In Re Chaney
ORDER
This сase is before the court on the motion of Wilmer Chaney (the “Debtor”) to extend the automatic stay pursuant to § 362(c)(3)(B) of the Bankruptcy Code. The Debtor filed his chapter 13 bankruptcy case on December 13, 2006 (the “Petition Date”); and on December 25, 2006, he filed a motion to extend the automatic stay. A hearing was conducted on January 10, 2006, at which the Debtor appeared and testified.
The Debtor’s request is governed by the provisions of § 362(c)(3) of the bankruptcy code. 11 U.S.C. § 362(c)(3) (2006). That section provides:
(3) if a single оr 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 ... with respect to any action taken with respect to a debt or property 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 latеr case;
(B) on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as thе court may then impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed; ...
11 U.S.C. § 362(c)(3)(A, B)(emphasis added).
The quoted language of § 362(c)(3) effectively provides that where a debtor has been a debtor in a previous bankruptcy case that was dismissed within one year of the filing of the new case, the automatic stay of § 362(a) terminates as to the Debt- or on the 30th day following the new filing unless within that 30 days the debtor seeks an extension of the stay and the court grants the extension within the 30-day period. In order to obtain an extension of the stay, the debtor must prove that the filing of the new case was in good faith as to the creditors that would be affected by the stay. 11 U.S.C. § 362(c)(3)(B).
The statute further provides a presumption that a case is not filed in good faith if any of several circumstances occurred:
(C) for purposes of subparagraph (B), a case is presumptively filed not in good faith (but such prеsumption may be rebutted by clear and convincing evidence to the contrary)-
(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 сhapters 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 shаll 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 bеen 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—
(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) [for relief from the stay] 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; ...
11 U.S.C. § 362(c)(3)(C).
The Debtor in this case has filed five prior cases in this court; 90-30673-BNS; 90-33506-DOT; 93-30251-BNS; 93-33403-BNS; and Case No. 05-42613-DOT (the “Immediately Prior Case”). The Immediately Prior Case was filed under chapter 13 on October 15, 2005. An order confirming the Debtor’s chapter 13 plan was entered by the Court on January 20, 2006. The Immediately Prior Case was dismissed by order entered July 14, 2006, for the Debtor’s failure to make the payments required by the plan.
As the Debtor’s Immediately Prior Case was pending within the year preceding the Petition Date and as that Immediately Pri- or Case was dismissed after the Debtor failed to perform the terms of the plan confirmed by the Court, § 362(c)(3)(C) of the Bankruptcy Code raises a presumption that his new case was filed not in good faith. The presumption may be rebutted by clear and convincing evidence. 11 U.S.C. § 362(c)(3)(C).
The Court of Appeals for the Fourth Circuit has observed that, “ ‘[C]lear and convincing’ is a well-recognized standard in the proof scheme employed by our nation’s courts.”
Direx Israel, Ltd. v. Breakthrough Medical Corp.,
In Addington v. Texas, the Supreme Court identified the “three standards or levels for different types of cases” as follows: “preponderance of the evidence” is the lowest level of proof, and is to be applied in the “typical civil case involving a mоnetary dispute;” “beyond reasonable doubt” is the highest level of proof, and is to be applied “in a criminal case;” and “clear and convincing” is an “intermediate standard,” which is to be applied in cases where the interests at stake “are deemed to be more substantial than mere loss of money.” This intermediate level of proof, the Supreme Court added, is “no stranger in the civil law.” A relevant treatise, for example, defines “clear and convincing” as meaning “highly probable.” 9 J. Wigmore Evidence § 2498 (3d еd.1940).
Id.
(citing
Addington v. Texas,
Section 362(c)(3) does not include a definition of the term “good faith.” “The normal rule of statutory construction is that if Congress intends for legislation to change the interpretation of a judicially created concept, it makes that intent speсific.”
CoStar Group, Inc. v. Loopnet, Inc.,
In evaluating a debtor’s good faith in the context of § 1325(a)(3) of the Bankruptcy Code, the Cоurt of Appeals for the Fourth Circuit stated “[w]hile no precise definition can be sculpted to fit the term ‘good faith’ for every Chapter 13 case, we think the generally accepted definition of ‘good faith’ as used in Chapter 11 of the old Bankruptcy Act, 11 U.S.C. § 766(4) (1976) (repealed), provides the general parameters: ‘Broadly speaking, the basic inquiry should be whether or not under the circumstances of the case there has been an abuse of the provisions, purpose, or spirit of [the Chapter] in the proрosal or plan....’”
Deans v. O’Donnell,
A nonexclusive list of the militating factors a court may consider in making a gоod faith determination includes “the percentage of proposed repayment, ... the debtor’s financial situation, the period of time payment will be made, the debtor’s employment history and prospects, the nature and amount of unsecured claims, the debtor’s past bankruptcy filings, the debt- or’s honesty in representing facts, and any unusual or exceptional problems facing the particular debtor.”
Id.
The court added the debtor’s pre-petition conduct to this nonexclusive list in
Neufeld v. Freeman,
The evidence bеfore the Court in this case comes from the testimony provided by the Debtor at the hearing and from the documents filed with the Court. No substantial change has occurred in the Debtor’s financial or personal affairs since the Immediately Prior Case. The Debtor’s employment has remained stable. In fact, the Debtor testified that he received a promotion and a raise of approximately $200 per month since he filed the Immedi
However, the totality of the circumstances reveals that this case actually represents an abuse of the spirit and purpose of chapter 13 of the Bankruptcy Code. In spite of the increase in the Debtor’s incоme and the decrease in his expenses since the dismissal of the Immediately Pri- or Case, the Debtor’s plan payments in this case have been reduced significantly. The plan payments in the Immediately Prior Case were $900 per month. The Debtor had proposed to pay $58,500 into the plan, which would have yielded an 82% dividend to his unsecured creditors. 1 The Debtor now proposes to pay a total of only $15,600 into the plan. The new plan proposes to pay a $9,000 priority tax claim in full but only 4% to the Debtor’s unsecurеd non-priority creditors. 2 Taken together, the reduced proposed repayment in the new case and the improvement in the Debtor’s financial situation between the two filings are not indicia of good faith.
The Court is not persuaded by any evidence (lеt alone clear and convincing evidence) that this case is a good faith effort by the Debtor to repay his creditors. Rather it appears to be an attempt to pay his creditors as little as possible. The Debtor defaulted in his repayment sсhedule under the confirmed plan in the Immediately Prior Case, presumably because of an unanticipated additional expense he was required to assume for his daughter. Now, with improved economic fortunes, the Debtor proposes a far less generous рlan. In light of the fact that there has been no adverse change in the Debtor’s circumstances, the Court is left to wonder why the Debtor’s disposable income in the Immediately Prior Case allowed him to pay so much more to his creditors than he is proposing to pay in this case. The Debtor offered no explanation. While it was argued that this would be an issue best addressed in the context of a plan confirmation hearing, it may certainly be considered at this juncture as well. Indeed, in adopting § 362(c)(3)(C) of the Bankruptcy Cоde, Congress signaled its preference for the early disposition of cases that lack substantive merit. The Court finds that the Debtor has failed to rebut the statutory presumption that his new case was filed not in good faith.
Because the presumption has not been rebutted, the Court will not continue the automatic stay as to the Debtor beyond the 30th day following the filing of this case. 3 Therefore,
Notes
. The vast majority of the unsecured debt derived from consumer spending.
. The Dеbtor is represented by the same counsel in this case as he was in the Immediately Prior Case. The attorneys’ fees in this case and in the Immediately Prior Case are more than double the total amount that the Debtor’s unsecured non-priority creditors will receive.
. The court was not asked to decide the extent to which the automatic stay is terminated under § 362(c)(3)(A). Is the stay terminated only with respect to the Debtor or is termination of the stay also applicable to property of the bankruptcy estate? Compare
In re Jones,