Martin William Acevedo and Stephanie Anne Acevedo

1 The Court has subject matter and personal jurisdiction
pursuant to 28 U.S.C. §§1334 and 157(b); this is a core
proceeding pursuant to 28 U.S.C. §157(b)(2)(A) and/or (O); and
these are findings of fact and conclusions of law as may be
required by Rule 7052 F.R.B.P.
2 Mr. Acevedo filed case no. 13-12-10071-SS on January 11,
2012. 	That case was automatically dismissed effective February
26, 2012 pursuant to 11 U.S.C. § 521(I) and Fed. R. Bankr. P.
9006(a) per order entered March 5, 2012. 	Ms. Acevedo was a non-
filing spouse in that case.
3 Neither party argued what the effect might be of only one
debtor having filed a previous case; that is, even if the stay
terminated as to Mr. Acevedo, would it also terminate as to Ms.
Acevedo, who had not previously filed, when the home is listed as
being owned in joint tenancy with a right of survivorship. 	Doc
1, Schedule A. 	The Court need not consider the issue in light of
its disposition of the motion.
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re
Martin William Acevedo and
Stephanie Anne Acevedo,
Debtors. 	No. 13-12-11819 SS
MEMORANDUM OPINION ON MOTION
TO CONTINUE AUTOMATIC STAY
This matter came before the Court for a final hearing on
Debtors’ Motion to Continue Automatic Stay (doc 9)(“Motion”)
filed on May 8, 2012. 	Valley National Bank (“VNB”) objected to
the Motion. 	Doc 17. 	For the reasons set out below, the Court
grants the Motion. 1
Mr. Acevedo had one prior bankruptcy case pending in the
year before this case was filed. 2 	Consequently, pursuant to 11
U.S.C. § 362(c)(3)(A) the automatic stay would ordinarily
terminate, at least as to Mr. Acevedo, 3 in this second case on
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 1 of 15

-2-
the thirtieth day after its filing. 	Debtors moved to continue
the stay beyond the thirty days pursuant to 11 U.S.C. §
362(c)(3)(B).
The statutory sections cited above were introduced as part
of the Bankruptcy Abuse Prevention and Consumer Protection Act of
2005. 	See P.L. 109-8 (S 256)(April 20, 2005) 119 Stat 23 §
302(3) (“Discouraging Bad Faith Repeat Filings”). 	Section
362(c)(3)(B) provides:
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[.]
No creditors other than VNB objected to the Motion. 	The issue,
then, is whether this case was filed in good faith as to VNB.
Section 362 also contains a rebuttable presumption that a filing
is not in “good faith”:
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
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 2 of 15

-3-
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 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)(C) (Emphasis added.)
Section 362(c)(3)(C)(i)(I) is not relevant because there was
not “more than 1 previous case” in the preceding 1-year period.
Section 362(c)(3)(C)(i)(II) may be relevant. 	Subsections
(bb) and (cc) are not relevant because the Court never ordered
adequate protection in the previous case, nor was a plan
confirmed. 	VNB argues that the Mr. Acevedo failed to file
statements and schedules “as required by this title ... without
substantial excuse,” which is the ground set forth in subsection
(aa). 	As is discussed below, however, VNB ignores the
qualification to subsection (aa) that “mere inadvertence or
negligence shall not be a substantial excuse unless the dismissal
was caused by the negligence of the debtor's attorney.”
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 3 of 15

4This provision in the judgment does not prevent Debtors’
attempted retention of the Property. 	See 11 U.S.C. § 1322(c)(1):
Notwithstanding subsection [1322](b)(2) and applicable
nonbankruptcy law--
(continued...)
-4-
VNB also argues that section 362(c)(3)(C)(i)(III) applies
because there has been no change in financial circumstances after
dismissal of the first case, and that there is no ability of the
Debtors to perform fully a Chapter 13 plan. 	This will also be
discussed below.
Section 362(c)(3)(C)(ii) is not relevant because VNB did not
seek stay relief in the earlier case.
FACTS
VNB Exhibit 1 is a Default Judgment and Order of Foreclosure
(“Judgment”), filed June 17, 2009, in Valley National Bank v.
Martin Acevedo and Stephanie A. Acevedo (“Defendants”) in case
No. D-0101-CV-2009-00800 (1st Judicial District, New Mexico)
(“Lawsuit”). 	The Judgment provides that the lien of a Mortgage
dated May 3, 2004 and filed for record on May 7, 2004 in the
records of Santa Fe County, New Mexico (“Mortgage”) was a valid
first lien on the property described by the Mortgage (“Property”
or “Debtors’ Residence”). 	The Judgment also foreclosed any
right, title, interest or lien of the Defendants in the Property
and authorized the appointment of a Special Master and the sale
of the Property. 	The Judgment declared that VNB was the rightful
owner of the property. 4
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 4 of 15

4(...continued)
(1) a default with respect to, or that gave rise to, a
lien on the debtor's principal residence may be cured
under paragraph (3) or (5) of subsection (b) until such
residence is sold at a foreclosure sale that is
conducted in accordance with applicable nonbankruptcy
law[.]
See also Jim Walter Homes, Inc. v. Spears (In re Thompson), 894
F.2d 1227, 1231 (10 th Cir. 1990)(If a debtor files a chapter 13
petition before a foreclosure sale, he has a right to cure.);
Capital Realty Services, LLC v Benson (In re Benson), 293 B.R.
234, 239 (Bankr. D. Ariz. 2003)(A debtor’s right to cure a
default on a principal residence exists at least until completion
of the trustee’s sale, notwithstanding any state law that might
terminate that cure right earlier.)(Construing 11 U.S.C. §
1322(c)(1)). 	It is not disputed that the Debtors’ Property was
never sold. 	The Court need not decide at this stage, rather than
as part of the confirmation process, whether Debtors’ plan must
provide for full repayment of the entire debt within the five
year period of the plan based on Huntington Nat’l Bank v. Sproul,
116 N.M. 254, 257, 861 P2d 935, 938 (1993) (obligations
engendered by underlying note were extinguished and replaced by
the obligations of the judgment). 	Now that Debtors are assured
that the current case will at least continue to confirmation (a
preliminary hearing on confirmation of the plan is scheduled for
about six weeks from now), the parties and the Court can focus
specifically on what confirmation may require. 	This result
thwarts VNB’s attempt in effect to obtain denial of confirmation
at this early stage in the case, but does not preclude it from
fully airing its position at any hearing on confirmation. 	VNB
has objected to the Plan, including among the grounds for
objection the specific issue of what amount has to be paid over
the life of the plan. 	Doc 25. 	That would also be the context in
which to decide whether the attorney fees incurred by VNB are
reasonable in the context of section 506(b).
-5-
VNB and Defendants entered a “Forbearance Agreement”
(“Agreement”) on August 6, 2009 under which VNB agreed to forbear
exercising its rights under the Judgment provided that Defendants
perform obligations set out therein, including monthly payments
and a balloon payment in 2011. 	Defendants performed until
sometime in 2011 when they failed to make payments under the
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 5 of 15

-6-
Agreement. 	On November 30, 2011, Michael Padilola, Senior Vice
President of VNB executed an affidavit of default that cancelled
the Agreement and established a remaining balance due as of
November 9, 2011 of $ 115,273.97 and accruing interest at a
default rate of 10.25% per annum plus additional costs, expenses
and fees to be incurred by VNB until sale of the Property. 	VNB
filed this affidavit with a “Notice of Default and Intent to
Proceed [to sale]” in the Lawsuit on December 6, 2011. 	The
Special Master announced a public auction of the Property for
9:45 A.M. on January 11, 2012 at the Judicial Complex in Santa Fe
County, New Mexico.
Debtor Martin Acevedo testified regarding his financial
history, the circumstances surrounding the first Chapter 13
filing, his attempts to save it, and his refiling the current
case. 	The Court finds that substantially all, if not all, of his
testimony was not contradicted by VNB or on cross-examination,
and the Court makes the following findings regarding the Debtor
under the clear and convincing standard. 	Mr. Acevedo was cross-
examined by VNB’s attorney during which he freely admitted he had
filed bankruptcy to save his house/ stop the forced sale of the
Personal Residence. 	The Court found him to be totally credible,
honest, and well-intentioned. 	He never denied any liability to
VNB, never expressed any intention to avoid paying that debt, and
actively demonstrated that he intended to pay all creditors. 	The
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 6 of 15

-7-
Court finds that he was intelligent, but not financially
sophisticated or familiar with legal terms or distinctions (such
as distinctions between mortgage payments and forbearance
payments).
Mr. Acevedo purchased his mobile home in 1991. 	In 2004 he
acquired the land on which it sits. 	He did not borrow money from
VNB to obtain the land. 	Rather, he borrowed the money to build
additions onto the mobile home and to improve the property. 	The
property consists of about 3 acres. 	It now has a two-car garage,
a shed, and a basketball court. 	He believes it is worth
$250,000. 	In 2009, Debtor’s wife lost her job. 	To date, she has
not found new employment. 	Despite the loss of her job, Debtor
made payments to VNB throughout 2009, 2010, and 2011 until August
when he could no longer afford the payments. 	He attempted to
refinance because he understood his interest rate was 10.25% per
year, but was unable to because there was a negative mark on his
credit report from “Espanola National Bank.” 	Nick Vigil, an
agent of VNB promised to look into the Espanola National Bank
comment but never reported back to Mr. Acevedo. 	He then learned
that the residence was to be sold.
Mr. Acevedo testified that he learned of the impending sale
of his residence on December 11, 2011 when he received a letter
from VNB’s attorney. 	After that notice he received a telephone
message from “Triton,” that apparently offered assistance with
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 7 of 15

5The “papers” consisted of a three page voluntary petition
that on page 2 was signed by Christopher Yates, “Attorney for
Debtor”; but which on page 3 stated that the Debtor was not
represented by an attorney, was signed by Christopher Yates
stating that he was the foreign representative of the Debtor in a
foreign proceeding, and provided all information required of a
bankruptcy petition preparer for “Triton Law Group”, Christopher
Yates Petition Preparer but lacked Mr. Yates’ signature. 	The
“papers” also included Schedule D which stated that the Debtor
had completed a credit counseling session but did not have the
certificate, and a “verification of creditor matrix” that
consisted of one creditor: VNB.
-8-
his foreclosure problem. 	Mr. Acevedo had never heard of Triton
before, but called them back to see if they could help him. 	He
believed that they were a group of lawyers, and learned that if
he paid them $1000 they would help save his house. 	He sent them
the $1000. 	In return, he received a fax transmission with
“papers” 5 he had to deliver to the bankruptcy court with a $281
fee to stop the foreclosure. 	He did. 	At the hearing, he
admitted that he later learned the documents were not correct and
were incomplete, but took full responsibility for his filing the
papers and his ignorance. 	Mr. Acevedo had no prior experience
with bankruptcy matters and expected that if anything else were
required of him Triton would inform him. 	Rather, he received a
Notice from the court that his case would be dismissed for
failure to file statements and schedules. 	After receiving this
notice Debtor attempted to educate himself about the situation in
which he found himself, contacted the New Mexico State Bar and
attended a State Bar bankruptcy clinic. 	He then, pro se, filed a
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 8 of 15

-9-
handwritten “Payment Plan” that disclosed his take home pay, his
expected pay for the next month, and stated that he was
attempting to find part time work, without success. 	He promised
that he could start sending $650 a month on March 21st and every
month after that, and stated that that was all he could afford
after paying his living expenses. 	He also promised that, if he
found part time work, he would increase his payments. 	He
apologized for his delay in filing the “Plan” and thanked the
Court for its patience. 	Thereafter, he contacted his present
attorney who was unable to avoid the automatic 46-day dismissal.
On cross-examination, Mr. Acevedo testified that he had
never seen the Judgment and was not even aware that VNB had
obtained a judgment. 	He did not understand that the property had
been foreclosed on, and did not understand that he had entered a
“Forebearance Agreement”; rather, he understood that he agreed to
make payments to VNB. 	He was unaware of the provision for a
balloon payment due in 2011. 	He did not pay the balloon payment,
partly because he was unaware that he had to.
Mr. Acevedo was aware of the impending sale of his residence
in December 2011. 	He did not realize he had hired a bankruptcy
petition preparer, did not know what that was, and was adamant
that he had hired Triton attorneys to save his house. 	He
admitted signing the bankruptcy petition voluntarily, but the
Court finds that he had no understanding of what he was starting
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 9 of 15

-10-
when he filed the first petition. 	He admitted that he received
the notice of forthcoming dismissal if he did not file documents
within 45 days, but testified that he tried to learn what to do
and did his best but ultimately did not file the requisite
papers. 	When asked if his failures were “intentional or
inadvertent” he paused, then stated “I didn’t mean to do that
[not file].” 	When Bank’s counsel tried to get him to admit that
his failure was “inadvertent”, it became apparent that Debtor did
not know what “inadvertent” meant nor how to pronounce it. 	And
Debtor immediately acknowledged that the failure to file papers
timely in the first case was not his attorney’s fault. 	Despite
the testimony, the Court finds that the failures were totally out
of ignorance and misplaced trust in a bankruptcy petition
preparer that represented himself as an attorney and swindled Mr.
Acevedo out of $1000. 	He also was asked if he “messed up” and
truthfully answered “yes.” 	The Court finds that there was no
active attempt to evade or delay creditors in an unlawful way.
Debtor was exercising what he believed was his right to save his
home while paying VNB what was due on a payment plan.
On cross-examination Debtor also admitted that his expenses
were not entirely accurate. 	For example, a $600 yearly property
tax was omitted from the monthly expenses. 	VNB’s attorney also
focused on the omission from Debtor’s first schedule I the
listing of his daughter, although Debtor did list her in Schedule
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 10 of 15

6 Debtor testified that their 15-year old daughter has
access to health coverage free of charge to Debtors.
-11-
I filed in the current case. 	The Court finds the omissions not
material and certainly not intentional.
VNB’s attorney also argued that Debtors’ having no health
insurance or provision for health costs or emergencies was not
reasonable and was evidence of bad faith. 6 	The Court disagrees.
A good portion of the citizens in this country lack health
insurance and get by on a monthly basis by praying that they will
not suffer an expensive illness or injury which will force them
over the financial edge. 	If Debtors’ experience is that they can
(or must) manage without the good fortune of health insurance,
the Court will not declare that unreasonable.
Similarly, Debtor reduced his home maintenance expense on
Schedule J from the first case to the second. 	The Court finds
that if Debtors choose to defer maintenance on their house to
save it, that is not unreasonable or evidence of bad faith.
Debtor also testified that he no longer drives his car to work
but rides to town with his son. 	This perfectly explains the drop
in transportation expense, despite VNB’s protestations to the
contrary. 	And VNB argued that a food budget of only $200, rather
than the $300 listed in Schedule I in the first case, was
obviously not realistic. 	VNB specified these items in order to
show that Debtor’s financial situation had not changed but rather
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 11 of 15

7 Whether, in the circumstances of these two cases, Debtor’s
employing an attorney since the filing of the first case
constitutes a substantial change in either financial or personal
circumstances, particularly if Debtor had not hired an attorney
previously in his life, is a question the Court need not decide.
-12-
the Schedule I numbers had merely been gerrymandered to make it
appear that there had been a substantial change in the financial
circumstances. 7 	Whether reduced living expenses constitute a
substantial change in financial circumstances is another question
the Court does not need to decide in this case.
That is because Debtor testified that he now has obtained a
second job, part time, at which he can work 25 hours per week at
$10.30 per hour. 	At an average of 4.3 weeks per month, this
would generate an additional $1,107.25 per month (before taxes at
probably the lowest bracket possible) that would be available for
plan payments. 	This is significant, compared to the current
proposed plan payments of $175. 	Plan, Art. 1.1 (doc 6).
The Court also found the testimony of VNB’s witnesses, Dan
Maes, Vice President for commercial lending at VNB, and the
appraisal expert Paul Montoya, totally credible and professional,
but not probative of this Motion.
CONCLUSIONS OF LAW
1. 	It is not per se bad faith to use the Bankruptcy Code to
obtain relief specifically authorized by the Code. 	Goeb v. Heid
(In re Goeb), 675 F.2d 1386, 1391 (9 th Cir. 1982)(It was error
for the bankruptcy court to rely exclusively on the fact that
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 12 of 15

-13-
debtor would receive incidental benefits from chapter 13 in
finding bad faith.) 	Furthermore, even serial filings are not per
se bad faith. 	Downey Savings and Loan Ass’n v. Ketz (In re
Metz), 820 F.2d 1495, 1497 (9 th Cir. 1987).
2. 	Under the circumstances of this case, the Court finds that
although the Debtor, in fact, filed a bankruptcy petition in the
one-year before this case, he did not comprehend, understand, or
intend to do so. 	Rather, he was tricked into filing by a person
misrepresenting himself to be a lawyer on which he reasonably or
at least justifiably relied. 	He should not be denied bankruptcy
relief due to unintentional behavior caused by a third party.
3. 	Debtor is an honest, unfortunate debtor worthy of bankruptcy
protection. 	He is not the type of debtor that the Bankruptcy
Abuse Prevention and Consumer Protection Act, even with its anti-
debtor spirit, was passed to protect creditors against. 	Cf. P.L.
109-8 (S 256)(“Discouraging Bad Faith Repeat Filings”). 	Debtor
filed the petition in good faith.
4. 	A debtor is excused in Section 362(c)(3)(C)(i)(II)(aa) for
an attorney’s negligence. 	Debtor’s previous case’s dismissal was
caused by the negligence of the bankruptcy petition preparer.
Alternatively, it was caused by the bankruptcy petition
preparer’s fraudulent representations that he was an attorney.
Either characterization satisfies the requirement of subsection
(aa).
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 13 of 15

8 Art. 4.4 of the Plan provides for direct payment on the
debt to VNB. 	Doc 6.
-14-
5. 	Debtor’s reliance on Triton was reasonable (or at least
justifiable) in the circumstances.
6. 	Debtor’s acquisition of a second job demonstrates a
substantial change in circumstances justifying a continuance of
the automatic stay, at least to confirmation. 	Furthermore, VNB’s
appraiser valued the property at more than the debt,
demonstrating equity in the property. 	By definition, in a
Chapter 13 case filed to save a debtor’s home, the residence is
necessary for reorganization. 	This indicates that VNB could not
obtain relief from the stay at this time. 	Alternatively, it
demonstrates that VNB will be sufficiently protected by an equity
cushion until confirmation.
CONCLUSION
For the reasons stated, the Court finds that the Motion to
Continue Automatic Stay is well taken and will be granted by
separate order, subject to Debtors resuming monthly payments of
$847.50 beginning June 15, 2012 and continuing on the 15 th of
each subsequent month thereafter unless changed by Court order. 8
All of the objections of VNB are not well taken and each are
specifically overruled.
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 14 of 15

-15-
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	June 7, 2012
Copies to:
Michael K Daniels
PO Box 1640
Albuquerque, NM 87103-1640
Kelley L. Skehen
625 Silver Avenue SW
Suite 350
Albuquerque, NM 87102-3111
James Jurgens
100 La Salle Cir Ste A
Santa Fe, NM 87505-6976
Case 12-11819-t13 Doc 30 Filed 06/07/12 Entered 06/07/12 16:25:11 Page 15 of 15