Don B Bosco and Nancy Bosco

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
WILMINGTON DIVISION
IN RE:
DON B. BOSCO and NANCY BOSCO,
DEBTORS.
CASE NO. 10-08000-8-JRL
Chapter 13
ORDER EXTENDING AUTOMATIC STAY
This matter came before the court on the debtors’ motion to extend the automatic stay. A
hearing was held on October 27, 2010, in Raleigh, North Carolina.
The debtors filed a voluntary chapter 13 petition on October 1, 2010. This petition was
their third in 18 months. The first case, filed on April 1, 2009, was dismissed on September 23,
2009 for the debtors’ failure to make plan payments. The case was later reopened to investigate
conduct of the debtors’ former counsel but was closed again on March 31, 2010. The second
petition was filed on December 4, 2009 and dismissed without prejudice on September 9, 2010
for exceeding the secured debt limits of 11 U.S.C. § 109(e). Upon this motion to extend the
automatic stay under § 362(c)(3)(B), creditor SunTrust Bank responded, asserting that the
debtors failed to disclose almost $100,000.00 in unsecured debts listed in their second filing,
which would make them in violation of the §109(e) limits. The debtors have provided sufficient
explanation as to why these unsecured debts were not listed in their current petition and the court
SO ORDERED.
SIGNED this 09 day of November, 2010.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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finds they are within the unsecured debt limits of §109(e). Furthermore, the debtors have
demonstrated substantial changes in their financial and personal affairs such that extension of the
automatic stay should be granted as to any and all creditors.
At the hearing, the debtors testified and presented evidence of their unsecured debts as of
the date of filing. In determining eligibility for filing chapter 13, §109(e) allows individuals with
regular income to have noncontingent, liquidated, unsecured debts of up to $360,475.00. 11
U.S.C. §109(e). For joint debtors, the debt limits apply individually. So long as each spouse
qualifies separately under the limits, they are eligible to file jointly even if the debts of both
spouses together would exceed the limits. In re Werts, 410 B.R. 677, 688 (Bankr. D. Kan.
2009). This reading of §109(e) comports with the goal of encouraging chapter 13 filings as
opposed to allowing married debtors half of the debt limits allowed for individual debtors. Id.
The debtors testified that they have made efforts to keep the majority of their unsecured debts
separate and share joint liability on only two unsecured debts, which are owed to SunTrust Bank.
The female debtor has $301,411.00 in unsecured claims. SunTrust Bank argues she
failed to list three debts which would make her in excess of the $360,475.00 limit. The first debt
is a Bank of America credit card joint claim for $8,900.00. The female debtor testified this debt
was listed in their petition; however, it was without an amount of claim or account number. The
claim had been transferred several times such that the debtors could not match it to the claim
listed in the previous filing. Furthermore, the female debtor said she erroneously listed the claim
as a joint debt when the account was only in her name. The debtors presented account
statements that came in the female debtor’s name alone. Including this debt in the amount
asserted by SunTrust leaves the female debtor below the eligibility amount.
The second debt included was a Washington Mutual credit card claim in the female
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debtor’s name for $13,492.00. This claim was sold to Portfolio Recovery Associates and is
accurately listed in the debtors’ petition.
The third debt SunTrust argues the debtors failed to list is a Bank of America joint debt
of $46,429.55. The debtors owned and operated Tuscan Grill, Inc., a restaurant in Carolina
Beach. This claim was for a credit card held in the corporation’s name. The female debtor listed
this debt in the prior petition because she did not know she did not have to list corporate debts
that were not personally guaranteed by her and her husband. Nothing in the record indicates that
this claim is against the debtors. The statements for the account were in the name of Tuscan
Grill, Inc., the debt does not appear on the debtors’ credit report, and the debtors have objected
to Bank of America’s claim for these reasons. SunTrust has not shown evidence to the contrary;
thus, in terms of the eligibility analysis, the $46,429.55 claim is not included.
The male debtor has unsecured debts totaling $194,388.57 after including proof of claims
filed to date. For the reasons stated above, the male debtor does not need to include the
$46,429.55 debt cited by SunTrust Bank as a joint debt, which for the purposes of the eligibility
analysis has been established as a corporate debt. In addition, the male debtor does not need to
list the $8,900.00 debt, which, as stated above, is a debt of the female debtor. There are two
remaining claims SunTrust Bank argues were left out of the petition and thus out of the male
debtor’s eligibility analysis. The first is a $4,801.42 credit card debt in the male debtor’s name.
This claim has been transferred to LVNV Funding since the last bankruptcy filing. It was not
listed in the petition; however, LVNV Funding filed a proof of claim and this amount is included
in the male debtor’s $194,388.57 unsecured debt total. The second claim is a $24,505.05 credit
card debt. Again, this debt was not listed in the petition; however, Creditor FIA Card Services
has filed a proof of claim in this amount and it is included in the male debtor’s total unsecured
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1The debtors filed an objection to this claim. FIA listed it as a joint claim and the debtors
contend it is a debt of the male debtor only. The debtors presented account statements that
indicate the credit card was in the male debtor’s name alone, and thus for purposes of the
eligibility analysis, the court finds it is only part of his individual debt total.
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debt which is below the §109(e) limit.1 After reviewing the debtors’ testimony and exhibit, the
court finds both debtors are not in violation of the unsecured debt limits of §109(e)
Having had a case pending within the previous year, the debtors must overcome the
presumption that the current case was not filed in good faith by demonstrating a substantial
change in financial or personal affairs. 11 U.S.C. §362(c)(3)(C). The debtors have met this
burden. Both have found new employment and reduced their health care costs by securing
health insurance through the female debtor’s new employment. In particular, the male debtor
obtained certification in computer-aided design, as he can no longer physically work as a
contractor. He has been successful in earning income from his design services clients. The
debtors liquidated two properties that caused them to exceed the secured debt limits in the
previous filing. Since that time, they have secured stable tenants in their remaining rental
properties.
The court finds that the debtors have provided clear and convincing evidence sufficient to
rebut the presumption that the case was not filed in good faith. Accordingly, and pursuant to
§362(c)(3)(B), the stay contained in § 362(a) shall continue in effect throughout the pendency of
the debtors' chapter 13 case as to all creditors unless otherwise ordered or terminated by
operation of a separate statutory provision (e.g., § 362(h)).
END OF DOCUMENT
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