Frances Scarborough

-1-
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF PENNSYLVANIA
IN RE: FRANCES SCARBOROUGH : Chapter 13
:
Debtor : Bky. No. 07-15269ELF
M E M O R A N D U M
I.
The Debtor commenced this case by filing a chapter 13 bankruptcy petition on September
10, 2007 (“the Present Case”). Presently before the court is the “Debtor’s Motion for
Continuation of the Automatic Stay Pursuant to 11 U.S.C. §362” (“the Motion”).
Through the Motion, the Debtor seeks to extend the automatic stay pursuant to 11 U.S.C.
§362(c)(3)(B) as to all of her creditors, including Chase Manhattan Mortgage (“Chase”). Chase
is the holder of the purchase money mortgage on the Debtor’s residential real property located at
5116 N. Warnock St, Philadelphia, PA 19141 (“the Property”).
For the reasons set forth below, the Motion will be denied.
II.
An analysis of the Motion requires a review of the unusual procedural history of the
Debtor’s prior bankruptcy case, docketed at Bky. No. 01-35194ELF (“the Prior Case”). The
Prior Case was dismissed by Order of this court dated September 5, 2007. (Docket Entry No.
283).
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 1 of 14

Prior to February 14, 2006, the Hon. Kevin J. Carey presided over all of the1
proceedings in the Prior Case.
-2-
I will not recount in exhaustive detail the procedural history of the Prior Case as the
parties are well versed in that history and recently, I summarized that history in the bench opinion
that immediately preceded the entry of the September 5, 2007 Order dismissing the Prior Case.
See Prior Case Docket Entry No. 293. It is helpful, however, to identify the major events in the
case leading to the dismissal of the Prior Case on September 5, 2007. Those events are set forth
below:
C 10/31/01 - Prior Case filed by the Debtor acting pro se
C 2/25/02 - Chase filed proof of claim, secured by the Property, for $55,532.58
with prepetition arrearages of $27,465.89
C 7/26/02 - the Debtor filed Adv. No. 02-858 (“the AP”), in an effort to reduce
Chase’s allowed secured claim to $13,000, that amount representing
the asserted fair market value of the Property, see 11 U.S.C. §506(b)
C 10/14/03 - bankruptcy court dismissed the AP on ground that 11 U.S.C.
§1322(b)(2) precluded the relief requested by the Debtor
C 10/23/03 - the Debtor filed a notice of appeal from the bankruptcy court Order
dismissing the AP
C 12/27/04 - the Debtor filed a proposed chapter 13 plan providing for a cure of
Chase mortgage delinquency under 11 U.S.C. §1322(b)(5);
C 7/21/05 - bankruptcy court issued written decision denying confirmation of the
Debtor’s plan on ground that the Debtor’s inadequate income
rendered the plan infeasible, see 11 U.S.C. §1325(a)(6)
C 8/1/05 - the Debtor filed appeal from the bankruptcy court order dismissing
the case1
C 8/28/06 - Court of Appeals reversed the District Court Order affirming the
10/14/03 bankruptcy court Order dismissing the AP
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 2 of 14

In its §362 Motion, Chase challenged the Debtor’s assumption that, in a case filed2
in 2001, she was entitled to propose a chapter 13 plan with a sixty (60) month term commencing
in September 2007 (and therefore, ending in August 2012). The Debtor countered by arguing
that she should not be penalized because the bankruptcy court erred by dismissing the AP in
2003, thereby precluding her from proposing a plan to pay Chase an allowed secured claim
commensurate with the fair market value of the Property, see 11 U.S.C. §506(b), a value the
Debtor considers to be far below the unpaid balance of the mortgage.
In my decision, I acknowledged that the prevailing view is that a debtor may not
propose a plan with a term that exceeds sixty (60) months and that the sixty (60) month period
commences when the first payment falls due under the first chapter 13 plan proposed by the
debtor. See, e.g., In re Musselman, 341 B.R. 652, 655 -657 (Bankr. N.D. Ind. 2005) (collecting
cases). I then reasoned that, assuming arguendo, that I had equitable discretion to toll the sixty
(60) month period for the period following the bankruptcy court dismissal of the AP, the
maximum plan term that the Debtor could propose was thirty-six (36) months. Based on the
record made at the August 28, 2007, hearing, I concluded, for reasons similar to those articulated
-3-
C 9/20/06 - Court of Appeals’ remand Order docketed in the bankruptcy court on
the AP docket
C 4/11/07 - U.S. District Court vacated bankruptcy court Order dismissing the
main bankruptcy case and remanded the case for proceedings
consistent with the Court of Appeals’ decision
C 6/27/07 - the District Court’s remand Order was docketed in the bankruptcy
court
Following all of these events, on July 10, 2007, Chase filed a motion for relief from the
automatic stay (“the §362 Motion”). On July 31, 2007, the Debtor countered by filing a proposed
amended chapter 13 plan. The Debtor’s proposed plan assumed success in the AP and provided
for payment of an allowed secured claim of $13,000.00 over a 60 month period.
A consolidated hearing on confirmation and the §362 Motion was held on August 28,
2007. At the conclusion of the hearing, I took the matter under advisement.
On September 5, 2007, I issued a bench opinion, denying confirmation of the Debtor’s
chapter 13, dismissing the bankruptcy case pursuant to 11 U.S.C. §1307(c) and denying the §362
Motion as moot. On September 14, 2007, the Debtor appealed the September 5, 2007 dismissal2
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 3 of 14

by Judge Carey when he denied confirmation of the Debtor’s chapter 13 plan in 2005, that the
Debtor’s income was not adequate to fund a thirty-six (36) month plan. My decision was also
based on the Debtor’s failure to make an adequate showing that she would likely prevail in the
AP and reduce Chase’s allowed secured claim from an amount in excess of $55,000 to $13,000.
Since it appeared that the Debtor could not propose a feasible plan, I exercised my
discretion under 11 U.S.C. §1307(c) to dismiss the case. See, e.g., Jablonski v. Internal Revenue
Service, 204 B.R. 456, 458-59 (W.D. Pa. 1996), aff’d, 114 F.3d 1172 (3d Cir. 1997); In re
Fricker, 116 B.R. 431, 442 (Bankr. E.D. Pa. 1990); 4 Collier on Bankruptcy ¶1307.04, at
1301-11 (15th rev. ed. 2006) ("Collier") (observing that a 1986 amendment to §105(a) of the
Code presumably provides authority for sua sponte dismissal).
By Order dated September 28, 2007, I granted the Debtor’s motion for leave to3
prosecute her appeal in forma pauperis. In granting the motion, I stated:
In large part, my decision to deny confirmation of the Debtor’s most recently
proposed chapter 13 plan and to dismiss the case was based on a determination
that the Debtor cannot afford to make the minimum payment required to obtain
confirmation of a chapter 13 plan, which I estimated to be approximately
$445/month. In other words, I was not persuaded that the Debtor could afford to
make a relatively modest monthly chapter 13 plan payment. Her request for IFP
status with respect to a $255 filing fee seems only to confirm my conclusions
regarding the Debtor’s financial inability to perform.
See Prior Case Docket Entry No. 296 (citation omitted).
On October 22, 2007, Chase filed a proof of claim asserting a secured claim for:4
(1) a total amount in excess of $104,000, including over $20,000 in legal
-4-
Order. That appeal is pending.3
On September 10, 2007, four (4) days before appealing the dismissal Order in the Prior
Case, the Debtor filed another bankruptcy petition, thereby commencing the Present Case. On
September 21, 2007, the Debtor filed a chapter 13 plan in which she proposed to pay the Trustee
$300 per month for 60 months. This chapter 13 plan, like the last plan filed in the Prior Case,
proposes a distribution to Chase of $13,000 in full satisfaction of Chase’s secured claim.4
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 4 of 14

expenses and an escrow deficit of more than $25,000; and
(2) prepetition mortgage arrearages in excess of $80,000 (including the
legal expenses and escrow deficit).
See Bky. No. 92-16272 (Docket Entry No. 25)5
-5-
On October 2, 2007, the Debtor filed the Motion and requested an expedited hearing. I
granted the request for an expedited hearing. A hearing on the Motion was held and concluded
on October 9, 2007. Chase and the Chapter 13 Trustee appeared through counsel and both
opposed the Debtor’s request for an extension of the automatic stay under 11 U.S.C. §362(c)(3).
At the conclusion of the hearing, I took the matter under advisement. By Order dated October
10, 2007, with the parties’ consent, the automatic stay was extended pending the ruling on the
Motion.
III.
Before addressing the merits of the Motion, the Debtor’s current attempt to achieve
financial rehabilitation through a chapter 13 bankruptcy case and prevent the foreclosure of her
home must be put in historical perspective. The Prior Case and the Present Case were not the
Debtor’s only chapter 13 bankruptcy filings. Between 1992 and 1998, the Debtor filed three (3)
other chapter 13 cases before the Prior Case:
C a chapter 13 case on October 13, 1992, dismissed by Order dated
January 13, 1994 for failure to comply with the terms of a confirmed
plan;5
C a chapter 13 case on May 25, 1994, dismissed on a motion of the
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 5 of 14

See Bky. No. 94-13274 (Docket Entry No. 85).6
See Bky. No. 98-16484 (Docket Entry No. 120).7
In making this calculation, I have excluded the period in which the appeal was8
pending with respect to the dismissal Order in the Prior Case (July 2005 through June 2007).
-6-
Chapter 13 Trustee by Order dated March 3, 1998;6
C a chapter 13 case filed on May 20, 1998, dismissed by Order dated
October 30, 2001.7
Also, on February 20, 2004, while the Prior Case was pending, the Debtor filed still
another chapter 13 bankruptcy case, docketed at Bky. No. 04-12462. That case was dismissed on
motion of the Debtor by Order dated May 13, 2004.
Thus, prior to the Present Case, the Debtor filed a total of five (5) chapter 13
bankruptcy cases: in 1992, 1994, 1998, 2001 and 2004. In the one hundred and eighty (180)
months between October 1992 and September 2007, the Debtor has been under the protection of
the bankruptcy court for approximately one hundred thirty five (135) months.8
IV.
Section 362(c)(3) of the Bankruptcy Code provides, in pertinent part:
if a single or joint case is filed by or against debtor who is an individual in a case
under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending
within the preceding 1-year period but was dismissed, other than a case refiled under
a chapter other than chapter 7 after dismissal under section 707(b)--
(A) the stay under subsection (a) with respect to any action taken with respect to a
debt or property securing such debt or with respect to any lease shall terminate
with respect to the debtor on the 30th day after the filing of the later case;
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 6 of 14

-7-
(B) on the motion of a party in interest for continuation of the automatic stay and
upon notice and a hearing, the court may extend the stay in particular cases as to
any or all creditors (subject to such conditions or limitations as the court may then
impose) after notice and a hearing completed before the expiration of the 30-day
period only if the party in interest demonstrates that the filing of the later case is in
good faith as to the creditors to be stayed; and
(C) for purposes of subparagraph (B), a case is presumptively filed not in good
faith (but such presumption may be rebutted by clear and convincing evidence to
the contrary)--
(i) as to all creditors, if--
(I) more than 1 previous case under any of chapters 7, 11, and 13 in
which the individual was a debtor was pending within the preceding
1-year period;
(II) a previous case under any of chapters 7, 11, and 13 in which the
individual was a debtor was dismissed within such 1-year period,
after the debtor failed to--
(aa) file or amend the petition or other documents as required by
this title or the court without substantial excuse (but mere
inadvertence or negligence shall not be a substantial excuse unless
the dismissal was caused by the negligence of the debtor's
attorney);
(bb) provide adequate protection as ordered by the court; or
(cc) perform the terms of a plan confirmed by the court; or
(III) there has not been a substantial change in the financial or
personal affairs of the debtor since the dismissal of the next most
previous case under chapter 7, 11, or 13 or any other reason to
conclude that the later case will be concluded--
(aa) if a case under chapter 7, with a discharge; or
(bb) if a case under chapter 11 or 13, with a confirmed plan that
will be fully performed; and
(ii) as to any creditor that commenced an action under subsection (d) in a
previous case in which the individual was a debtor if, as of the date of
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 7 of 14

-8-
dismissal of such case, that action was still pending or had been resolved
by terminating, conditioning, or limiting the stay as to actions of such
creditor;
11 U.S.C. §362(c)(3).
Under §362(c)(3)(C)(ii), a rebuttable presumption exists that the Debtor did not file the
Present case in good faith as to Chase. The rebuttable presumption arises because Chase’s
motion for relief from the automatic stay was pending in the Prior Case when the Prior Case was
dismissed on September 5, 2007. To rebut that presumption and obtain an extension of the
automatic stay under §362(c)(3)(B), the Debtor must prove by clear and convincing evidence that
the Present Case was filed in “good faith” as to Chase. Clear and convincing evidence is
evidence that produces in the mind of the trier of fact an abiding conviction that the truth of the
factual contentions is highly probable. E.I. du Pont de Nemours & Co. v. MacDermid, Inc., 2007
WL 2332161, *8 (D.N.J. Aug.13, 2007) (unpublished); SmithKline Beecham Corp. v. Apotex
Corp. 2005 WL 941671, at *7; see also In re Ellis, 339 B.R. 136, 141-42 (Bankr. E.D. Pa. 2006)
(describing the standard as evidence “so clear, direct and weighty and convincing” as to enable
the court to find the facts at issue “without hesitancy”).
Good faith under 11 U.S.C. §362(c)(3)(B) is determined by a consideration of the totality
of the circumstances. E.g., In re Ortiz, 355 B.R. 587, 593-94 (Bankr. S.D Tex. 2006); In re
Montoya, 333 B.R. 449, 457-58 (Bankr. D. Utah 2005); see generally In re Ferguson, 2007 WL
3036857 (Bankr. E.D. Pa., October 19, 2007) (discussing totality of the circumstances test for
determining good faith under 11 U.S.C. §362(c)(4)(B)). In considering whether a case has been
filed in good faith, the court may consider the debtor’s good faith in both subjective and
objective terms. In re Winters, 2006 WL 3392890, at *3 (Bankr. W.D. Va. Nov. 22, 2006); In re
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 8 of 14

The Debtor had testified previously at some length concerning her current9
financial situation at the hearing on confirmation and Chase’s motion for relief from the
automatic stay held on August 28, 2007 in the Prior Case. In effect, the Debtor’s testimony on
October 9, 2007 served as a “supplement” or “update” to her August 28, 2007 testimony.
-9-
Mark, 336 B.R. 260, 268 (Bankr. D. Md. 2006); In re Charles, 334 B.R. 207, 218 (Bankr. S.D.
Tex. 2005).
The role of the bankruptcy court in deciding whether to extend the automatic stay under
§362(c)(3) has been described as follows:
if the newly filed case is futile or if the debtor is filing merely to benefit from the
"stay and delay," the Court must recognize this at the earliest possible time. In
adopting § 362(c)(3), Congress intended the Court to conduct an early triage of a
case . . . . Absent exceptional circumstances, a debtor fails to sustain her burden
of demonstrating good faith as to the creditors to be stayed if the case lacks a
reasonable likelihood of success.
In re Charles, 334 B.R. at 219.
In as case such as the Present Case, i.e., where a debtor files a bankruptcy case to prevent
a foreclosure after previous chapter 13 cases were unsuccessful, the most significant
considerations in evaluating good faith are: (1) why the previous plan failed, and (2) what has
changed so that the present plan is likely to succeed. See In re Elliott-Cook, 357 B.R. 811, 815
(Bankr. N.D. Cal. 2006); see also In re Legree, 285 B.R. 615, 619 (Bankr. E.D. Pa. 2002) (similar
analysis employed in context of deciding whether to grant debtor leave to file a new case
notwithstanding entry of prior order prohibiting refiling).
With these principles in mind, I consider the Motion in the Present Case.
IV.
At the October 9, 2007 hearing, the Debtor testified at some length. In her testimony, the9
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 9 of 14

That income consisted of approximately $2,190 per month derived from a10
combination of rental income, child support and Social Security benefits. See Present Case
Schedule I (Exhibit R-1).
Therefore, it was not surprising that the Debtor testified that, as of the hearing11
date on the Motion, she had no savings. Her income during the first thirty (30) days of the
Present Case was apparently consumed by her living expenses. These expenses did not include
any payment of a monthly home mortgage installment or a chapter 13 plan payment. I do note,
however, that the Trustee’s Case Report, available to the public on the internet, reflects the
posting of the Debtor’s first plan payment of $300 on October 24, 2007, slightly more than two
(2) weeks after the hearing on the Motion.
The Debtor derives some income from child support and Social Security12
survivor’s benefits. The Debtor’s daughter is seventeen (17) years old. When her daughter
reaches the age of majority, the income derived from child support and Social Security will be
reduced or eliminated.
-10-
Debtor acknowledged that her income and expenses had not changed between the dismissal of
the Prior Case and the filing of the Current Case on September 10, 2007. Nevertheless, the10
Debtor asserted that the Present Case was filed in good faith because, at the time it was filed, she
expected that her income would increase soon from two sources: (1) employment as a secretary
with the Philadelphia School District; and (2) additional, part-time employment providing
“transcription services” to a company called Landmark Transcription. The Debtor acknowledged
that, as of the hearing date, she had not yet been hired by the School District or received any
compensation from Landmark Transcription and that her income was at the same level as before
the dismissal of the Prior Case. She also acknowledged that even if the two new jobs11
materialized, any additional income likely would be offset during the term of her proposed plan
by a reduction in income from her other sources.12
On this record, I find that the Debtor has not proven, by clear and convincing evidence
that the Present Case was filed in good faith as to Chase. I accept the Debtor’s subjective good
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 10 of 14

In making this statement, I am well aware that due to the bankruptcy court’s13
dismissal of the AP in 2003 and later dismissal of the main bankruptcy case, the Debtor did not
have a clear vehicle for making the plan payments and attempting to implement the type of
chapter 13 plan that she felt that she was entitled to propose. Eventually, however, the Debtor
prevailed on appeal in the Prior Case. Had she been saving the putative plan payments, she may
-11-
faith in filing her sixth (6 ) bankruptcy case. Based on my observation of her demeanor and herth
dogged determination in this court and in the appellate courts, I am convinced that the Debtor
seeks to employ the bankruptcy process for its intended use – specifically, use of the legal tools
available in 11 U.S.C. §§506(b) and 1325(a) to pay Chase a reduced secured claim
commensurate with the fair market value of her home, thereby preventing foreclosure and loss of
her home. I accept that the Debtor’s intentions are sincere. For several reasons, however, I do not
find that the Present Case has a sufficient likelihood of success to merit the extension of the
automatic stay.
First, the Debtor’s evidence of her expected increased income was not persuasive. She
presented no concrete evidence that either new source of employment income had materialized.
Given the long history of this attempted bankruptcy rehabilitation in general, as well as under the
specific requirements of the statute, I must hold the Debtor to a higher standard of proof. See 11
U.S.C. §362(c)(3)(B); see generally In re Yeager, 2004 WL 422049, *3 (Bankr. E.D. Pa.
February 18, 2004) (in deciding whether to confirm a chapter 13 plan, the court may hold employ
a higher standard of feasibility after the failure of prior bankruptcy cases).
Second, even if the Debtor’s employment with the School District materializes, it is the
same employment the Debtor represented would be a major funding source for the plan payments
in the Prior Case. In that case, the Debtor’s income was either inadequate or insufficiently stable
to fund her proposed plan. Based on the evidence presented on October 9, 2007, I saw no13
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 11 of 14

have been in a position to implement her proposed plan after the matters on appeal were
remanded to this court – assuming also that she could have prevailed in the AP and invoked 11
U.S.C. §506(b) successfully to reduce Chase’s allowed secured claim to $13,000. However, the
Debtor acknowledged at the confirmation hearing in the Prior Case that while the two (2) appeals
were pending, her income had been insufficient to permit her to “save up” the money required to
fund her plan. Thus, even if the appeals had not been necessary, it appears that the Debtor’s
income in the Prior Case was insufficient to implement her proposed chapter 13 plan.
I have not even addressed, because I find it unnecessary to do so, the good faith14
issue that arises due to the fact that the Debtor has two open bankruptcy cases (the Prior Case on
appeal and the Current Case), where both open cases are designed to treat the same assets and
debts. There is legal authority suggesting that, in such circumstances, the newly filed case should
be dismissed. E.g., In re Myers, 2007 WL 2428694 (Bankr. E.D. Pa., August 22, 2007). I note
-12-
improvement in her financial situation.
Third, the underlying premise of the Debtor’s chapter 13 rehabilitation theory is that the
Chase secured claim (as to which a proof of claim in excess of $100,000 has been filed) will be
allowed in the amount of only $13,000 due to the operation of 11 U.S.C. §506(b). At this late
date, the Debtor has not presented evidence sufficient to persuade me that she has a reasonable
prospect of success on that legal theory.
Finally, I cannot ignore the Debtor’s multiple, prior rehabilitation efforts. By my
calculation, the Debtor has been “in bankruptcy” for more than eleven (11) of the past fifteen
(15) years. Even under the most tolerant of good faith standards, a debtor filing yet again would
have to be able to establish at the outset of the case that the rehabilitation plan is concrete, in
place and ready to proceed immediately. Unfortunately for the Debtor, her plan is based on
income that she does not yet have. Also, her plan requires that she succeed in claims litigation
against Chase and the likelihood of her success is only speculative at the present time. In short,
the Debtor’s effort to use chapter 13, yet again, is fueled on hopes and expectations and not on
rehabilitation tools that are ready and dependable.14
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 12 of 14

that the Trustee has filed a motion to dismiss the Present Case and a hearing is scheduled on that
motion on November 27, 2007. I will defer further consideration of the issue until the hearing on
the motion to dismiss.
-13-
VI.
For the reasons set forth above, the Debtor’s Motion requesting the entry of an order
extending the automatic stay pursuant to 11 U.S.C. §362(c)(3)(B) will be denied. An appropriate
Order will be entered.
Date: October 25, 2007
ERIC L. FRANK
U.S. BANKRUPTCY JUDGE
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 13 of 14

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF PENNSYLVANIA
IN RE: FRANCES SCARBOROUGH : Chapter 13
:
Debtor : Bky. No. 07-15269ELF
O R D ER
AND NOW, for the reasons set forth in the accompanying Memorandum, it is hereby
ORDERED that the Debtor’s Motion for Continuation of the Automatic Stay Pursuant to 11
U.S.C. §362 (Docket Entry No. 20) is DENIED.
Date: October 25, 2007
ERIC L. FRANK
U.S. BANKRUPTCY JUDGE
Counsel
Frances Scarborough, Pro Se
Leslie E. Puida
Attorney for Chase Manhattan Mortgage
Case 07-15269-elf Doc 34 Filed 10/25/07 Entered 10/25/07 15:03:01 Desc Main
Document Page 14 of 14