In Re Castaneda
MEMORANDUM DECISION
I.
INTRODUCTION
Margarita Castaneda (“Debtor”) has filed this motion to continue the automatic stay as to all creditors beyond the 30th day after the filing of this bankruptcy case pursuant to
II.
FACTUAL BACKGROUND
A. Debtor’s Prior Chapter 13 Bankruptcy Case.
Prior to filing this chapter 13 bankruptcy case, Debtor filed a chapter 13 case on May 22, 2003 (“Prior Case”). 2 Debtor’s Prior Case scheduled secured claims of $12,780 and general unsecured claims of $8,440. In July 2003, Debtor confirmed a plan of reorganization providing for monthly payments of $317 with a 0% dividend to general unsecured creditors. [P.C. Doc. # 2 and 10]
Debtor’s Schedule “I” indicates she was employed as a “Caregiver” with net monthly pay of $1,262.06. Additionally, her Schedule “I” lists $700 monthly in “Room and Board” received from her adult daughter, and an average annual tax refund of $812 ($67.66 monthly), for total combined net monthly income of $2,029. Debtor’s Schedule “J” lists monthly expenses of $1,712, leaving her $317 in disposable income for her monthly plаn payments. 3 [P.C. Doc. # 1]
Debtor made the plan payments until October 2005. Debtor indicates she defaulted because her daughter had stopped working due to pregnancy, and then moved out of debtor’s house. [P.C. Doc. # 22; Motion at ¶ 3] Debtor was not able to make up for the lost income. Accordingly, by order entered January 13, 2006, her case was dismissed. [P.C. Doc. # 24]
On February 24, 2006, Debtor filed this chapter 13 case. Debtor’s plan of reorganization proposes monthly payments of $247 with a 0% dividend to general unsecured creditors. [Doc. # 2] Debtor’s petition scheduled secured claims of $5,964. and general unsecured claims of $11,372. Accordingly, Debtor’s general unsecured debts have increased by $2,932 since she filed hеr Prior Case. Debtor believes the additional debt is due to late charges, penalties and interest on her existing debts, and possible duplicates from the assignment of her credit accounts to collection agencies. [Debtor’s Supplemental Declaration filed April 10, 2006 at ¶ 3] 4
Debtor’s schedule “I” indicates she remains employed as а “Caregiver” for the same company. Her Schedule “I” lists net monthly income of $1,717, plus $500 monthly “Rent from adult son” and an average annual tax refund of $858 ($72 monthly), for total combined monthly net income of $2,289. Debtor’s Schedule “J” lists monthly expenses of $2,042, leaving $247 monthly to make her plan payments. Therefore, Debtor’s income has increased but so have her еxpenses, leaving her less disposable income than she had in her Prior Case.
In accordance with
III.
LEGAL ANALYSIS
Under BAPCPA, the automatic stay no longer applies uniformly to all debtors. New
(3) if a single or joint case is filed by or against debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707(b)—
(A) the stay under subsection (a) with respect to any action taken with respect to a debt or propеrty securing such debt or with respect to any lease shall terminate with respect to the debtor on the 30th day after the filing of the later case
Nonetheless,
The movant bears the burden of proof of establishing these minimum requirements.
Charles I,
Although the statute contains four minimum requirements, the bulk of the legal analysis is on the fourth requirement (proving that the filing of the new case was in good faith).
Collins,
(i) as to all creditors, if—
(I) more than 1 previous case under any of chapters 7, 11, and 13 in which the individual was a debtor was pending within the preceding 1-year period;
(II) a previous case under any of chapters 7, 11, and 13 in which the individual was a debtor was dismissed within such 1-year period, after the debtor failed to—
(aa) file or amend the petition or other documents as required by this title or the court without substantial excuse (but mere inadvertence or negligence shall not be a substantial excuse unless the dismissal was caused by the negligence of the debtor’s attorney);
(bb) provide adequate protection as ordered by the court; or (cc) perform the terms of a plan confirmed by the court; or
(III)there has not been a substantial change in the financial or personal affairs of the debtor since the dismissal of the next most previous case under chapter 7, 11, or 13 or any other reason to conclude that the later case will be concluded — 5
(aa) if a case under chapter 7, with a discharge; or
(bb) if a case under chapter 11 or 13, with a confirmed plan that will be fully performed; and
(ii) as to any creditor that commenced an action under subsection (d) in a previous case in which the individual was a debtor if, as of the date of dismissal of such case, that action was still pending or had been resolved by terminating, conditioning, or limiting the stay as to actions of such creditor; and.... 6
[Emphasis added.] The presence of any of the аbove-listed events gives rise to a re-buttable presumption of bad faith. If the presumption of bad faith arises, the mov-ant must rebut the presumption by “clear and convincing evidence to the contrary.”
The burden of establishing the presence of presumptive bad faith rests upon the opponent to the motion.
Collins
at 650-51;
Charles II
at 216. Notwithstanding, the lack of opposition does not require the Court to continue the stay.
In the present case, the presumption of bad faith arises pursuant to
In this case, Debtor’s financial and personal affairs remаin the same as in her Prior Case. Debtor remains employed as a Caretaker with the same company, and she still does not earn enough income from her employment to pay her monthly bills. Although Debtor’s salary has increased since her Prior Case, so have her living expenses. She remains unable to make her plan payments without financial assistance. Arguably, the lack of change gives rise to a presumption of bad faith.
However, such a presumption would be a misapplication of
Further, the Court is unaware of any other specific reasons to conclude Debtor will not complete this case with a fully performed plan.
Because the presumрtion arises, Debtor must rebut the presumption by clear and convincing evidence. This evidence standard is stricter than the preponderance of the evidence standard. It is defined as that degree or measure of proof which will produce in the mind of the trier of fact, a firm belief or conviction that the allegations sought to be еstablished are true; it is “evidence so clear, direct and weighty and convincing as to enable the fact finder to come to a clear conviction, without hesitancy, of the truth of the precise facts of the case.”
Charles I,
Moreover, mere statements by the movant in the motion do not carry any evidentiary weight.
Wilson,
In the present case, Debtor’s Motion did not provide the type of detailed, competent evidence needed to grant the Motion. Although normally the Court would not afford a debtor the opportunity to augment the record, given the recency of this legislation and its heightened requirеment of evidentiary proof, the Court allowed Debt- or to submit supplemental evidence. Debtor’s supplemental evidence will suffice to grant the Motion since it is unopposed.
Specifically, the Court finds Debtor has met the first three requirements of
In this circuit, the “totality of circumstances” test for determining whether a debtor filed a chapter 13 case in good faith includes: 1) whether debtor misrepresented facts in the petition or the plan, unfairly manipulated the Code or otherwise filed the current chapter 13 plan or petition in an inequitable manner; 2) debtor’s history of filings and dismissals; 3) whether debt- or only intended to defeat state court litigation; and 4) whether egregious behavior is present. In
In re Leavitt,
Further, the evidence shows Debtor is the victim of circumstances beyond her control. Debtor is hard working but she simply does not earn enough income as a caretaker to pay her monthly bills. Debt- or tried to improve her financial situation through her Prior case. She should not be penalized for her daughter’s life changes. Moreover, Debtor’s desire to start her plan over after making over two years of payments in her Prior Case is admirable. It shows a genuine desire to complete her case.
Similarly, the totality of circumstances supports the Court’s finding of good faith. Debtor is not a repeat filer in the traditional sense. There is no evidеnce of any misrepresentations of fact, unfair manipulation of the Code or any other inequitable or egregious behavior. To the contrary, Debtor made all her plan payment until she encountered circumstances beyond her control. There is nothing to suggest bad faith.
Even though the Court may be satisfied that Debtor filed the case in gоod faith, extension of the stay is not automatic but rather discretionary because
y.
CONCLUSION
Debtor has satisfied the four minimum requirements contained in
It is unfortunate that a debtor in this factual situation had to incur the expense of filing this Motion. It is also unfortunate she had to pay counsel to attend a hearing on an unopposed motion where there is simply no reason to question her good faith. It is a waste of the Debtor’s limited resources and it is a waste of the Court’s time.
The Motion is granted as to all creditors. Debtor is directed to prepare and file an оrder granting the Motion within ten days of the date of entry of this Memorandum Decision.
Notes
.This section was added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA”), Pub.L. No. 109-8 (2005), effective in cases commenced on or after October 17, 2005. Hereinafter, all code and section references are to
. The priоr case is Southern District of California Bankruptcy Case No. 03-04941-A13. Hereinafter, the docket entries for the Prior Case are referred to as “P.C. Doc. #__”
. This information is not provided in the Motion; although it is pertinent to the Court’s ruling.
See
. This explanatory information was not in the motion. It was provided in response to the Court’s letter requesting Debtor to explain thе reason for her increased debt. [Doc. # 15] In the future, this type of explanatory information should be filed and served with the motion.
. The last part of
. This subsection is factually inapplicable because no creditor filed a motion for relief from stay in the Prior Case.
. As indicated in footnote 5 above, the last part of
. At the Court’s request, Debtor’s son filed a declaration confirming his financial commitment for the next five years. In the future, the Court will require this type of supporting evidence to be filed and served with the motion.