good faith

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Court Refuses to Discard Totality of Circumstances Test for Good Faith

A chapter 13 plan must still be proposed in good faith under the totality of circumstances test even if it complies with Code provisions for confirmation. Booker v. Johns (In re Booker), No. 16-1604 (W.D. La. April 17, 2018).

Although the trustee did not challenge Webster and Lillie Bookers’ first chapter 13 plan, which proposed to keep their boat and various other secured items and paid only 4% to unsecured creditors, the bankruptcy court held a hearing and found the plan was not proposed in good faith. After filing a successful plan, the Bookers appealed the denial of confirmation of the first plan to the district court. [Read more…] about Court Refuses to Discard Totality of Circumstances Test for Good Faith

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Debtor Correctly Excluded Mother’s Social Security From PDI

Where the debtor lived with his mother and they shared all income and expenses, he correctly included her expenses and excluded her social security benefits in his projected disposable income calculation. In re Palcher, 2018 WL 481863, No. 7:17-bk-3938 (Bankr. D. S.C. Jan. 16, 2018).

Above-median debtor, Michael Palcher, proposed a chapter 13 plan to pay his mortgage directly and pay approximately 6.7% to unsecured creditors through the plan. The trustee objected to confirmation arguing that, because Mr. Palcher did not include his mother’s social security in his projected disposable income, the plan did not comply with section 1325(b) and was proposed in bad faith. [Read more…] about Debtor Correctly Excluded Mother’s Social Security From PDI

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Fourth Circuit Looks at Multiple Factors in Bad Faith Analysis

Filing bankruptcy for the primary purpose of discharging one debt is not, in itself, bad faith, and the bankruptcy court did not abuse its discretion when weighing several factors in denying the creditor’s motion to dismiss for cause under section 707(a). Janvey v. Romero (In re Romero), No. 17-1197 (4th Cir. Feb. 21, 2018).

Peter Romero was found liable to victims of a Ponzi scheme in which he was involved. Pursuant to that judgment, he owed $1.275 million to Ralph Janvey, the court-appointed Receiver in the Ponzi litigation. Mr. Janvey rejected without counteroffers Mr. Romero’s attempts to settle and Mr. Romero filed for chapter 7 bankruptcy. The bankruptcy court denied Mr. Janvey’s motion to dismiss and granted Mr. Romero’s discharge. In re Romero, 557 B.R. 875 (Bankr. D. Md. 2016). The district court affirmed. [Read more…] about Fourth Circuit Looks at Multiple Factors in Bad Faith Analysis

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No Bad Faith for Failure to Voluntarily Devote Social Security Funds to Plan

Where the debtor’s plan proposed terms that were within bankruptcy and social security parameters, and there was no evidence of misconduct or bad faith, the bankruptcy court erred in declining to confirm his plan due to his failure to voluntarily contribute some of his social security funds. In re Manzo, No. 16-7218 (N.D. Ill. Aug. 25, 2017). [Read more…] about No Bad Faith for Failure to Voluntarily Devote Social Security Funds to Plan

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Fee-Only Plan Has Purpose beyond Payment of Fee

Although the debtor’s chapter 13 plan effectively paid nothing to the debtor’s single creditor, it was filed in good faith. In re Banks, No. 15-9819 (Bankr. N.D. Ill. Feb. 8, 2016).

Mr. Banks had no assets and only one debt: $5,080 in city parking tickets. His chapter 13 plan contemplated paying his entire $120 disposable income for 36 months for a total of $4,320, $4,000 of which would go to his bankruptcy attorney, and $285.12 to the bankruptcy trustee. The trustee challenged the plan as not having been filed in good faith under section 1325(a)(7). [Read more…] about Fee-Only Plan Has Purpose beyond Payment of Fee

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Loan Servicer Lack of Good Faith in Loss Mitigation Program

Failure to tell the debtor that a down payment toward mortgage arrears was essential to loan modification rendered the loan servicer’s loss mitigation negotiations in bad faith. Rushmore Loan Management Services v. Hosking, No. 15-3999 (S.D. N.Y. Jan. 11, 2016). [Read more…] about Loan Servicer Lack of Good Faith in Loss Mitigation Program

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Warning: May Cause Munchies and Preclude Bankruptcy Relief

A Colorado Bankruptcy Court found that a debtor whose only non-social security income was generated through the marijuana industry could not avail himself of bankruptcy relief. In re Arenas,  — B.R. —-, 2014 WL 4288991 (Bankr. D. Colo. Aug. 28, 2014). The chapter 7 debtors’ income sources were $4,265.16 from Mr. Arenas’ marijuana growing business for which he was licensed under Colorado law, a lease with a marijuana dispensary, and $3,000.00 from his co-debtor wife’s social security disability benefits. Mr. Arenas’ marijuana-related business interests were legal under state law and illegal under the federal Controlled Substances Act. [Read more…] about Warning: May Cause Munchies and Preclude Bankruptcy Relief