Matter of Swan

98 B.R. 502, 1989 Bankr. LEXIS 473, 1989 WL 32090
CourtUnited States Bankruptcy Court, D. Nebraska
DecidedMarch 10, 1989
Docket19-40211
StatusPublished
Cited by8 cases

This text of 98 B.R. 502 (Matter of Swan) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Nebraska primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Matter of Swan, 98 B.R. 502, 1989 Bankr. LEXIS 473, 1989 WL 32090 (Neb. 1989).

Opinion

MEMORANDUM OPINION

JOHN C. MINAHAN, Jr., Bankruptcy Judge.

THE MATTER before the court is an Objection to Confirmation (Fil. # 13), filed by Mary Hayford, a creditor herein. The debt at issue arose from an intentional tort committed by the debtor against Ms. Hay-ford. A state court judgment has been rendered against the debtor in the amount of $8,000.00, together with costs and post-judgment interest. Ms. Hayford filed a claim in this bankruptcy case in the amount of $9,109.88.

FINDINGS OF FACT

The facts in this case have been presented to the court on stipulation between the parties. On February 4, 1986, Mary Hay-ford, creditor and objector herein, obtained a judgment against the debtor in state court as a result of an assault and battery committed against her. Debtor, Mr. Swan filed Chapter 7 bankruptcy on October 8, 1986. After Ms. Hayford filed an adversary proceeding to determine dischargeability of the debt owed her, the debtor converted to a Chapter 13 case.

Debtor’s schedules list no secured creditors, but debtor has unsecured debts in the total amount of $13,884.10. The major portion of these debts arose out of the state court assault and battery action by Ms. Hayford against the debtor. Specifically, these debts include $9,109.88 owed to Ms. Hayford; $2,037.81 owed to Fredrick L. Swartz for legal counsel in state court; and $2,136.41 owed to Coupland Law Office for legal counsel in state court. The remaining $600.00 unsecured debt is owed to John Thomas, debtor’s attorney in this bankruptcy case.

The debtor, Mr. Swan is employed as a lineman for Three Rivers Telco, a small telephone company, and earns approximately $1,750.00 per month. Although Mrs. Swan was employed, the development of a neurological disorder necessitated her quitting work. This disorder has contributed to large monthly medical bills, of which insurance pays only a portion. According to debtor’s budget, the monthly expenses of debtor’s family are approximately $1,730.00. Debtor’s Chapter 13 plan proposes to make payments of $20.00 per month for three years, a total of $720.00. The plan proposes to pay the total $600.00 legal fee to John Thomas as a priority claim under 11 U.S.C. Section 507. The remaining $120.00 is to be distributed to Mary Hayford, Fredrick L. Swartz, and Coupland Law Office. The effect of debt- or’s plan is to pay Ms. Hayford approximately $90.00.

Ms. Hayford argues that debtor’s plan should not be confirmed for various reasons. First, Ms. Hayford argues that debt- or’s plan was not proposed in good faith under 11 U.S.C. Section 1325(a)(3) and improperly proposes to discharge a debt non-dischargeable as a willful and malicious injury under 11 U.S.C. Section 523(a)(6). Ms. Hayford secondly asserts that the plan does not include all of debtor’s disposable income. Third, Ms. Hayford contends that the plan should not provide for attorney’s fees as a priority administrative expense under 11 U.S.C. Section 507. Fourth, Ms. Hayford contends that the debtor does not have the ability to make the $20.00 monthly payments proposed under the plan.

ANALYSIS

The court concludes that debtor’s Chapter 13 plan should not be confirmed. However, as the impediments to confirmation may be resolved in an amended plan, the court concludes that debtor should have leave to amend.

Good Faith

Section 1325(a)(3) of the Bankruptcy Code provides that the court shall confirm a plan if “the plan has been proposed in good faith and not by any means forbidden *504 by law.” The eighth circuit, in In re Estus, 695 F.2d 311 (8th Cir.1982), has set forth several elements to consider in determining whether a plan has been proposed in good faith. The eighth circuit has stated that “in addition to the percentage of repayment to unsecured creditors, some of the factors that a court may find meaningful in making its determination of good faith are:

1. The amount of the proposed payments and the amount of the debtor’s surplus;

2. The debtor’s employment history, ability to earn and likelihood of future increases in income;

3. The probable or expected duration of the plan;

4. The accuracy of the plan’s statements of the debts, expenses and percentage repayment of unsecured debt and whether any inaccuracies are an attempt to mislead the court;

5. The extent of preferential treatment between classes of creditors;

6. The extent to which secured claims are modified;

7. The type of debt sought to be discharged and whether any such debt is non-dischargeable in Chapter 7;

8. The existence of special circumstances such as inordinate medical expenses;

9. The frequency with which the debtor has sought relief under the Bankruptcy Reform Act;

10. The motivation and sincerity of the debtor in seeking Chapter 13 relief; and

11. The burden which the plan’s administration would place upon the trustee.” Estus, 695 F.2d at 317.

Of the 11 elements enunciated in Estus, items 3, 7, and 10 are especially relevant herein. An examination of the facts of this case in light of these items reveals a lack of good faith of the debtor, Mr. Swan.

First, the duration of debtor’s proposed plan is three (3) years. Although there is no legal obligation to propose a 5-year plan, the length of the plan is a relevant consideration in determining good faith. See Estus, 695 F.2d at 317. The duration of a plan reflects not only the debtor’s state of mind and intentions, but also the amount a debtor seeks to repay creditors. See In re Kourtakis, 75 B.R. 183, 187 (Bkrtcy.E.D.Mich.1987); In re Williams, 42 B.R. 474 (Bkrtcy.E.D.Ark.1984); In re Chase, 28 B.R. 814, 818 (Bkrtcy.D.Md.1983). By proposing a 3-year plan, Mr. Swan will pay only approximately $90.00 to reimburse Ms. Hayford for the injury he inflicted upon her. In light of the violent act giving rise to his obligation to Ms. Hayford, however, the court concludes that Mr. Swan has not demonstrated the requisite good faith in proposing his plan. A jury has imposed an $8,000.00 judgment against Mr. Swan and this court will not allow him to reform that jury verdict in this bankruptcy case, at least not to the extent proposed by Mr. Swan. Proposing a 5-year plan is within Mr. Swan’s power. If he were fully honest and sincere, Mr. Swan would propose to pay Ms. Hayford with his best efforts and for the full duration available under the law. See In re Kourtakis, 75 B.R. at 188; In re Chase 28 B.R. at 818.

The second relevant item from Es-tus

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Jacob Benjamin Dumas
N.D. Georgia, 2019
Matter of Tobiason
185 B.R. 59 (D. Nebraska, 1995)
Montgomery v. Herring (In Re Herring)
193 B.R. 344 (N.D. Alabama, 1995)
Matter of Jones
119 B.R. 996 (N.D. Indiana, 1990)

Cite This Page — Counsel Stack

Bluebook (online)
98 B.R. 502, 1989 Bankr. LEXIS 473, 1989 WL 32090, Counsel Stack Legal Research, https://law.counselstack.com/opinion/matter-of-swan-nebraskab-1989.