David Victor Cordova

1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	DAVID VICTOR CORDOVA, 	No. 13-07-10950 MS
Debtor.
ORDER DENYING CONFIRMATION OF DEBTOR’S CHAPTER 13
PLAN AND DISMISSING CASE
THIS MATTER is before the Court on confirmation of Debtor’s Chapter 13 plan. The
Court held a final hearing on June 27, 2007, and took the matter under advisement. 	At the final
hearing the Chapter 13 Trustee requested that the Court dismiss the case based on the Debtor’s
failure to comply with certain requirements of the Bankruptcy Code. Creditors JP Morgan Chase
Bank, N.A., Sean and Valeriane Wilson, and the New Mexico Taxation and Revenue
Department supported dismissal of the Debtor’s bankruptcy.
After consideration of the record of this proceeding and Debtor’s two prior bankruptcy
cases, and in light of the testimony and evidence offered at the final hearing on confirmation, the
Court finds that Debtor’s plan cannot be confirmed at this time and that dismissal of the Debtor’s
bankruptcy is appropriate. 	In reaching this determination, the Court FINDS:
1. Debtor filed a voluntary petition under Chapter 13 of the Bankruptcy Code on April
20, 2007.
2. This bankruptcy is the Debtor’s third bankruptcy proceeding filed since August of
2005. Debtor filed Case No. 13-05-16661 SS (the “First Case”) on August 18, 2005. 	A plan
was confirmed in the First Case. The Chapter 13 Trustee moved to dismiss the First Case based
on Debtor’s failure to make plan payments, and the First Case was dismissed by stipulation on
August 24, 2006. (See Case No. 13-05-16661 SS, Docket # 84). Four days after the dismissal of
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 1 of 10

2
the First Case, Debtor filed Case No. 13-06-11490 SS (the “Second Case”). 	The Second Case
was dismissed on November 6, 2006, effective October 13, 2006, based on Debtor’s failure to
comply with the filing requirements contained in 11 U.S.C. § 521.
3. In this case, after notice and a final hearing, the Court entered an order which
reimposed the automatic stay, conditioned upon the Debtor making a payment to Sean and
Valeriane Wilson (the “Wilsons”) no later than May 14, 2007, representing past due payments
under a real estate contract, and timely payments under the real estate contract due thereafter.
(See Docket # 23).
4. 	Debtor’s plan proposes payments of $925.00 per month for a period of sixty months,
beginning May 20, 2007. (See Docket # 27).
5. On June 7, 2007, the Chapter 7 Trustee filed a Motion to Dismiss this bankruptcy
proceeding based on Debtor’s failure to commence make timely payments under his plan. (See
Docket # 33).
6. As of the date of the final hearing on confirmation of Debtor’s Chapter 13 plan,
Debtor was not current on plan payments.
7. The Debtor lists several businesses in his statements and schedules. (See Statement of
Financial Affairs (Docket #26) identifying the following businesses: Aspen Leaf Casting; Aspen
Associates; David Cordova Consulting; New Mexico Casting; Nativo Chimayo; Colores de
Chimayo). However, Debtor did not file any monthly operating reports for any of his businesses
until the date of the final hearing on confirmation, when he filed monthly operating reports for
Aspen Leaf Associates for the periods of April 15 to May 15, 2007, and May 15, 2007 to June
15, 2007.
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 2 of 10

3
8. 	JP Morgan Chase Bank NA (“JP Morgan”) is the holder of a claim secured by a
Hummer H3 which the debtor purchased in August of 2006, just after the First Case was
dismissed. Although the Debtor’s Chapter 13 Plan proposed to make payments to JP Morgan
Chase outside the plan, no post-petition payments have been made.
9. The New Mexico Department of Taxation and Revenue (“Taxation and Revenue
Department”) has not received all tax returns for the Debtor’s businesses for the tax years 2005
and 2006. Nor does the Taxation and Revenue Department have record of receipt of the Debtors’
2006 PIT return. At the final hearing on Confirmation, Debtor testified that he mailed all
delinquent tax returns and CRS forms for all of his businesses in April of 2007 to the Taxation
and Revenue Department. He also testified that he gave copies of all returns to his attorney. 	No
copies of tax returns were offered into evidence at the final hearing on confirmation.
10. Debtor testified about a contract with Montano de Truchas under which he expected
to receive a payment of $8,033.00 by June 29, 2007. 	A copy of the contract was admitted into
evidence as Exhibit A.
11. 	Debtor’s Schedule J reflects net monthly disposable income in the amount of
$46.00. Debtor testified that he plans to bring plan payments current with the income he expects
to receive under his contract with Montano de Truchas and through new employment that he has
applied for and expects to secure shortly. 	He also testified that he now has a tenant from which
he expects to receive rent in the amount of $1,200.00 per month. 	However, while the Debtor
testified that he has a signed lease, no copy of the signed lease was offered into evidence.
12. 	Confirmation of a Chapter 13 plan is governed by 11 U.S.C. § 1325.
13. Pursuant to 11 U.S.C. § 1325(a)(9), confirmation is contingent upon the debtor’s
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 3 of 10

4
filing of “all applicable Federal, State, and local tax returns as required under 11 U.S.C. §
1308.” 11 U.S.C. § 1325(a)(9). Section 1308 requires the debtor to “file with appropriate tax
authorities all tax returns for all taxable periods ending during the 4-year period ending on the
date of the filing of the petition.” 	11 U.S.C. § 1308(a).
14. The plan must also be feasible. See 11 U.S.C. § 1325(a)(6) (requiring that “the
debtor will be able to make all payments under the plan and to comply with the plan.”); In re
Lundahl, 307 B.R. 233, 244 n. 38 (Bankr.D.Utah 2003) (noting that “[t]he Bankruptcy Code
mandates the finding of feasibility in 11 U.S.C. § 1325(a)(6).”). 	Thus, where a debtor cannot
make the payments proposed under a Chapter 13 plan because his or her net disposable income
is insufficient or the expenses unrealistic, the plan is not feasible and cannot be confirmed. See
Lundahl, 307 B.R. at 245 (concluding that plan was infeasible where debtor’s budget included
no expenses for water, telephone, clothing, medical, dental, recreation or taxes). See also, In re
Tucker, 34 B.R. 257, 262 (Bankr.D.Okla. 1983) (“It is incumbent upon a Chapter 13 debtor to
sufficiently demonstrate an ability to fund the plan from sources which are stable and
regular.”)(citation omitted).
15. 	The Debtor bears the burden of proving all elements necessary to confirmation. 	See
In re Hutchinson, 354 B.R. 523, 531 (Bankr.D.Kan. 2006) (“Debtors bear the burden of proving
that they have met all of the requirements of § 1325, . . .”) (citing In re Barnes, 32 F.3d 405 (9th
Cir.1994) (holding that the debtor has the burden of proving each element necessary to
confirmation under § 1325)). See also, In re Alexander, 363 B.R. 917, 922 (10th Cir. BAP 2007)
(holding that the debtor bears the burden of establishing good faith under § 1325(a)(3)).
16. The Debtor has failed to sustain his burden of proof as to all elements necessary to
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 4 of 10

5
confirmation. 	First, the Debtor has not sufficiently demonstrated feasibility as required under
11 U.S.C. § 1325(a)(6). 	Debtor failed to commence making payments under his proposed plan.
The length of the plan as proposed is the sixty-month maximum allowed under 11 U.S.C. §
1322(d). Debtor cannot, therefore, cure the delinquent plan payments by extending the term of
his plan. 	While Debtor is optimistic about his earning potential, his Schedule J shows net
disposable monthly income that is woefully insufficient to make the payments of $925.00
contemplated under his plan. 	Debtor testified that as of the date of the final hearing he did not
have sufficient net disposable income to make the $925.00 payments under his plan. Debtor
offered no additional evidence to support his testimony of additional rental income. 	Nor was
the contract with Montano de Truchas supported by any corroborating testimony. 	A Debtor’s
wishful thinking about future income, anticipated new employment, and/or supplemental income
sources fails to satisfy the feasibility requirement of 11 U.S.C. § 1325(a)(6). Based on this
evidence, the Court must conclude that the plan is not feasible.
17. 	The Court also finds that the Debtor’s testimony regarding the tax returns and CRS
forms is insufficient to demonstrate compliance with 11 U.S.C. § 1325(a)(9). 	Debtor knew that
tax returns were missing at the outset of his bankruptcy proceeding. 	The final hearing on
confirmation was scheduled upon commencement of the bankruptcy proceeding. 	The Taxation
and Revenue Department’s objection to confirmation, filed a month prior to the confirmation
hearing date, identifies the missing tax returns. 	Debtor, therefore, knew well before the final
hearing on confirmation that the missing tax returns were an issue in this bankruptcy proceeding
and a possible impediment to confirmation. Yet, at the final hearing on confirmation Debtor did
not offer into evidence copies of the missing returns that he testified he prepared and mailed to
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 5 of 10

6
the Taxation and Revenue Department. 	Under these circumstances, the Court finds that the
Debtor’s testimony alone is insufficient to sustain Debtor’s burden under 11 U.S.C. § 1325(a)(9).
18. 	Pursuant to 11 U.S.C. § 1307, a case may be dismissed for cause, including the
following:
(4) failure to commence making timely payments under section 1326 of this title;
(5) denial of confirmation of a plan under section 1325 of this title and denial of a
request made for additional time for filing another plan or a modification
of a plan;
11 U.S.C. § 1307(c)(4) and (5).
19. 	Section 1307(c)(5) is not strictly applicable here since the Debtor has not made a
request for additional time to file another plan or to seek to modify a plan, and the Court has not
denied such a request. 	Cf. In re Brock, __ B.R. __, 2007 WL 773723, *9 (Bankr.D.Kan. 2007)
(noting that because the debtor had not had an opportunity to request additional time within
which to modify his plan, § 1307(c)(5) could not support dismissal or conversion at that point in
the proceedings). However, as noted above, the Debtor’s plan as proposed is for the maximum
term authorized under the Bankruptcy Code, and the Debtor has missed two payments while his
present income is insufficient to make the payments called for under the plan. It is not clear
whether Debtor could propose a plan with lower monthly payments. The plan now provides for
payment of priority claims totaling $32,122.40, while his net disposable income reported on
Schedule J is $46.00, and the Statement of Current Monthly Income and Calculation of
Commitment Period and Disposable Income reflects a negative monthly disposable income
under § 1325(b)(2).
20. While “the rejection of a Chapter 13 plan should not necessarily lead to dismissal, it
is a factor for the bankruptcy court to consider as it determines whether to dismiss the petition
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 6 of 10

1That section provides:
Upon the failure of the debtor to file a tax return under section 1308, on request of
a party in interest or the United States trustee and after notice and a hearing, the
court shall dismiss a case or convert a case under this chapter to a case under
chapter 7 of this title, whichever is in the best interest of creditors and the estate.
11 U.S.C. § 1307(e) (emphasis added).
7
pursuant to § 1307(c).” In re Gier, 986 F.2d 1326, 1329 (10 th Cir. 1993).
20. 	Moreover, pursuant to 11 U.S.C. § 1307(e), dismissal or conversion is mandatory
where a debtor has failed to file a tax return as required under 11 U.S.C. § 1307(e). 1 See also, In
re Sawyer, 2007 WL 1725627, *5 (Bankr.E.D.Va. 2007) (noting that “as the statute is phrased,
the court is required to (“shall”) dismiss or convert the case, whichever is in the best interest of
the creditors and the estate, if the debtor fails to file the returns required by § 1308 and
dismissal is requested by a party in interest.”) (emphasis in original).
21. Here, the Debtor’s inadequate efforts to comply with the requirements of the
Bankruptcy Code and his failure to meet the burden of proof on confirmation warrant dismissal,
especially given Debtor’s record in two prior failed attempts in Chapter 13. 	Cf. In re Jackson,
2007 WL 1188202, *4 (Bankr.E.D.Pa. 2007) (noting that particularly when the pending case is
not the debtor’s first proceeding, the standard for evaluating the debtor’s reasonableness in his or
her efforts to confirm a plan are necessarily more stringent)(citing In re Yeager, 2004 WL
422049, *3 (Bankr.E.D.Pa. February 18, 2004) (finding that the court may apply a higher
standard of feasibility in determining whether to confirm a chapter plan filed after the failure of
prior bankruptcy cases)). 	And because Debtor’s statements and schedules do not reflect an
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 7 of 10

2Debtor holds only an equitable interest as purchaser under the real estate contract with
the Wilsons for the only real property listed on Schedule A. (See Schedule A - Real Property).
Debtor’s Hummer H3 is encumbered by the lien of JP Morgan, and his other vehicle, valued at
$1,440.00 is encumbered by a title lien in the amount of $800.00 held by Fastbucks. (See
Schedule D). Debtor claimed an exemption in the real property and in the Hummer H3 on
Schedule C, although the Chapter 13 Trustee has filed an objection to Debtor’s claim of
exemption as exceeding allowable exemption amounts under applicable state law. (See Docket #
36).
3The Debtor’s voluntary petition was filed April 20, 2007. 	After filing a motion to
extend the time within which to file statements and schedules (See Docket # 20) on the deadline
for filing timely statements and schedules under Rule 1007(c), Fed.R.Bankr.P., the Debtor filed
statements and schedules on May 19, 2007 (See Docket # 26).
8
excess of unencumbered non-exempt assets2, dismissal, rather than conversion is in the best
interest of creditors.
22. The Debtor readily admitted at the confirmation hearing that there were inaccuracies
in his statements and schedules, including the lack of any business income reported for previous
years in his Statement of Financial Affairs, yet no amendments have been filed. Debtor’s
Schedule J does not provide for payment of taxes from the operation of Debtor’s businesses, yet
the only income reflected on Schedule I is Debtor’s business income; therefore, post-petition
taxes from the Debtor’s business operations are being incurred. 	This proceeding is the Debtor’s
third bankruptcy case in less than three years. Yet the Debtor did not file all statements and
schedules with the petition 3, and the statements and schedules as filed contain inaccuracies that
have not been corrected. 	Debtor did not file a Statement of Current Monthly Income and
Calculation of Commitment Period and Disposable Income until the date of the final hearing on
confirmation. 	Debtor failed to file timely operating reports for his business and failed to make
timely payments under his proposed plan. 	In fact, the only payments Debtor has made were the
payments he was required to make under the order reimposing the automatic stay. Under these
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 8 of 10

9
circumstances, where the Debtor failed to make a diligent effort to comply with the requirements
for proceeding under Chapter 13 of the Bankruptcy Code, and where the Debtor’s plan cannot be
confirmed, dismissal is appropriate. Cf. In re Alexander, 363 B.R. 917, 925 (10th Cir. BAP
2007) (in determining whether dismissal is appropriate under § 1307, “the Tenth Circuit has
stated that a bankruptcy court may dismiss a case for cause if after considering the totality of the
circumstances the court determines that ‘under the circumstances of the case there has been an
abuse of the provisions, purpose, or spirit of [the Chapter].’”) (quoting Gier, 986 F.2d at 1329).
The Chapter 13 Trustee’s Motion to Dismiss, filed June 7, 2007, provided sufficient notice to the
Debtor of the possible dismissal of his Chapter 13 proceeding. See 11 U.S.C. § 1307 (requiring
notice and a hearing).
WHEREFORE, IT IS HEREBY ORDERED, that confirmation of Debtor’s chapter 13
plan is DENIED.
ORDERED FURTHER, that this bankruptcy proceeding is DISMISSED.
_________________________________________
MARK B. McFEELEY
United States Bankruptcy Judge
COPY TO:
Michael K Daniels 	Kelley L. Skehen
Attorney for Debtor 	Chapter 13 Trustee
PO Box 1640 	625 Silver Avenue SW, Suite 350
Albuquerque, NM 87103-1640 	Albuquerque, NM 87102-3111
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 9 of 10

10
James C. Jacobsen
Attorney for Taxation and Revenue Department, State of New Mexico
111 Lomas NW Ste 300
Albuquerque, NM 87102-2368
James Jurgens 	Allan L. Wainwright
Attorney for Sean and Valeriane Wilson 	Attorney for JP Morgan Chase Bank NA
100 La Salle Cir Ste A 	920 Lomas Blvd. NW
Santa Fe, NM 87505-6976 	Albuquerque, NM 87102-3150
Case 07-10950-m13 Doc 48 Filed 07/16/07 Entered 07/16/07 15:31:35 Page 10 of 10