JAMES ROBINSON, Bankruptcy Judge
This matter came before the Court on the Notice to Show Cause (Doc. 19) as to why the above case ("2010 case") should not be dismissed due to the Debtors having an active chapter 13 case, i.e. case 08-40195 ("2008 case"), that was pending at the time the 2010 case was filed. The Court has jurisdiction to hear this matter pursuant to 28 U.S.C. §§ 157 and 1334, and the General Order of Reference, as amended, entered by the United States District Court for the Northern District of Alabama. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); therefore, the Court has authority to enter a final order.
Section 362(c)(3) of the Bankruptcy Code' provides, in essence, that when a debtor files a case under chapter 7, 11 or 13, "if a . . . case of the debtor was pending within the preceding 1-year period but was dismissed . . . the stay shall terminate . . . on the 30th day after the filing of the later case [unless on the motion of a party in interest], after notice and a hearing completed before the expiration of the 30-day period . . . the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed. . . ." (emphasis added). The later case is presumed to have been filed not in good faith, and the burden is on the movant to prove by clear and convincing evidence to the contrary. Section 362(c)(3)(C).
11 U.S.C. § 101 et seq, and herein the "Bankruptcy Code" or "Code." Unless the context indicates otherwise, all "Section" references are to a section, subsection or other subdivision of the Code.
Sections 362(c)(3) and (4) were enacted as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 for the purpose of making it more difficult for serial bankruptcy petitioners to abuse the automatic stay. By filing the 2010 case before the 2008 case was dismissed, and whether they intended to or not, the Debtors avoided Section 362(c)(3) and the ensuing 30-day expiration of the automatic stay and presumption of bad faith, which would have applied if their 2008 case "was pending within the preceding 1-year period but was dismissed." This Court concludes that Congress did not intend for Sections 362(c)(3) and (4) to be so easily sidestepped.
In addition to the 2008 and 2010 cases, the Debtors had filed another chapter 13 case in 1998 in which they received a discharge in 2003. The Court makes no finding of whether the Debtors' three cases qualifies them as serial bankruptcy petitioners.
In the 2008 case, the holder of the Debtors' mortgage filed a motion for relief from stay, and an order conditionally denying relief was entered July 9, 2008. On January 7, 2010, the trustee filed a motion to dismiss the 2008 case for failure to make direct mortgage payments. Thus, the Court assumes that the Debtors defaulted on the terms of the July 9, 2008 order and the stay accordingly lifted. Per statements of Debtors' counsel in open court, the 2010 case was filed as an effort to save the Debtors' home from foreclosure. See infra note 5.
By filing the 2010 case before the 2008 case was dismissed, the Debtors also avoided the possible application of Section 109(g)(2), which provides for a 180 day bar from filing a new petition if "the debtor requested and obtained the voluntary dismissal of the case following the filing of a request for relief from the automatic stay provided by section 362 of this title." A voluntary dismissal of the 2008 case could have triggered Section 109(g)(2) and prevented Debtors from filing a new case until the expiration of the 180-day period since the stay had recently been lifted in the 2008 case. The 2010 filing could be construed as an attempt to sidestep the operation of Section 109(g)(2), further evidencing bad faith.
To demonstrate their good faith, the Debtors filed a Motion to Extend the Automatic Stay (Doc. 13) on the day after they filed the 2010 case. But when the Debtors filed the 2010 case, they had no case pending in the preceding 1-year that had been dismissed. Thus, Section 362(c)(3) did not apply, the stay would not have expired in 30 days and there was no presumption of bad faith; there was no basis for filing the Motion.
Before a chapter 13 plan may be confirmed, Section 1325(a)(7) requires that the "action of the debtor in filing the petition was in good faith." The filing of a subsequent chapter 13 case while another is pending, whether or not the debtor intended to avoid the presumption of bad faith and possible loss of the stay under Section 362(c)(3), constitutes bad faith per se. If the Debtors' case was filed in bad faith, no plan may be confirmed, and the case is due to be dismissed.
At the hearing on the Notice to Show Cause, Debtors' counsel represented that the 2010 case was not filed in bad faith because the Debtors' mortgage holder, who received stay relief in the 2008 case, urged the Debtors to file the 2010 case to avoid foreclosure. The Court is certain counsel's representations are accurate; however, even if the mortgage holder's conduct were considered a waiver of Section 362(c)(2), in their schedules the Debtors listed 43 additional creditors with claims exceeding $38,000 who have done or said nothing that can be construed as such a waiver.
THEREFORE IT IS ORDERED, ADJUDGED and DECREED that, for the foregoing reasons, the 2010 case (i.e. case no. 10-40215) is hereby DISMISSED. This Order shall constitute a judgment entered pursuant to Rule 9021.
Notice Recipients District/Off: 1126-1 User: blindsey Date Created: 3/5/2010 Case: 10-40215-JJR13 Form ID: pdf000 Total: 49 Recipients submitted to the BNC (Bankruptcy Noticing Center) without an address: 6260327 Affiliated Credit Services 6260329 BellSouth 6260339 Grandview Medical Center 6260352 MRS Associates TOTAL: 4 Recipients of Notice of Electronic Filing: tr Linda B Gore debtorscommat;bellsouth.net aty Carla Handy kaciebeckcommat;comcast.net TOTAL: 2 Recipients submitted to the BNC (Bankruptcy Noticing Center): db Michael J Clark 983 Lookout Dr. Arab, AL 35016 jdb Tabatha T Clark 983 Lookout Dr. Arab, AL 35016 cr Snap-on Credit LLC 950 Technology Way, Ste 301 Libertyville, IL 60048 6260326 A D Motors 628 N. Brindlee Mt. Pkwy Arab, AL 35016 6260328 Arab Kids College 414 2nd Ave. NW Arab, AL 35016 6260333 CMI 4200 International Parkway Carrollton, TX 75007 6260330 Capital One Bank P.O. Box 85015 Richmond, VA 23285-5015 6287919 Capital One Bank (USA), N.A. by American Infosource Lp As Agent PO Box 71083 Charlotte, NC 28272-1083 6260331 Charter Communications C/O CMI 4200 International Parkway Carrollton, TX 75007-1906 6260332 Citizens Bank P.O.Box 683 Arab, AL 35816 6260334 Dell Financial 3115 N. 3rd Ave, Ste. 112 Phoenix, AR 85013 6260335 Drive Financial Services P.O.Box 560284 Dallas, TX 75356 6260336 Financial Recovery Services P.O. Box 385908 Minneapolis, MN 55438-5908 6260337 First National Bank P.O. Box5097 Sioux Falls, SD 57117-5097 6260338 GFS Inc. C/O Parnell Cram 641 South Lawrence St. Montgomery, AL 36104 6260344 HSBC P.O. Box 81622 Salenas, CA 93912 6260343 HSBC P.O. Box 816622 Salenas, CA 93912 6260341 Household Renaissance C/O Bureau Of Collection Recovery P.O. Box 9001 Minnetonka, MN 55345-9001 6260340 Household Renaissance C/O Parnell Crum 9641 South Lawrence St. Montgomery, AL 36104 6260342 Household Renaissance C/O Protocol Recovery Service Inc. 509 Mercer Ave. Panama City, FL 32401 6260345 Huntville Hospital C/O Waldrop Associates 415 Church St., NW, Ste. E-l Huntsville, AL 35801 6260346 Jim Walter Mortgage Co. P.O.Box 31601 Tampa, FL 33631-3601 6260347 Joe's Pawn Shop C/O Hall Associates 560 Rt. 303, Ste. 209 Orangeburg, NY 10962 6260348 LTD Financial Services 7322 Southwest Freeway, Ste.160 Houston, TX 77074 6260350 MCM Holdings C/O Parnell Cram 641 South Lawrence St. Montgomery, AL 36104 6276141 Marshall Medical Center P.O. Box 11407 Birmingham, AL 35246-1091 6276142 Marshall Medical Center P.O. Box 11407 Birmingham, AL 35246-1091 6260349 Marshall Medical Ctr North P.O. Box 11407 Birmingham, AL 35246-1098 6260351 Mid-State Homes Inc. P.O.Box 31601 Tampa, FL 33631-8374 6260353 Murphy Oil C/O Certegy Pymt. Recovery Systems P.O. Box 30031 Tampa, FL 33630-3031 6260354 Northland Group P.O. Box 390846 Edina, MN 55439 6260355 Peoples Bank 8033 Al Hwy 69 Guntersville, AL 35976 6260358 RJM Acquisitions 575 Underhill Blvd., Ste. 224 Syosset, NY 11791 6260359 RJM Acquisitions 575 Underhill Blvd., Ste. 224 Syosset, NY 11791-3416 6260357 RJM Acquisitions P.O. Box 469046 Escondido, CA 92046 6260356 Regions Financial Corp P.O.Box 740640 Atlanta, GA 30374 6276140 Snap On Tools 14008 Randamere Dr. Huntsville, AL 35803 6305674 Snap-on Credit LLC 950 Technology Way, Suite 301 Libertyville IL 60048 6260360 Title Cash 1930 Gunter Ave. Guntersville, AL 35976 6260362 Transworld Systems 400 Vestavia Parkway, #271 Birmingham, AL 35216 6260361 Transworld Systems P.O. Box 1864 Santa Rosa, CA 95402 6260363 Wachovia C/O Receivables Specialist, Inc. P.O. Box 26570 Tamarac, FL 33320-6570 6260364 Worldwide Asset Purchasing C/O Gerald E. Moore P.O Box 723548 Altanta, GA 31139 TOTAL: 43