In re Carol Engen

Case Type:
Case Status:
BAP No. WW-20-1019-BSG (9th Circuit, Jul 06,2020) Published
BAP for 9th Circuit affirmed ruling of bankruptcy court (WD Wash) dismissing chapter 13 case for cause under 11 USC 1307(c), including delay prejudicial to creditors. Debtor's failure to make payments due under confirmed plan, including failure to sell, or even attempt to sell, real property as called for under plan constituted adequate cause for discretionary dismissal. Debtor's dispute of principal creditor's claim (IRS) did not justify delay and failure to perform under plan.
Procedural context:
Bankruptcy court (WD Wash.) granted Chapter 13 trustee's motion to dismiss case and debtor appealed to BAP for 9th Cir.
The Internal Revenue Service ("IRS") filed a complaint against Engen in Washington for outstanding tax assessments and to foreclose tax liens on Engen's real property ("Property"). Engen responded by filing chapter 13. The IRS, Engen's only creditor of note, filed an amended secured proof of claim for $250,517.27. Engen objected to the claim. The bankruptcy court overruled the claim objection without prejudice, determining that the complex tax matter should be resolved by an adversary proceeding. The bankruptcy court entered an order confirming Engen's chapter 13 plan on October 13, 2018 ("Plan"). The 36-month Plan provided for a 100% dividend to creditors via two sources: (1) a $100.00 monthly plan payment; and (2) the sale of the Property within 18 months of the petition date. Engen had to obtain the bankruptcy court's approval prior to selling the Property. Meanwhile, Engen continued to dispute the IRS's claim. With the assistance of counsel, she timely filed her adversary complaint against the IRS. This was followed by various pro se motions for summary judgment. Engen failed to sell the Property by the plan deadline or otherwise make payments due under the plan. The chapter 13 trustee moved to dismiss the case for cause under 11 USC 1307(c)(1) and (6) based on Engen's failure to sell the Property and an unreasonable delay that was prejudicial to creditors.
Brand, Spraker, Gan

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