Summary of a Recent
Judicial
Development in
Bankruptcy
Debtor Cannot Avoid Judgment by Voluntarily
Dismissing and Filing a New Case
Walt McCarterNational AgLaw Center Research Associate
Summary of Decision
In In re Parten, No. 07-10255-JDW , 2007 Bankr. LEXIS 921 (Bankr. M.D. Ga. Mar. 13, 2007), the United States Bankruptcy Court for the Middle District of Georgia, Albany Division, held that 11 U.S.C. § 109(g)(2) did not allow the Debtor to obtain a stay of foreclosure, and thus granted his Creditors relief from stay.
Background
The Debtor filed a Chapter 12 petition in February 2006. Id. at 1. In January 2007, creditors Ray and Jeanette Bittner received relief from the automatic stay with respect to certain real property owned by the Debtor. Id. The Debtor then voluntarily dismissed his Chapter 12 case and filed for Chapter 13 bankruptcy before the Creditors could complete the foreclosure. Id. at 2. Creditors filed motions for relief from the stay to allow them to continue with the foreclosure sale. Id.
Arguments
Creditors argued that the Debtor's unsuccessful bankruptcy history demonstrated his inability to fund a feasible Chapter 13 plan. Id. at 2-3.
Debtor argued that his Chapter 13 plan was feasible and the automatic stay should remain in place. Id.
Analysis and Holdings
The court began by analyzing 11 U.S.C. § 109(g)(2), which provides that no individual or family farmer may be a debtor if he has been a debtor in a previous case during the preceding 180 days and if he "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." Id. at 3. This provision allows a creditor to enforce rights granted in an order entered in a previous case, and if a debtor were allowed to avoid the previous order just by filing a new case it would render the remedy meaningless. Id. The court concluded that § 109(g)(2) does not allow the Debtor to file his new case to prevent the foreclosure sale. Id. at 4. Furthermore, allowing his new case would do injustice and irreparable harm to his Creditors. Id. Thus the court granted the Creditors' motion requesting stay relief to avoid such harm. Id. at 5.
The case was decided on March 13, 2007.