1

 As Personal Representative of the Estate of Frederick W. Espeaignette.

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2014 BNH 003 Note: This is an unreported opinion. Refer to LBR 1050-1 regarding

citation.

______________________________________________________________________________

UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEW HAMPSHIRE

In re: Bk. No. 13-10464-JMD

Chapter 13

Jonathan Smolin,

Debtor

Mary F. Stewart 

Mary Stewart Law, PLLC 

2 1/2 Beacon Street , Suite 285 

Concord, NH

Christopher P. Mulligan

Bosen & Associates, PLLC 

96 Chestnut Street

Portsmouth, NH

Attorney for Creditor William F. Espeaignette,

Personal Representative of the Estate of Frederick W. Espeaignette

MEMORANDUM OPINION

I. INTRODUCTION

The Court has before it creditor William F. Espeaignette’s1 (“Espeaignette”) Objection to

Confirmation of Plan (Doc. No. 22) (the “Objection”). The Objection concerns Jonathan

Smolin’s (the “Debtor”) chapter 13 plan (Doc. No. 6) (the “Plan”), and alleges that the Debtor

filed it in bad faith because it is not an honest effort to repay creditors, but rather an attempt to

thwart creditors. 

The Court held a non-evidentiary hearing on the matter on September 3, 2013 (the

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 The chapter 13 trustee appeared at the Hearing, but takes no position in this dispute.

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“Hearing”). After hearing oral argument from Espeaignette and the Debtor, the Court issued a

scheduling order (Doc. No. 49) (the “Scheduling Order”) requiring, among other things, that “to

the extent either party determines that there are material factual disputes requiring an evidentiary

hearing, said party must file a motion detailing the disputed factual issues on or before October

1, 2013. Any response to such a motion must be filed on or before October 8, 2013.” Neither

party filed such a motion. The Scheduling Order further required each party to submit a

memorandum of law on the issue of the Plan being filed in good faith on or before October 18,

2013. Each party did so, and the Court took the matter under submission. On October 28, 2013,

the Debtor filed a response to Espeaignette’s memorandum (the “Response”).

This Court has authority to exercise jurisdiction over the subject matter and the parties

pursuant to 28 U.S.C. §§ 1334, 157(a), and U.S. District Court for the District of New

Hampshire Local Rule 77.4(a). This is a core proceeding in accordance with 28 U.S.C. §

157(b)(2)(L).

II. FACTS

The following information comes from the parties’ pleadings and the Court’s docket. 

Neither party filed a motion detailing any material factual disputes requiring an evidentiary

hearing.2

 Accordingly, the Court will accept allegations of fact in the parties’ pleadings as true

for purposes of ruling on the Objection and the Debtor’s opposition thereto.

A. Espeaignette’s Claim Against the Debtor

On June 20, 2007, the Cumberland County Probate Court in Maine entered a consent

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3 Section 707(a) provides that a “court may dismiss a [chapter 7 case] only after notice and a

hearing and only for cause, including--

 (1) unreasonable delay by the debtor that is prejudicial to creditors;

 (2) nonpayment of any fees [or] and charges required under chapter 123 of title 28; and

 (3) failure of the debtor in a voluntary case to file, within fifteen days or such additional

time as the court may allow after the filing of the petition commencing such case, the

information required by paragraph (1) of section 521(a), but only on a motion by the

United States trustee.

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judgment in favor of Espeaignette against the Debtor, in the amount of $210,000, plus interest at

the statutory post-judgment interest rate (the “Judgment”). The underlying nature of the

Judgement and the facts and circumstances that gave rise to it are not readily apparent from the

parties’ pleadings or the Court’s docket and claims register in this case. Neither party has argued

that the underlying nature of the Judgment is relevant to the issues before the Court. 

Espeaignette holds an unsecured claim of $295,121.62 against the Debtor. Espeaignette filed

claim number 4-1 in the Court’s claims register on April 9, 2013, which states “judgment” as the

only basis for the claim. No party has objected to Espeaignette’s claim.

B. The Debtor’s Prior Bankruptcies

On February 14, 2008, the Debtor, along with his spouse, Dianna Smolin, filed a chapter

7 bankruptcy petition in the District of Maine (the “2008 Bankruptcy”). On December 17, 2008,

the U.S. Trustee (the “UST”), with the Debtor’s consent, filed a motion to dismiss the 2008

Bankruptcy with respect to the Debtor only, pursuant to § 707(a) of the Bankruptcy Code.3

According to the motion, the UST had “cause to file an objection to discharge and the Debtors

desiring to avoid the cost of litigation, the [UST and the Debtor] have come to a resolution

whereby [the Debtor] will be dismissed as a Chapter 7 debtor with prejudice for two years (730

days) from the date the dismissal order becomes final.”

 On December 5, 2011, the Debtor filed a second chapter 7 bankruptcy petition in this

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 Section 523(a)(2)(A) excepts from discharge any debt “for money, property, services, or an

extension, renewal, or refinancing of credit, to the extent obtained, by... false pretenses, a false

representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial

condition.”

Section 523(a)(6) excepts from discharge any debt “for willful and malicious injury by the debtor

to another entity or to the property of another entity.”

5 Bankruptcy Judge Louis H. Kornreich of the District of Maine presided over the adversary

proceeding by designation. 

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district (Doc. No. 11-14437-JMD, the “2011 Bankruptcy”). The Debtor filed the 2011

Bankruptcy as a single individual, without his spouse. The Debtor’s Schedules I and J in the

2011 Bankruptcy listed average monthly income of $7,755.66 and average monthly expenses of

$7,245.51, resulting in monthly net income of $510.15.

On February 2, 2012, Espeaignette commenced an adversary proceeding (Doc. No.

12-01011-LHK) against the Debtor, alleging causes of action under § 523(a)(2)(A) and (a)(6) of

the Bankruptcy Code.4

 On April 5, 2012, Espeaignette filed a motion for summary judgment in

the adversary proceeding. As part of his objection to Espeaignette’s motion, the Debtor filed

revised versions of his Schedules I and J in the adversary proceeding, but did not formally

amend his schedules in the 2011 Bankruptcy. Those revised schedules listed average monthly

income of $7,913.76 and average monthly expenses of $8,260.18, resulting in a monthly net loss

of $346.42. On July 19, 2012, the bankruptcy court granted Espeaignette’s motion for summary

judgment as to the § 523(a)(2)(A) count, and entered a final judgment in favor of Espeaignette in

the amount of $210,000 plus post judgment interest and costs.5

On March 7, 2012, the Court granted the Debtor a discharge in the 2011 Bankruptcy

under § 727 of the Bankruptcy Code. On August 3, 2012, the Court closed the 2011 Bankruptcy.

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C. The Present Bankruptcy

On January 10, 2013, the Belknap County Superior Court entered a payment order of

$2,000.00 per month against the Debtor (the “Payment Order”) with respect to Espeaignette’s

Judgment. The first payment under the order was due February 1, 2013. The Debtor did not

make the February payment. According to the Debtor, “[a]lthough [he] could have filed a...

Motion to Reconsider the Payment Order, he was advised that absent a change in circumstances,

it was unlikely to result in a reduction of the monthly payment order.”

On February 27, 2013 (the “Petition Date”), the Debtor filed the present chapter 13

bankruptcy (the “2013 Bankruptcy”). The Debtor cannot receive a discharge in the 2013

Bankruptcy because he received a discharge in the 2011 Bankruptcy within four years of the

filing of the case. See 11 U.S.C. § 1328(e)(1). The Debtor has filed three different versions of

his Schedules I and J, reflecting changes in his income and expenses since the Petition Date. See

Doc. Nos. 1, 47, and 51. The most recent version of the Debtor’s Schedules I and J (Doc. No.

51) was filed in apparent compliance with the Scheduling Order, which required the Debtor to

file any further amendments to those schedules by September 17, 2013. Schedules I and J

currently list average monthly income of $7,224.63 and average monthly expenses of $7,220.70,

resulting in monthly net income of $3.93. Among the Debtor’s expenses are $647.45 per month

for the Debtor’s primary vehicle (a 2012 Nissan Titan truck), $200 per month for the Debtor’s

1924 Dodge Brothers antique truck, and $643.25 per month for the Debtor’s spouse’s primary

vehicle. According to the Debtor’s memorandum, he purchased the Nissan truck between the

2011 Bankruptcy and the present case. The purchase price was $34,243.95 financed over 72

months. As part of his most recent amendments to Schedules I and J, the Debtor explained a

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6 According to the Debtor’s schedules, the Debtor’s two auto lenders are Wells Fargo Dealer

Services, on account of the 2012 Nissan Titan, and Michael Gawlicki, on account of the 1924 Dodge

truck.

7 The State of Maine also filed an objection to the Plan, but later withdrew it as well. See Doc.

Nos. 15 and 32.

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recent decrease in his income, as well areas where he reduced or eliminated expenses. The

Debtor’s Form 22C indicates that he is a below median debtor, with an applicable plan

commitment period of three years. See Doc. No. 1. 

On March 2, 2013, the Debtor filed the Plan (dated February 26, 2013). The Plan

proposes to make 60 monthly payments of $200.00, for a total of $12,000.00 over its life. The

Plan proposes to pay the following claims and administrative expenses: 1) chapter 13 trustee’s

fees and expenses in the amount of $1,200.00; 2) attorney’s fees totaling $1,995.00; 3) a

disputed priority claim to the State of Maine in the amount of $6,000; and 4) an estimated prorata payment to unsecured creditors – which total $308,498 according to the Plan – of 3%. The

Plan states that the Debtor will make payments directly to his two secured auto lenders outside

the Plan.6 After the Debtor filed the Plan, the State of Maine filed a claim, but later withdrew it.7

See Claim No. 3-1 and Doc. No. 31. After claims objections and withdrawals, the remaining

claims in the case are as follows: 1) a $33,611.81 claim by Wells Fargo Dealer Services, secured

by the Debtor’s 2012 Nissan Titan, which the Debtor proposes to pay outside the Plan; 2) a 

$1,714.88 claim by the IRS, of which $1,450.03 is entitled to priority under § 507(a)(8) of the

Bankruptcy Code, according to the claim; and 3) the $295,121.62 claim by Espeaignette, which

is non-dischargeable, as explained above.

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D. The Parties’ Positions

Espeaignette argues that the Plan was filed in bad faith and should not be confirmed on

the following grounds:

1) The Debtor has a history of filing bankruptcy to thwart Espeaignette, has never made

any payments to Espeaignette on account of the Judgment, and is only using the present

bankruptcy to hold off Espeaignette’s collection efforts for five years;

2) The payments under the Plan are not sufficient to cover the statutory interest that will

accrue on Espeaignette’s Judgment, and thus Espeaignette’s non-dischargeable claim will

increase over the life of the Plan; and

3) The Debtor’s proffered expenses include $647.45 per month for the Debtor’s Nissan

Titan truck, and $200 per month for the Debtor’s 1924 Dodge Brothers antique truck,

both of which were recently acquired, and both of which the Debtor intends to pay before

his unsecured creditors.

The Debtor responds that he was unable to pay his obligations as they became due, was

struggling under the weight of oppressive debt, and had two pending lawsuits at the time he filed

his bankruptcy: Espeaignette’s collection action, and a collection action by the State of Maine on

account of a tax obligation the state asserted was a non-dischargeable trust fund tax in the

amount of $113,239.00. Essentially, the Debtor argues that he filed the present bankruptcy as an

honest effort to repay his creditors to the best of his abilities, he has no unreasonable or

unnecessary expenses, and his Plan satisfies the best interests of creditors test.

III. DISCUSSION

A. Requirement of Good Faith for Confirmation Pursuant to § 1325(a)(3)

Section 1325(a)(3) provides that a chapter 13 plan is entitled to confirmation if “the plan

has been proposed in good faith and not by any means forbidden by law.” 11 U.S.C. §

1325(a)(3). The Debtor bears the burden of demonstrating that a plan has been proposed in good

faith. Sullivan v. Solimini (In re Sullivan), 326 B.R. 204, 211 (B.A.P. 1st Cir. 2005).

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 When a debtor files a chapter 7 case, receives a discharge, and subsequently files a

chapter 13 case, as the Debtor did here, the process is colloquially referred to as a “chapter 20.”

See Keith M. Lundin & William H. Brown, CHAPTER 13 BANKRUPTCY, 4TH EDITION, § 179.1, at

¶ 13, Sec. Rev. June 15, 2004, www.Ch13online.com. When a debtor has received a discharge

in a prior chapter 7 case filed within the four-year period preceding the petition date of the

subsequent chapter 13 case, the Bankruptcy Code bars a court from granting the debtor a

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In the First Circuit, good faith is determined on a case-by-case basis using the totality of

the circumstances test. Id. Courts typically consider the following factors in making such a

determination:

(1) debtor’s accuracy in stating her debts and expenses, (2) debtor’s honesty in the

bankruptcy process, including whether she has attempted to mislead the court and

whether she has made any misrepresentations, (3) whether the Bankruptcy Code is being

unfairly manipulated, (4) the type of debt sought to be discharged, (5) whether the debt

would be dischargeable in a Chapter 7, and (6) debtor’s motivation and sincerity in

seeking Chapter 13 relief. Id. at 212, citing In re Dicey, 312 B.R. 456, 459 (Bankr.

D.N.H. 2004).

Although this Court and others have provided lists of relevant factors, the inquiry is

inherently fact sensitive, is done on a case-by-case basis, and may involve consideration of other

factors or a more general balancing of equities. See Sullivan, 326 B.R. at 212 (citations

omitted). “No one factor is determinative, but it is the totality of all the various factors and the

facts of the particular case that is considered.” Dicey, 312 B.R. at 459. As this Court has noted

before, the requirement of good faith is ambiguous. Id.

Debtors seeking bankruptcy relief may not “play fast and loose with their assets or with

the reality of their affairs.” Marrama v. Citizens Bank (In re Marrama), 430 F.3d 474, 478 (1st

Cir. 2005) (citations omitted). Thus, the bankruptcy court “is entitled to insist upon filings and

representations made in utmost good faith.” Hannigan v. White (In re Hannigan), 409 F.3d 480,

483 (1st Cir. 2005). The unique circumstances of this “chapter 20” case8 warrant a careful

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discharge in the chapter 13 case. 11 U.S.C. § 1328(f)(1).

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inquiry by the Court. In re Dolinak, 497 B.R. 15, 23 (Bankr. D.N.H. 2013).

The Court finds the following circumstances of this case relevant to a determination of

good faith:

1. The Debtor’s History of Filings

A debtor’s history of filings and dismissals is relevant to a good faith inquiry. See

Sullivan, 326 B.R. at 212. Here, the Debtor has filed three bankruptcy petitions in less than five

years. The parties did not address the specific circumstances of the 2008 Bankruptcy and its

dismissal, so the Court will only consider the fact that the Debtor filed the case and agreed to its

dismissal. The Debtor filed the 2011 Bankruptcy roughly one year after the agreed-to

prohibition on bankruptcy filings ended. The time between the petition dates of the 2011

Bankruptcy and the 2013 Bankruptcy was approximately 15 months. The Debtor may not

receive a discharge in the 2013 Bankruptcy, although none of the unsecured debt in the case is

dischargeable anyway. Despite the Debtor’s lack of dischargeable debt and a commitment

period of only thirty-six months, the Debtor proposes a sixty month plan.

It appears that the Debtor has resorted to bankruptcy protection frequently, instead of

infrequently, even when he cannot receive a discharge and does not owe any dischargeable

unsecured debts. Therefore, it appears that the Debtor’s motivation in seeking bankruptcy

protection is not to achieve a fresh start, but to merely control or delay payments on

nondischargeable unsecured debts.

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2. The Debtor’s Filings in Light of State Court Litigation

Whether a debtor uses bankruptcy solely as a means to defeat state court litigation is

another factor relevant to a good faith inquiry. See id. Here, the Debtor filed two chapter 7

bankruptcies following Espeaignette’s judgment in the state court in Maine. The Debtor filed

the 2008 Bankruptcy approximately eight months after the Judgment entered. The Debtor filed

the present case less than two months after the New Hampshire state court entered the Payment

Order. As the Debtor acknowledges in his memorandum, there were two pending court actions

against him as of the Petition Date: Espeaignette’s action and an action by the State of Maine to

collect a tax obligation it asserted to be non-dischargeable. The Debtor states that he could have

filed a motion to reconsider the Payment Order, but elected to file bankruptcy instead. 

Accordingly, it appears that one of the Debtor’s primary motivations in filing bankruptcy was to

evade or delay his obligations under a final state court payment order without seeking a

modification from the issuing court. Such actions are indicative of bad faith.

3. The Type of Debt sought to be Discharged and Whether the Debt Would

be Dischargeable in a Chapter 7

The nature of the debt at issue in a case is another factor relevant to a good faith inquiry.

See id. In this case, all of the Debtor’s unsecured debts are nondischargeable, and the debtor is

not eligible for a discharge in any event. In Dicey, a case that predates the BAPCPA

amendments to chapter 13, this Court addressed a factual situation similar to the Debtor’s. There,

the chapter 13 debtors proposed a plan that would pay a de minimis dividend to unsecured

creditors. Dicey, 312 B.R. at 459. A single creditor’s claim constituted over 65% of the noninsider claims, and that creditor’s claim would have been non-dischargeable in a chapter 7

pursuant to § 523(a)(6) of the Bankruptcy Code. Id. at 459-460. The Court noted that there

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9 The parties have not argued whether the Maine or New Hampshire judgment interest rate

applies. A Maine state court entered the original Judgment, but a New Hampshire state court entered the

Payment Order. The applicable interest rate in Maine is the one-year U.S. Treasury Bill rate (weekly

average one-year constant maturity yield, for the last full week of the calendar year immediately prior to

the year in which post-judgment interest begins to accrue) plus 6%. Thus, if the Maine rate applies in this

case, the post-judgment interest rate would likely be 10.99%. See ME. REV. STAT. tit. 14, § 1602-C

(2013).

The applicable interest rate in New Hampshire is the prevailing discount rate of interest on

26-week U.S. Treasury bills at the last auction thereof preceding the last day of September in each year,

plus 2 percentage points, rounded to the nearest tenth of a percentage point. See R.S.A. 336:1. The

interest rate between 2007 and 2013 has ranged from a low of 2.0% to a high of 6.8%. See

http://www.nh.gov/treasury/Tinfo/JudgmentRate.htm

Regardless of the applicable rate, at the Hearing, the parties did not dispute that Espeaignette’s

claim will negatively amortize over the life of the plan.

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were no priority or secured creditors, other than the chapter 13 trustee’s fees and debtors’

attorney fees. Id. at 459. The Court held that “[t]he de minimis dividend, the fact that the debt

would be nondischargeable under a Chapter 7, the fact that the case [was] in substance a one

creditor case, the fact that no prepetition creditors [were] receiving any substantial payment, the

fact that the only distributions [would] be to administrative creditors and the timing of the

bankruptcy filing, all lead to the conclusion that the plan was not filed in good faith.” Id. at 460.

In this case, the Debtor’s plan would pay the IRS’s priority claim of $1,450.03. 

Otherwise, the facts are similar to those present in Dicey, before taking into account the Debtor’s

bankruptcy history. Other than the IRS’s claim, this is effectively a one creditor case. The

Debtor’s payments to Espeaignette do not constitute a substantial payment because

Espeaignette’s claim will grow over the life of the plan.9 These factors are indicative of bad

faith.

4. The Debtor’s Expenses Relative to the Plan Payments

The Debtor’s expenses, which he intends to pay in full outside the plan, include $647.45

per month for the Debtor’s 2012 Nissan Titan truck, and $200 per month for the Debtor’s 1924

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Dodge Brothers antique truck. The Debtor argues that the average price for a vehicle is $31,252,

and thus the Nissan truck payment is “within the range of a typical vehicle expenditure.” The

Debtor’s argument has no credibility. The Debtor offers no viable evidence to support his

argument. Moreover, the Debtor offers no justification that his transportation requirements

necessitate a full-size pick up truck. He is employed as a surgical technologist. Therefore, the

Debtor has failed to provide any convincing justification to support the necessity or

reasonableness for owning, and financing, an expensive truck with a monthly payment of

$647.45.

Moreover, the Debtor has made no showing as to why the $200 monthly payment for his

antique Dodge truck is reasonable and necessary. The record does not disclose whether the 90

year old vehicle is operational. However, the status of the antique truck is not material because

the Debtor offers no argument that ownership of, and loan payments on, this truck are reasonable

or necessary.

Chapter 13 is, at base, a bargain between debtors and creditors. In re Klaven, 2012

Bankr. LEXIS 3286 at *3 (Bankr. D. Mass. July 18, 2012), citing In re Amos, 452 B.R. 886, 894

(Bankr. D.N.J. 2011). Here, the Debtor proposes to pay $200 per month towards his Plan, in

spite of the fact that his Schedule J shows only $3.93 in net income. The Debtor has failed to

provide a sufficient explanation for why he can afford the proposed plan payments, and failed to

establish that all of his expenses are reasonable and necessary. The Court notes that the amount

the Debtor proposes to pay towards his Plan is the same amount the Debtor pays on account of

his antique truck. These factors are indicative of bad faith.

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5. Section 1322(d) and the Creditor’s Delay in Receiving Payment

The Debtor states in his Response that he “intends to pay the Espeaignette claim in full

over time - a portion during bankruptcy and the remainder outside of bankruptcy.” The Debtor

argues that a “delay in receiving payment is not a proper consideration under § 1325(a)(3),” and

cites to In re Richall, 470 B.R. 245 (Bankr. D. N.H. 2012). Richall concerned above median

debtors who proposed a 60 month, 100% plan. Id. at 247-48. However, the plan payments were

less than the debtors’ monthly disposable income, and had the debtors dedicated all of their

monthly disposable income to plan payments, they could have completed a 100% plan in

approximately 30 months. Id. at 248. The Court held that the BAPCPA amendments to §

1322(d) explicitly allowed this result, and the Court lacked any authority to require above

median debtors to reduce their plan term from five years, if they are paying all unsecured claims

in full. Id. at 249-251.

The circumstances of this case are distinguishable because the Debtor is not proposing a

100% plan. All of the Debtor’s unsecured debts are non-dischargeable, and the Debtor is not

eligible for a discharge in any event. The proposed dividend in this case is minimal, and

Espeaignette’s claim will increase over the life of the plan, in spite of, or perhaps because of, the

amount of the plan payments. Moreover, Richall was primarily concerned with the question of

whether § 1325(b) of the Bankruptcy Code allowed above median debtors to pay less than their

disposable income over five years, if such lower payments would pay unsecured creditors in full.

Here, the below median Debtor proposes a five year plan. Section 1322(d)(2) states that

a below median debtor’s plan “may not provide for payments over a period that is longer than 3

years, unless the court, for cause, approves a longer period, but the court may not approve a

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period that is longer than 5 years” (emphasis added). The Debtor has not even argued, let alone

established, cause for the Court to approve a five year plan period. The Debtor’s decision to

propose a five year plan – as opposed to a three year plan, as required by §1322(d)(2) – is a

double edged sword. A longer plan would ostensibly result in greater total payments to

creditors. But here, due to the relatively small plan payments, Espeaignette’s claim will grow

larger than it would have under a shorter plan. And the longer plan forestalls Espeaignette’s

collection efforts for more time. The Debtor has made no showing as to why this is an equitable

result. Thus, the longer than required plan term is indicative of bad faith, because the Debtor is

maximizing the time he can delay Espeaignette’s collection efforts and the effects of the

Payment Order, while failing to even pay the interest on the Judgment.

IV. CONCLUSION

 The Debtor bears the burden of demonstrating that his Plan was proposed in good faith. 

Here, the Debtor has failed to establish that, under the totality of the circumstances, he filed his

Plan in good faith. Accordingly, the Court will deny confirmation of the Plan as being filed in

bad faith, by separate order.

This opinion constitutes the Court’s findings of fact and conclusions of law in accordance

with Federal Rule of Bankruptcy Procedure 7052. 

ENTERED at Manchester, New Hampshire.

Date: March 17, 2014 /s/ J. Michael Deasy

J. Michael Deasy

Bankruptcy Judge

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