- Case Type:
- Case Status:
- 19-8022, 2020 WL 3498438 (6th Circuit, Jun 29,2020) Published
- Bankruptcy Court has discretion to dismiss case for bad faith with 3 year bar to refiling.
- Procedural context:
- Debtor filed his current (5th overall) case. The United States Trustee filed a Motion to Dismiss under Section 707 for bad faith and requested bar to refiling. Bankruptcy Court granted Motion, dismissed case, and imposed 3 year bar to refiling. On appeal, the Sixth Circuit BAP affirmed.
- Debtor was described by BAP as "serial bankruptcy filer". Since 2011, he filed five cases. In his first case, a chapter 7, Debtor was denied a discharge for concealing assets and not cooperating with the Trustee. His third case was dismissed on June 18, 2015, with a three-year bar to refiling. Debtor filed his fourth case shortly after expiration of the bar, a chapter 13 which was dismissed because Debtor did not obtain pre-petition credit counseling. Debtor then filed the current case. The Bankruptcy Court concluded that the current case was filed in bad faith where Debtor repeated much of the conduct that resulted in denial of his discharge in the 2011 case including not producing records requested by the Trustee, clear errors in the schedules and SOFA (including failure to accurately reflect the status of his divorce, to list his child support obligation, and to accurately disclose his tax obligations, income, and personal property, non-disclosure of income), incorrect disclosure of expenses, omission of creditors from the Schedules, and general failure to cooperate or perform statutory duties. Bankruptcy Court listed many of the factors generally considered in addressing bad faith and concluded that dismissal was warranted and imposed new 3-year bar. On appeal, the BAP held that the Bankruptcy Court did not abuse its discretion in dismissing the case and held that Sections 105 and 349 allow imposition of bar in excess of 6 month bar under Section 109(g). Debtor's history of filings to stop state court foreclosure and collection actions amounted to use of Bankruptcy Court to stop suits and delay resolutions in State Court when it suited Debtor, not for any purpose of reorganization. Debtor’s behavior mirrored his behavior in 2011 case, in which Debtor was denied a discharge; (b) the Debtor filed his 2018 and 2019 bankruptcy cases to stop eviction from property that had long been foreclosed; and (c) Debtor’s stated purpose in filing this case - to avoid effects of State Court Judgment of Divorce - was improper, such that imposition of bar was not abuse of discretion.
- CROOM, MASHBURN and WISE,
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