Debtor who Filed Chapter 13 Soon After his Ex-Wife Sued him in State Court to Enforce Equitable Distribution Award Did Not File Case in Bad Faith

Debtor who Filed Chapter 13 Soon After his Ex-Wife Sued him in State Court to Enforce Equitable Distribution Award Did Not File Case in Bad Faith

The Debtor, a retired member of the U.S. Navy filed a Chapter 13 bankruptcy in order to deal with issues regarding his homestead, income tax debts and general unsecured debts.

The Debtor and his ex-wife, Stephens, had a short marriage, which ended in dissolution in 2016. According to the final judgment of dissolution, the Debtor was ordered to pay Stephens $24,002.62 as equitable distribution within 60 days of the judgment. The Debtor had not paid anything to Stephens within 60 days, so she filed a motion for contempt in state court to enforce the equitable distribution award.  A little over a month later, the Debtor filed a petition under Chapter 13 of the Bankruptcy Code.

The Debtor’s Chapter 13 Plan proposed paying a claim to the Internal Revenue Service for past-due taxes; a claim by the Debtor’s Homeowners’ Association (HOA);   claim of Wells Fargo for a financed hot tub that the Debtor sold pre-petition;  and a dividend to unsecured creditors, including Stephens, in an amount “no less than $1,833.28.”

The Trustee initially objected to confirmation of the Plan, but later said the Debtor had resolved the issues which gave rise to the objection.

Stephens objected to the Debtor’s Second Amended Plan. She alleged that the Debtor did not file the petition or Plan in good faith.

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