Virginia Lawyers Weekly//July 27, 2023
Virginia Lawyers Weekly//July 27, 2023//
Where the debtor failed to make any payments under her proposed Chapter 13 plan, failed to provide the trustee with any wage statements or paystubs and attempted relitigate a state family court’s decision, the Bankruptcy Court did not err in dismissing the case.
This matter comes before the court on Michelle Davy’s pro se appeal of the Bankruptcy Court’s order dismissing her Chapter 13 bankruptcy action. The issue on appeal is whether the Bankruptcy Court wrongly dismissed appellant’s case because her plan was not infeasible.
Appellant proposed two plans to pay off her debt. Appellant’s first proposed payment was $225.00 per month for 36 months. Appellant’s proposed payment in her amended plan was $1,750.00 per month for 36 months. Appellant filed her first plan on May 27, 2022, and her amended plan on July 15, 2022. As of the date of the dismissal, appellant still had not made any payments.
Appellant does not dispute that she did not make any plan payments as required under 11 U.S.C. §1326 (a)(1). Even though her plan had not been confirmed, the Code clearly states that a debtor must begin plan payments 30 days after filing the plan. Accordingly, the Bankruptcy Court appropriately dismissed the case on this ground under 11 U.S.C. § 1307(c).
At the time of the motion to dismiss hearing, appellant had not provided the trustee with any wage statements or paystubs. At the motion to dismiss hearing, appellant stated that she brought her pay stubs with her so that the trustee may review them; but that she would not file the pay stubs with the trustee because she did not want her paycheck garnished.
However, Rule 4002 makes clear that a debtor must provide the trustee with pay stubs. As indicated by the Bankruptcy Court, without the pay stubs, a Chapter 13 trustee is unable to determine whether a debtor’s plan is feasible based on their income, which is part of the trustee’s duties. Failure to provide the trustee with pay stubs is grounds for dismissal under 11 U.S.C. §1307(c)(4). Thus, the Bankruptcy Court did not err in dismissing appellant’s bankruptcy case on this ground.
The Bankruptcy Court did not err in dismissing appellant’s case on the child support ground. Davy Jr. has a child support judgment against appellant from proceedings in Prince George’s County Court in the state of Maryland. While appellant argues Rooker-Feldman should not apply because she is not in Bankruptcy Court litigating the same issues that she litigated in state court, the crux of appellant’s argument is that she is entitled to relief from the Bankruptcy Court because the state court erred in reaching its child support determination. Thus, in effect, appellant is asking the Bankruptcy Court to review and reverse the decision of the Maryland state court.
However, under Rooker-Feldman, “[l]ower federal courts cannot sit in direct review of final state court decisions.” Accordingly, the Bankruptcy Court did not err in refusing to review the order entered by the state court. Moreover, state court judgments are also entitled to full faith and credit.
Finally, although appellant has expressed a clear desire to settle or compromise with both claimants in this case, this does not control the disposition of this issue. As noted by the Bankruptcy Court, the Bankruptcy Court cannot compel a child support claimant, or other creditors for that matter, to compromise.
Further, appellant argued for more time before the Bankruptcy Court so that she would be able to reach a settlement with her creditors. The Bankruptcy Court was most patient and granted appellant multiple continuances equating to nearly five months so that appellant could try to reach a resolution with her creditors. Even still, no resolution was reached, and as noted, the creditors are not required to compromise. Thus, the Bankruptcy Court did not err in finding the case infeasible in light of the child support order.
Davy v. Gorman, Case No. 1:22-cv-1155, July 10, 2023. EDVA at Alexandria (Alston). VLW 023-3-387. 10 pp.