Case Conclusion Date:June 20, 2011
Practice Area:Bankruptcy / Chapter 13
Outcome:Case was reversed and remanded on Appeal, in favor of our Client.
Description:The Debtors (represented by Nathan DeLadurantey) filed a chapter 13 bankruptcy case within 910 days of purchasing a vehicle. Their chapter 13 plan, which provided for full payment of the vehicle claim pursuant to the â€œhanging paragraphâ€ contained in 11 U.S.C. Â§ 1325(a)(9), was confirmed, but the case was dismissed nine days later for failure to make plan payments. Four days after the creditor took judgment in state court, the debtors refiled a second chapter 13 case which was now outside of the 910-day period. Accordingly, debtors plan proposed to â€œcram downâ€ the vehicle claim. Creditor objected to confirmation based on bad faith and the theory of equitable tolling. The bankruptcy court rejected the bad faith argument finding that refiling outside of the 910-day period alone is not enough to establish bad faith. However, the court sustained the objection to confirmation based on the theory of equitable tolling and the U.S. Supreme Court case In re Young, 535 U.S. 43 which held that a â€œlook-back periodâ€ is subject to equitable tolling in cases where a creditor is disabled from protecting its rights.