect bad faith. | Debtor argues prepetition conduct is not determinative; other factors show good faith. | Debtor filed petition in good faith for purposes of §1325(a)(7). |
| Can the retirement contributions sustain good faith under §1325(a)(3)/(b)(3)? | Comstock contends retirement contributions to Debtor’s own plan undermine good faith and dischargeability. | Debtor’s retirement contributions are legitimate but must be weighed against plan feasibility and fairness to creditors. | Debtor’s proposed retirement contributions fail to satisfy §1325(a)(3) good faith. |
| Whether the automatic stay may be continued under §362(c)(3) given a prior dismissal within a year? | Comstock argues presumptions of bad faith apply; Debtor cannot rebut. | Debtor argues lack of substantial change and potential for a confirmed plan; presumption acknowledged but not overcome. | Presumption of bad faith applicable; stay cannot be continued as to debtor’s property; partial stay termination as to estate considerations. |
Key Cases Cited
- Flygare v. Boulden, 709 F.2d 1344 (10th Cir. 1983) (adopts totality-of-the-circumstances test for good faith in plan)
- Gier v. Farmers State Bank of Lucas, Kansas (In re Gier), 986 F.2d 1326 (10th Cir. 1993) (nonexhaustive factors for good faith/dismissal in 13 cases)
- In re Estus, 695 F.2d 311 (8th Cir. 1982) (totality of circumstances framework; dispositive considerations)
- In re Werts, 410 B.R. 677 (Bankr.D.Kan. 2009) (burden on objector in bad-faith dismissal contexts; standards vary)