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Bankr. E.D.N.C.: In re Stockwell- Dismissal of 3rd and 4th Bankruptcy for Bad Faith under §707(a)

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By Ed Boltz, 9 January, 2018
Summary: Between March 7, 2017, and November 28, 2017, Mr. Stockwell filed first a Chapter 13 and then three Chapter 7 cases, with the fourth case being filed while the third was still pending. (The dismissal of the third case had been set aside as it had been automatically dismissed due to the failure to file documents under 11 U.S.C. § 521(I) while the Bankruptcy Administrator’s motion to dismiss with prejudice.) Mr. Stockwell’s cases were filed with the apparent intent of holding off a foreclosure by Ocwen, as it was the only creditor listed in any of his cases. (That failure to disclose other creditors and to file complete schedules had caused the dismissal of the first and second cases.) The bankruptcy court consolidated the motions to dismiss the third and fourth cases, ultimately finding that both should be dismissed under 11 U.S.C. § 707(a) as they were filed in bad faith. Further, applying 11 U.S.C. § 109(g), the bankruptcy court found cause to bar Mr. Stockwell from filing further cases for a period of twelve (12) months, holding that while § 109(g) specifically proscribes that a case can be dismissed with prejudice for 180 days the court had authority to bar filings for longer. Commentary: Without disagreeing with the result, it is unfortunately that the court again imported “bad faith” into 11 U.S.C. § 707(a), particularly as that section specifically allows for dismissal for “unreasonable delay by the debtor that is prejudicial to creditors” and failure to file documents required, either of which would have been sufficient and more appropriately narrow bases for dismissal in this case. For a copy of the opinion, please see: Stockwell- Dismissal of 3rd and 4th Bankruptcy for Bad Faith under §707(a)

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