Creditor objected to confirmation of the debtor’s amended plan on the grounds that the petition and amended plan were filed in bad faith in violation of Section 1325(a)(3) and 1325(a)(7) and that plan was not feasible under Section 1325(a)(6). Notwithstanding the Trustee’s recommendation in favor of confirmation, this was essentially a two-party dispute involving allegations of fraud, undue influence and willful and malicious injury to property by the debtor. The Court held that the debtor did not meet her burden of proof under Section 1325(a)(3) that the plan was proposed in good faith because of Debtor’s pre-petition and post-petition conduct, the lack of a meaningful dividend to unsecured creditors and the nature of likely non-dischargeable debt to the creditor. The Court denied confirmation of the plan.
The Court also held that the debtor filed her petition with a lack of good faith and dismissed the case under Section 1307(c)(5). The Court concluded that authorizing additional time to file a second amended plan was not in the best interests of creditors and would be fruitless. As almost half of the funding for the debtor’s “bare minimum” plan was proposed to come from her mother, some of which would go back to the mother in the form of a distribution on her own claim, it was unlikely that the debtor could propose a more advantageous plan for the repayment of her debts.