2007 Chief Judge Burns - Opinions
Chief Judge Gloria Burns -- Opinions signed in 2007
A debtor pled guilty to an assault charge that had resulted in physical injuries to a creditor. The creditor moved for relief from the automatic stay to have a state court reduce the personal injury claim to a judgment and asserted that the debtor's chapter 13 plan was not proposed in good faith pursuant to 11 U.S.C. § 1325(a)(3) and should not be confirmed. The debtor contended that stay relief was unnecessary because he would not object to the creditor's claim. The court held that because the debtor had not objected to the claim amount, the creditor could not show sufficient cause to warrant relief from the automatic stay. Additionally, based on the plain language of 11 U.S.C. § 1328(a)(4), the $300,000 claim "cannot be held to be nondischargeable because it is a contingent and unliquidated claim, not yet reduced to judgment and awarded by a court." In determining the good faith of the proposed plan, the Court used a totality of the circumstances analysis and found, based on the small distribution proposed to the creditor and on the debtor's lack of candor in his schedules and disclosures, the debtor's plan was not proposed in good faith and therefore the creditor's objection to the confirmation was sustained.
The debtor converted her chapter 13 case to a chapter 7 case and claimed that she did not need to meet the means test required for an initial filing in chapter 7 because her case was not "filed" as a chapter 7 case. The United States Trustee argued that the means test should be applied in initial filings in chapter 7 and in conversions from chapter 13 to chapter 7. Based on the plain language of § 707(b)(1), the court held that Congress intended for the means test to reach only those cases filed in chapter 7 and not those cases converted from chapter 13 to chapter 7. Additionally, the court held that Bankruptcy Rules, such as Interim Rule 1007(b)(4) which was purported to apply the means test to debtors "in" chapter 7, cannot be used to contradict the unambiguous words of a statute.