Bankruptcy Court Throws Out Chapter 13 Case for Debtor's Bad Faith and Abuse of the Bankruptcy Process

Posted on Jun 04, 2013

In a case decided May 31, 2013, U.S. Bankruptcy Judge Letitia Paul dismissed the Chapter 13 bankruptcy case of Krystal West, in Case No. 13-30961, here in the U.S. Bankruptcy Court for the Southern District of Texas. She not only dismissed it, but she dismissed it "with prejudice" for 180 days, meaning that Ms. West cannot file another bankruptcy case for 180 days.

Ms. West had been a debtor in four previous bankruptcies, all of which had been dismissed. She testified that she signed all the documents starting the cases, but that she stated that she didn't "actively participate" in any but the first case. Her property had already been foreclosed upon when she filed this case.

The Court ruled that Ms. West had engaged in bad faith conduct, and that the case should be dismissed for cause. The Court stated:

Debtor's filing of four previous cases, while maintaining the argument that she did not participate in the previous cases, despite her admission of having signed the petitions in each case, demonstrates a pattern of bad faith and abuse of the bankruptcy process. Debtor's filing of five cases to protect what she alleges is her separate property, which she testified she nonetheless pledged to payment of her non-debtor husband's debts, further indicates an intentional abuse of the bankruptcy process. The court concludes that the instant case should be dismissed, based on the Debtor's bad faith, with prejudice to the filing of another case under Title 11 within 180 days.

The lesson here is that if you are going to file chapter 13 bankruptcy to save a property, do it once and do it right. Don't abuse the bankruptcy process by filing over and over again. And if you can't afford a property, sell it or give it up.

 

 

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