Frances Scarborough

1This Memorandum constitutes the findings of fact and conclusions of law required by Fed. R.
Bankr. P. 7052. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §1334 and §157(a).
This is a core proceeding pursuant to 28 U.S.C. §157(b)(1) and (b)(2)(A), (G) and (L).
2The Debtor appealed the October 14, 2003 order and on October 29, 2004, the order was
affirmed by the District Court. In re Scarborough, Misc. No. 03-228, slip op. (E.D.Pa. Oct. 29, 2004).
The District Court Order is currently on appeal to the Third Circuit Court of Appeals (Civil Action No.
04cv1718).
3The Debtor’s first chapter 13 plan was filed on October 31, 2001, which was the date her chapter
13 petition was filed. Additional amended chapter 13 plans were filed thereafter on January 11, 2002,
May 28, 2003, January 7, 2003, April 22, 2004, and November 23, 2004.
UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re: 	: 	Chapter 13
:
FRANCES SCARBOROUGH , 	:
:
Debtor. 	: 	Bankruptcy No. 01-35194 KJC
MEMORANDUM1
BY: KEVIN CAREY, UNITED STATES BANKRUPTCY JUDGE
Frances Scarborough (the “Debtor”) filed a chapter 13 bankruptcy petition on October
31, 2001. During her case, she commenced an adversary proceeding (Adv. No. 02-858) seeking,
among other things, to bifurcate the claim of Chase Manhattan Mortgage Corporation (“Chase
Manhattan”) into a secured claim and unsecured claim pursuant to 11 U.S.C. §506(a). On
October 14, 2003, judgment was entered against the Debtor in the adversary proceeding.2
On November 23, 2004, the Debtor filed an amended chapter 13 plan (docket no. 186).
This was the Debtor’s sixth proposed chapter 13 plan.3 At a scheduled hearing on December 20,
2004, I entered an order granting a final continuation on confirmation of the Debtor’s chapter 13
plan until December 28, 2004 (docket no. 192). 	Two other matters also were continued to the
December 28, 2004 hearing date: (i) the motion filed by the chapter 13 trustee to dismiss the
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4The plan filed on December 27, 2004 was admitted at the December 28, 2004 hearing as Exhibit
D-1. Amended Schedule I was admitted as Exhibit M-7 and amended Schedule J was admitted as Exhibit
M-9.
5The amount of mortgage arrears set forth in the plan was itemized to include pre-petition arrears
in the amount of $24,053.00 and estimated post-petition arrears in the amount of $12,000.00, based upon
30 months of unpaid post-petition mortgage payments (4/2002 to 10/2004). (Ex. D-1)
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Debtor’s chapter 13 case (docket no. 177); and (ii) the motion filed by Chase Manhattan for
relief from the automatic stay or, in the alternative, to dismiss the bankruptcy case (docket no.
188).
On the eve of the confirmation hearing, the Debtor filed a seventh amended chapter 13
plan (docket no. 197) and amended Schedule I (docket no. 199) and amended Schedule J (docket
no. 198). Despite the late filing, the amended documents were made part of the record. 4 After
the hearing, each side filed a legal memorandum in support of their respective positions and the
three matters were taken under advisement.
For the reasons set forth below, the Court will deny confirmation of the Debtor’s
amended chapter 13 plan due to lack of feasibility and will grant the motions to dismiss the
Debtor’s case.
FACTS
On December 27, 2004, the Debtor filed her seventh amended chapter 13 plan which
provides for payment to secured creditor Chase Manhattan of mortgage arrears in the amount of
$36,053.00, 5 payment of the Trustee’s commission, and a small pro rata distribution to unsecured
creditors. (Ex. D-1.) On the same date, the Debtor also filed an amended Schedule J which
states that the Debtor has excess income in the amount of $1,801 per month. (Ex. M-9.)
The Debtor’s amended Schedule I lists her current monthly income at $1,215. (Ex. M-7.)
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6Citations herein are made to the transcript of the hearing held on December 28, 2004.
3
The Debtor is employed as a substitute secretary by the School District of Philadelphia. (Tr. at
27, Ex. M-8.) 6 As a substitute secretary, she is assigned each job on a daily basis. (Tr. at 27.)
At the December 28, 2004 hearing, the Debtor testified that she has been working five days a
week for about a month and a half. Id. She also testified that she hoped to continue working
with the school district, but was not sure if the work would continue over the summer. Id. Her
year-to-date pay as of December 17, 2004 was $1,822.50. (Ex. M-8.)
The Debtor testified that she also receives Social Security Disability payments for herself
and her daughter for the combined amount of $1,175 monthly. (Tr. at 29, Ex. M-7.) The Debtor
conceded, however, that after an interim period, her regular income will cause her disability
payments to decrease. (Tr. at 30.)
The Debtor also testified that she receives rent payments of $550 monthly from Mr.
Darrell Mills, a tenant at 5116 N. Warnock Street, Apt. #2. (See Ex. M-6.) The Debtor
introduced a copy of her lease with Mills, which showed that Mills has been a tenant since
February 8, 2000. (Ex. M-6.) The Debtor testified that Mills pays his rent in a timely fashion.
(Tr. at 27.) In addition, the Debtor testified that she receives child support payments from
Charles Beasley that average $360 monthly. (Tr. at 28, Ex. M-5.) However, outside of her
testimony, the Debtor did not provide evidence of payment or sources of income for either Mills
or Beasley. (Tr. at 6.)
During cross-examination regarding the expenses listed on her amended Schedule J, the
Debtor testified that her utility costs have not changed since 2001 because she receives a fixed
rate as a low-income resident. (Tr. at 14-15.) She also testified that she will need to spend
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7On April 30, 2005, the Debtor filed her eighth amended chapter 13 plan (docket no. 220),
proposing that she continue to make monthly payments of $500 until month 46, and then make payments
of $2,195.00 for months 47 through 60. Although I cannot substitute this plan for the plan considered at
the December 28, 2005 hearing, since it was filed months after the record was closed, I will take judicial
notice of its filing under Fed.R.Evd. 201, made applicable to this proceeding pursuant to Fed.R.Bankr.P.
9017. (“Federal Rule of Evidence 201 authorizes a court to take judicial notice of an adjudicative fact
‘not subject to reasonable dispute’...[and] so long as it is not unfair to a party to do so and does not
undermine the trial court’s fact finding authority.” In re Indian Palms Assoc., 61 F.3d 197, 205 (3d Cir.
1995)). The latest filed plan is simply further evidence of the Debtor’s continuing inability to fund her
proposed plan.
8The secondary issue is whether the Debtor may modify her plan pre-confirmation to include
payment of post-petition mortgage arrears. At the December 28, 2004 hearing, I indicated my intention to
address the post-petition mortgage arrears issue before addressing the issue of plan feasibility. (Tr. at pp.
34-35.) 	However, upon further consideration, I conclude that feasibility should be considered first
because, even assuming the Debtor is permitted to her pay post-petition mortgage arrears in the plan, the
Debtor did not satisfy her burden of proving that her income is sufficient to make the proposed payments
under her plan.
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$6,000 for dental treatment in the near future, which was not accounted for in her expenses on
amended schedule J. (Tr. at 16, Ex. M-9.)
The Debtor’s amended chapter 13 plan provides for tiered payments to the Trustee as
follows:
$ 	50.00 per month for months 	1-24
$ 108.00 per month for months 25-36
$ 500.00 per month for months 37-42
$1,593.00 per month for months 43-48
$2,040.00 per month for months 49-60
(Exhibit M-1.) As of December 7, 2004, the Debtor was in the 38th month of her plan. (Tr. at
31.) 7
DISCUSSION
The primary dispute regarding confirmation of the Debtor’s amended chapter 13 plan
focuses on feasibility, or more specifically, whether the Debtor has the financial ability to make
all of the payments under the plan. 11 U.S.C. § 1325(a)(6).8
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As the plan proponent, the Debtor has the burden of proving that her that her plan meets
the requirements for confirmation set forth in Bankruptcy Code §1325(a). Meyer v. Hill (In re
Hill), 268 B.R. 548, 552 (B.A.P. 9th Cir. 2001). This includes proving that her plan is feasible, as
required by §1325(a)(6), which provides that the plan may be confirmed if “the debtor will be
able to make all payments under the plan and to comply with the plan.” 11 U.S.C. §1325(a)(6).
See also In re Yeager, 2004 WL 422049, *3 (Bankr.E.D.Pa. Feb. 18, 2004); In re Felberman, 196
B.R. 678, 685 (Bankr.S.D.N.Y. 1995). 	As discussed in First Nat’l Bank of Boston v. Fantasia
(In re Fantasia), 211 B.R. 420 (B.A.P. 1st Cir. 1997):
To satisfy feasibility of a debtor’s plan must have a reasonable likelihood
of success, i.e., that it is likely that the debtor will have the necessary
resources to make all payments as directed by the plan. 11 U.S.C. §
1325(a)(6). The debtor carries the initial burden of showing that the plan
is feasible. Before confirmation, the bankruptcy court should be satisfied
that the debtor has the present as well as the future financial capacity to
comply with the terms of the plan.
Fantasia, 211 B.R. at 423 (citations omitted). Although the Debtor filed amended
Schedules I and J, which set forth a budget showing that excess income over expenses is
sufficient to make the Chapter 13 plan payments, the Debtor’s evidence does not support
those figures. The income on her amended Schedule I is comprised of net monthly wages
of $934, rental payments of $550, child support of $360, and social security disability
payments of $1,175. (Ex. M-7.) 	With respect to her wages, the Debtor testified that her
job as a substitute secretary is on a day-to-day basis as needed. (Tr. at 27.) Although she
testified that she worked five days per week for the month and a half prior to the hearing,
she did not know whether steady employment would continue, particularly during the
summer months. Id.
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The Debtor also stated that she receives $1,175 in monthly Social Security
Disability checks for herself and her daughter. (Tr. at p. 29.) However, she admitted that
the amount of her Social Security Disability payments would decrease, after an interim
period, as she continues to earn wages from her secretarial job. (Tr. at p. 30.) Therefore,
even if the Debtor is able to maintain steady employment with the School District, her
total income will decrease as the Social Security Disability payments decrease or are
terminated.
As to the remaining income items, the Debtor’s evidence is tenuous. To
document the amount of rental income she receives, the Debtor provided a copy of the
month-to-month lease with her tenant (Ex. M-6) and testified that her tenant has lived in
the apartment since February 2000 and has made timely rent payments. (Tr. at 27.)
However, she did not provide any evidence that those payments were actually being
made. (Tr. at 28.) 	With respect to her child support payments, the Debtor presented a
copy of a letter from Charles Beasley stating that he pays $360 per month in child
support payments. (Ex. M-5.) 	Although the Trustee and Chase Manhattan previously
requested more detailed information to confirm the amount of child support payments
(such as receipts or evidence regarding Beasley’s source of income), the Debtor did not
provide it. (Tr. at 7). The Debtor testified that $160 of the monthly child support is paid
directly from Beasley’s employer to her pursuant to a court order, but the remaining
amount is paid voluntarily by Beasley. (Tr. at p.28.)
The Debtor’s amended Schedule J did not show any increase in expenses, except
to add $40 to her mortgage payment as a correction. (Ex. M-9, Tr. at 13). 	The Debtor
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9The record is unclear as to the amount of the increased dental expenses and when they would
have to be paid. The Debtor testified that she was going to try to negotiate payment terms when she finds
a specialist for her treatment. (Tr. at 17). However, her expense is certain to be much more than the $10
per month over the course of the chapter 13 plan, which is now reflected in amended Schedule J.
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testified, however, that she may have increased medical expenses due to dental treatment
that she requires that would cost approximately $6,000, although that amount would be
paid over time.9 (Tr at p. 13.) Her amended Schedule J does not include any increase in
medical expenses.
After review of the Debtor’s evidence, I conclude that the Debtor has not satisfied
her burden of proving that she will be able to make all payments under her plan. She has
not submitted adequate evidence to verify the full amount of child support payments she
receives each month. The record demonstrates that her income will actually decrease,
because either her wages or her disability payments will end. Her testimony revealed
that both sources of income could not continue during the term of the plan. The Debtor’s
amended plan requires a significant increase in the monthly payment amount in month 42
(from $500 per month to $1,620 per month) and in month 43 (from $1,620 per month to
$1,801 per month). 	Although the Debtor’s schedules show that she currently receives
income from two sources (i.e., her employment as a secretary and her disability
payments), she has not shown an ability to make her plan payments consistently, even at
the lower amounts of $50 and $100 per month. (See Ex. M-4).
Furthermore, the Debtor’s expenses appear to be understated. I find that it
unlikely that her expenses have not increased since her petition was filed in 2001. The
Debtor also admitted that her amended Schedule J failed to include significant dental
expenses she will have to incur. The Debtor’s budget also fails to include any cushion
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10 Bankruptcy Code §1307(c) provides in relevant part that
(c) [O]n request of a party in interest or the United States trustee and after notice and a hearing, the court
may convert a case under this chapter to a case under chapter 7 of this title, or may dismiss a case under
this chapter, whichever is in the best interests of creditors and the estate, for cause, including - 	(1)
unreasonable delay by the debtor that is prejudicial to creditors;
....
(5) 	denial of confirmation of a plan under section 1325 of this title and denial of a request
made for additional time for filing another plan or a modification of a plan;
11 U.S.C. §1307(c).
8
for emergencies not budgeted. See e.g., In re Jones, 10 B.R. 128 (Bankr. E.D. Va. 1981)
(confirmation is denied when the court found a budget unrealistic for not including
amounts for home maintenance or automobile insurance, and little for recreation or food
and clothing); In re Hockaday, 3 B.R. 254 (Bankr. S.D. Cal. 1980) (confirmation is
denied when the debtor only budgeted $10 for emergencies). Consequently, confirmation
of the Debtor’s Chapter 13 plan is denied.
I now turn to the Trustee’s request for dismissal of the case and Chase
Manhattan’s request for relief from the stay, or in the alternative, dismissal of the case.
The Debtor has had the benefit of bankruptcy protection since her petition was filed in
October 2001. However, despite her attempts to amend the chapter 13 plan, the Debtor
does not appear to have a realistic ability to propose a confirmable chapter 13 plan. Her
latest amended plan is not feasible and it does not appear that she has sufficient income to
propose a confirmable plan. Accordingly, this case will be dismissed under Bankruptcy
Code §1307(c)(1) and (5).10 See Chambers v. Countrywide Home Loans, Inc. (In re
Chambers), 2003 WL 22996980, *4 (Bankr.E.D.Pa. Dec. 10, 2003)(The court dismissed
a bankruptcy case pursuant to §1307(c)(1),(4)and (5) after the debtor had been in
bankruptcy for more than one year and upon concluding that the debtor had not filed and
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9
was not capable of filing a confirmable plan).
In its Motion to Dismiss, Chase Manhattan also alleges that the Debtor’s
bankruptcy case was filed in violation of Bankruptcy Code §109(g) and requests that the
order dismissing the bankruptcy case include a bar to prevent the Debtor from filing
another petition for 180 days. 	Although the Debtor has filed three prior bankruptcy
cases, Chase Manhattan has not alleged any conduct by the Debtor in this case in which
the Debtor failed to abide by orders of the court, or to appear in court in proper
prosecution of her case (§109(g)(1)), or the Debtor’s request for a voluntary dismissal
after the filing of a request for relief from the automatic stay (§109(g)(2)).
However, my order of December 20, 2004, provided, in part: “If this case is not
confirmable on December 28, 2004, the case will be dismissed and the debtor may be
barred from filing any further bankruptcy cases without further leave of Court.” The
Debtor has now had the benefit of the bankruptcy stay for nearly four years, during which
time she has been unable to achieve confirmation of any plan and during which time she
failed to make a substantial portion of her post-petition mortgage payments. Therefore,
under these circumstances, the Debtor must first demonstrate her ability to propose and
perform a chapter 13 plan before she will be allowed to file another chapter 13 case
within 180 days.
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An appropriate Order follows.
BY THE COURT:
KEVIN J. CAREY
UNITED STATES BANKRUPTCY JUDGE
Dated: 	July 21, 2005
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UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re: 	: 	Chapter 13
:
FRANCES SCARBOROUGH , 	:
:
Debtor. 	: 	Bankruptcy No. 01-35194 KJC
ORDER DENYING CONFIRMATION OF AMENDED PLAN
AND DISMISSING CASE
AND NOW, this 21 st day of July, 2005, upon consideration of the Debtor’s
Amended Chapter 13 Plan (docket no. 197), the chapter 13 trustee’s motion to dismiss
the Debtor’s chapter 13 case (docket no. 177); and (iii) Chase Manhattan Mortgage
Corporation’s motion for relief from the automatic stay or, in the alternative, to dismiss
the bankruptcy case (docket no. 188), and after a hearing on these three matters, and for
the reasons set forth in the foregoing Memorandum, it is hereby ORDERED and
DECREED that:
1. 	Confirmation of the Debtor’s Amended Chapter 13 Plan is DENIED; and
2. 	This bankruptcy case is DISMISSED and the Debtor is barred from filing
a chapter 13 bankruptcy petition within 180 days from the date of this
Order without prior leave of Court.
BY THE COURT:
KEVIN J. CAREY
UNITED STATES BANKRUPTCY JUDGE
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2
Copies to:
Frances Scarborough
5116 North Warnock Street
Philadelphia, PA 19141
Leslie E. Puida, Esquire
Goldbeck McCafferty & McKeever
Mellon Independence Center, Suite 5000
701 Market Street
Philadelphia, PA 19106-1532
William C. Miller, Esquire
(Chapter 13 Trustee )
111 S. Independence Mall
Suite 583
Philadelphia, PA 19106
Frederic J. Baker, Sr., Esquire
Senior Assistant United States Trustee
833 Chestnut Street, Suite 500
Philadelphia, PA 19107
Timothy B. McGrath, Clerk, U. S. Bankruptcy Court
Pamela Blalock, Courtroom Deputy Clerk
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