Alastair M. Ingram and Donna M. Ingram

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
ALASTAIR and DONNA INGRAM, 	No. 11-13216
Debtor(s).
______________________________________/
Memorandum on Plan Confirmation
________________
The Chapter 13 plan of debtors Alastair and Donna Ingram is now before the court. There are
no objections, but the court has an independent duty to review Chapter 13 plans for compliance with
the Bankruptcy Code.1 United Student Aid Funds, Inc. v. Espinosa, – U.S – ,130 S.Ct. 1367, 1381,
176 L.Ed.2d 158 (2010).
The plan calls for the avoidance of a second mortgage on the Ingrams’ home, erasing a debt of
about $27,000.00. Such debt may not be erased in Chapter 7. Dewsnup v. Timm, 502 U.S. 410, 112
S.Ct. 773, 116 L.Ed.2d 903 (1992). However, it may be erased as part of a Chapter 13 plan. In re
Zimmer, 313 F.3d 1220, 1222 (9th Cir.2002).
The Ingrams first proposed to pay $154.00 per month for 36 months, which would be enough
1After the court raised the issue of good faith on its own, the Chapter 13 Trustee filed an
objection. The court elects to decide the case as if the objection was solely sua sponte.
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Entered on Docket
January 03, 2012
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 11-13216 Doc# 27 Filed: 01/03/12 Entered: 01/03/12 14:50:54 Page 1 of 3

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only to pay their attorneys’ fees and the trustee’s fees. They then filed an amended plan calling for
payments of $104.00 per month for 48 months. Like the original plan, the amended plan only pays
their attorney and the Trustee’s fees even though they could pay something to their creditors merely by
extending the length of their plan.
There is no minimum payment required by the Bankruptcy Code, nor is there any specific
definition of good faith which a debtor must demonstrate pursuant to § 1325(a)(3). However, it is
generally considered to be bad faith to manipulate the Bankruptcy Code to achieve a result not
permitted in Chapter 7 merely by calling it a Chapter 13. 	In re Eisen, 14 F.3d 469, 470 (9th Cir 1994).
The court understands that these are hard times and does not look for ways to deny
confirmation of a Chapter 13 plan. 	It takes very little to present a prima facie case for confirmation,
which is all the court requires to maintain the integrity of bankruptcy law. A debtor can easily satisfy
the court’s sua sponte concerns by showing a mortgage arrearage to be cured, a tax debt to be paid, a
small dividend to creditors, or something unique to Chapter 13 so the case is not blatantly a disguised
Chapter 7.
Relying on a bankruptcy case from New Mexico, In re Molina, 420 B.R. 825 (Bkrtcy. D.N.M.
2009), the Ingrams take the position that they do not have to make even a prima facie showing of a
legitimate Chapter 13 purpose and are entitled to confirmation. The court does not agree with this
case, and believes that the law was correctly stated in In re Paley, 390 B.R. 53, 59-60 (Bkrtcy.
N.D.N.Y.2008):
A plan whose duration is tied only to payment of attorney’s fees simply
is an abuse of the provisions, purpose and spirit of the Bankruptcy Code.
These cases, basically Chapter 7 cases hidden within Chapter 13 petitions,
blur the distinction between chapters into a meaningless haze.
See also In re Puffer, 453 B.R. 14, 22 (D.Mass. 2011)[“[T]he bankruptcy court did not err in following
the substantial weight of case law adopting the bright-line rule that attorney fee-only cases, including
this one, fail to satisfy the statutory good faith requirement.”]; In re Buck, 432 B.R. 13, 22n14
(D.Mass. 2010), and cases therein cited. See also Judge Jellen’s decision in In re Tran, 431 B.R. 230,
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Case: 11-13216 Doc# 27 Filed: 01/03/12 Entered: 01/03/12 14:50:54 Page 2 of 3

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238 (Bkrtcy.N.D.Cal.2010), aff’d – F.Supp.2d –, 2011 WL 3862010 (2011)[“[T]his case, as a chapter
13 case, is nothing other than an attempt by [the debtor] to unfairly manipulate the Bankruptcy Code
to skirt the Supreme Court’s holding in Dewsnup, and thus, was not filed in good faith.”].
The court has reviewed the testimony of the Ingrams carefully, and of course has considerable
sympathy for their situation, shared by many in this area. 	It would have been very easy for them to
propose a plan which at least looked like to might be a good faith use of Chapter 13, which is all the
court has ever required of any debtor when there were no creditor objections. Instead, the Ingrams
have argued that they are entitled to confirmation of their plan as proposed. The court elects to follow
the majority of cases and holds that a debtor does not meet the good faith requirement of § 1325(a)(3)
of the Bankruptcy Code where, as here, the debtor makes no effort to repay any debts other than to
counsel, a plan which would pay something on some debts is feasible, and the debtor’s purpose in
filing a Chapter 13 is to achieve a result forbidden in Chapter 7. Applying this law, and considering all
of the facts and circumstances, the court finds that the Ingrams have failed in their burden to
demonstrate good faith.
For the foregoing reasons, confirmation will be denied. Counsel for the Trustee shall submit an
appropriate form of order.
Dated: January 3, 2012
SAlan Jaroslovsky
U.S. Bankruptcy Judge
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Case: 11-13216 Doc# 27 Filed: 01/03/12 Entered: 01/03/12 14:50:54 Page 3 of 3