Russell Chalfont and Jennifer Chalfont

1
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
RUSSELL CHALFONT AND
JENNIFER CHALFONT,
DEBTORS.
CASE NO. 12-07428-8-JRL
CHAPTER 13
ORDER
This matter came before the court on the debtors’ motion to impose the automatic stay and
the motion for relief from the automatic stay filed by State Employees’ Credit Union (“SECU”).
A hearing took place in Raleigh, North Carolina on November 27, 2012.
Russell Chalfont (“male debtor”) and Jennifer Chalfont (“female debtor”) (collectively
“debtors”) filed a joint voluntary petition for relief under chapter 13 of the Bankruptcy Code on
October 17, 2012. SECU holds a promissory note executed by the debtors on April 14, 2009, in the
original amount of $234,000.00, which is secured by a deed of trust on the debtor's property located
at 233 Muses Mill Court, Holly Springs, North Carolina ("real property"). 	The debtors have
defaulted on their obligations under the note and are currently delinquent in the amount of
$21,079.57. 	The debtors currently owe SECU approximately $241,989.75 on the note and the
SO ORDERED.
SIGNED this 29 day of November, 2012.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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1 At the time of each prior dismissal, the debtors had proposed and the court had
confirmed their chapter 13 plan.
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scheduled value of the real property is $230,000.00.
On November 1, 2012, SECU filed the motion for relief from the automatic stay or adequate
protection currently before the court, requesting relief from the automatic stay. As an additional
expense of instituting the action, SECU incurred reasonable attorneys’ fees and expenses, which it
requests the debtors be deemed responsible. 	On November 2, 2012, the debtor filed a response
opposing the relief requested by SECU in the motion for relief from the automatic stay. Thereafter
on November 6, 2012, the debtors filed a motion to impose the automatic stay, pursuant to §
362(c)(4)(B).
Two prior cases of the debtors’ were pending within the preceding one-year period. The
debtors’ first prior case, Case No.10-05374-8-JRL, was filed on July 6, 2010 and was dismissed on
November 10, 2011. 	The debtors’ second prior case, Case No. 11-08670-8-SWH, was filed on
November 11, 2011, and dismissed on July 11, 2012. 	Both prior cases were dismissed for the
debtors’ failure to make their required chapter 13 plan payments.1 Therefore, the automatic stay did
not go into effect upon the debtors’ current filing, see 11 U.S.C. § 362(c)(4)(A)(i), and the current
filing is subject to the presumption that it was not filed in good faith pursuant to 11 U.S.C. §
362(c)(4)(D). Because the debtors’ current bankruptcy petition follows two previously dismissed
cases within the preceding one-year period, the automatic stay may only be imposed if the debtors
can rebut the presumption that the case was not filed in good faith by clear and convincing evidence.
11 U.S.C. §§ 362(c)(4)(D)(i), 362(c)(4)(B). To rebut the § 362(c)(4)(D) presumption and invoke the
protections afforded by the automatic stay, the debtors “must present clear and convincing evidence
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that the circumstances between the . . . filings have so changed that the debtor[s] will be able to
confirm and successfully complete a chapter 13 plan.” In re Brown, No. 11-06998-8-JRL, slip. op.,
at 2 (Bankr. E.D.N.C. Nov. 3, 2011).
At the hearing, the female debtor testified that the debtors’ circumstances have changed
substantially since the previous filing in that she obtained employment with the Wake County Public
School System as a fourth grade teacher at Holly Ridge Elementary, which increased her monthly
income by approximately $600.00 per month from her previous employment. 	According to her
testimony, this sizable increase in her monthly income, along with curtailing their expenses and the
surrender of a vehicle, will allow the debtors to confirm and successfully complete their chapter 13
plan.
After considering the record, testimony of the female debtor and other evidence presented,
the court finds that the debtors have rebutted the presumption that their current case was not filed in
good faith by clear and convincing evidence. 	Because they have successfully rebutted the
presumption, the automatic stay is hereby imposed against all creditors. Persuading the court was
the fact that the previous dismissals arose from the debtors’ failure to make their required plan
payments and the female debtor’s procurement of new employment will likely provide the immediate
increase in income needed for their current case and plan to be successful. 	Cf. Brown, No.
11-06998-8-JRL, at 2 (holding that the debtor failed to provide clear and convincing evidence to
rebut the presumption where there was “virtually no evidence of a change in circumstances [as] [t]he
debtor’s income is exactly the same as it was at the time of the first case.”); In re Ortiz, 355 B.R. 587,
592-93 (Bankr. S.D. Tex. 2006) (noting that the debtor failed to meet the clear and convincing
standard required by § 362(c)(4)(D) because the testimony concerning her changed fiscal personal
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circumstances was neither persuasive nor credible). Furthermore, the court finds that there is not
sufficient cause to grant SECU relief from the automatic stay under § 362.
Based on the foregoing and pursuant to § 362(c)(4)(B), the debtors’ motion to impose the
automatic stay is ALLOWED and SECU’s motion for relief from the automatic stay is DENIED.
The debtors are ordered to tender their chapter 13 plan payments to the trustee within thirty (30) days
of the due date. Should they fail to make their plan payments as set forth above, their case will be
dismissed without further hearing of this court. 	Additionally, SECU will be allowed to add the
reasonable attorneys’ fees and costs incurred in the prosecution of this action to its secured claim.
END OF DOCUMENT
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