Opinion
C/A No. 06-02068-JW.
June 15, 2006
ORDER
This matter comes before the Court upon a Motion to Extend Stay ("Motion") filed Michael Lee Potts ("Debtor") pursuant to 11 U.S.C. § 362(c)(3)(B). Debtor served the Motion and a Notice of Hearing on all creditors and a hearing on the Motion was completed within the thirty (30) day period following the petition date. The Chapter 13 trustee filed a response to the Motion.
Internal references to the Bankruptcy Code ( 11 U.S.C. § 101 et seq.), as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, shall be made by section number only.
Debtor was previously a debtor in a prior Chapter 13 bankruptcy case that was pending within a one (1) year period preceding the filing of this current case. Therefore, pursuant to § 362(c)(3)(A), the automatic stay provided by § 362(a) is scheduled to terminate on the thirtieth day (30th) day after Debtor filed this bankruptcy case. Pursuant to § 362(c)(3)(C)(i)(II)(cc), there is a presumption that Debtor did not file this case in good faith because Debtor's previous case was dismissed for failure to make timely plan payments. In light of the presumption that Debtor filed this case with a lack of good faith, Debtor must demonstrate, by clear and convincing evidence, that he filed this case in good faith in order to extend the stay.
Debtor testified at the hearing regarding a change in his employment, unexpected expenses, and loss of income that he experienced during the previous case and which led to the dismissal of the previous case. In this case, Debtor's filed schedules did not accurately reflect Debtor's current expenses at the time of the hearing on the Motion. It was not evident at the hearing on the Motion if Debtor had sufficient income to make the proposed plan payment. See In re Love, C/A 06-00648-W, slip op. (Bankr. D.S.C. Mar. 23, 2006) (denying a motion to extend the stay where it was not evident that debtor had sufficient income to make the proposed plan payments). The Court has previously noted that it may deny a debtor's motion to extend the automatic stay if a debtor is not prepared to meet his burden of proof at the hearing on the motion. See In re Elbert, C/A 06-01540-W, slip op. at 3 (Bankr. D.S.C. May 16, 2006) ("The Court is unfortunately finding that many schedules, when put to scrutiny, are seriously flawed especially with respect to the accuracy of a debtor's assets and income. In the future, the Court may deny motions to extend the stay if the moving debtor's schedules and statement of financial affairs are not accurate when a hearing is held on the motion. . . ."). Debtor amended his schedules after the hearing on the Motion to reflect his current income and expenses. Debtor's income has increased and Debtor has obtained employment, which appears to be stable. It appears that Debtor has experienced a substantial change in his financial and personal affairs since the dismissal of the previous case. At this early time in the case, there is no reason to conclude that Debtor's case will not result in a confirmed plan that will be fully completed.
Debtor's Chapter 13 Trustee consented to extending the automatic stay after Debtor amended his schedules.
Notwithstanding this Order, the bar should be advised that debtors carry a heavy burden of proof when they move to extend the automatic stay. Debtors must be prepared to meet this burden at the hearing on their motions to extend the automatic stay. If schedules and testimony are inconclusive on the issue, then the Court may deny the relief sought without allowing further time to correct any errors in the filed documents or to submit additional proof on the matter.
Based on all of the totality of the circumstances in this case, the Court finds that Debtor has met his burden of proof and that this case is filed in good faith. It is therefore ordered that the automatic stay is extended as to all creditors pursuant to § 362(c)(3)(B). As a condition for extending the automatic stay and with the agreement on Debtor, it is further ordered that any dismissal of this case shall be with prejudice under Chapters 11, 12 and 13 of the Bankruptcy Code for a period of one (1) year. The automatic stay shall terminate in this case, without further order, if Debtor does not have a plan confirmed in this case on or before September 8, 2006.
The Court's findings are limited to the context of this Motion and nothing in this Order shall be construed as res judicata to prevent Debtor, the trustee, or any party in interest from challenging or establishing that this case or plan was filed or proposed in good faith for purposes of 11 U.S.C. §§ 1307 or 1325. See In re Charles, 332 B.R. 538, 542 (Bankr. S.D. Tex. 2005) (holding that Congress, by enacting § 362(c)(3), intended the courts to conduct an early triage of a case and determine whether a case is doomed to fail or whether a case has a reasonable likelihood of success.)