Chapter 13 Plan which was Attorney Fee-Centric and Sought to Discharge Debts what Would Not have been Discharged in Chapter 7 was Not Filed in Good Faith

Chapter 13 Plan which was Attorney Fee-Centric and Sought to Discharge Debts what Would Not have been Discharged in Chapter 7 was Not Filed in Good Faith

This matter came before the Court for an evidentiary hearing on January 16, 2018 (the “Hearing”) on the issue of good faith in regards to confirmation of Debtor’s Amended Chapter 13 Plan, filed on May 11, 2017 (the “Plan”).

In the current Plan, Debtor proposes to pay $125 per month, with an applicable commitment period of 36 months. From those payments, Debtor proposes to pay $5,500 in attorneys’ fees and $1,200 on account of a domestic support obligation priority unsecured claim to his ex-wife. Debtor proposes to surrender his interest in four parcels of jointly-owned real property and one automobile. One of the parcels of real property is Debtor’s former residence. Debtor has also scheduled $189,865 in general unsecured claims and proposes a 0% dividend. In a supplementary provision, Debtor provides he shall arrange to sell by auction the four parcels of real property that are listed for surrender in the applicable section of the Plan. Debtor’s ex-wife holds secured, priority, and unsecured claims.

In his testimony, Debtor admitted that after he filed for bankruptcy, he undertook to auction the four real properties, but the auctioneer whom Debtor had retained to appraise and sell them informed him that the value of the Residence was far below the approximately $215,000 that Debtor was seeking. Debtor then testified that after informing ex-wife of the auctioneer’s opinion, the parties agreed that instead of Debtor auctioning off the properties, he would surrender them to ex-wife, who could then market and sell them herself. This was memorialized in the Order entitled Consent Order on Interim Confirmation Hearing Modifying Automatic Stay, entered on August 30, 2017 (the “Interim Order”). The Interim Order provided that “[t]he automatic stay is hereby modified to give [ex-wife and her father] possession and to allow them to exercise all state law in rem remedies.” Interim Order. It further provided that Debtor was required to vacate the properties no later than September 13, 2017, and that ex-wife and her father “are authorized to hire a realtor of their choice to market and sell the properties without interference from the Debtor.”

Ex-wife alleged that when Debtor vacated the properties, he left them in terrible condition and several fixtures had been removed. In vacating the Residence, Debtor admitted in his testimony at the Hearing that he took with him, inter alia, a chandelier, a wrought-iron gate from the bottom of a spiral staircase, and a fireplace mantle. He argued that he had left a replacement ceiling light for the chandelier, and that he had made the wrought-iron gate and therefore was entitled to it. As to the mantle, he argued that construction of the fireplace had never been completed, and that he had purchased the mantle, and so he was also entitled to it as well. He also admitted that he removed several arches attached to columns on the porch outside the Residence, because when a tree fell on the Residence and porch, some of the arches had been damaged beyond repair, and that the arches themselves had been discontinued. Therefore, since some of the arches could not be replaced, he removed the remaining, undamaged ones for the sake of uniformity, but left them at the Residence. Finally, he admitted to removing non-structural pillars from the living room, and some appliances from the kitchen, including the refrigerator.


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