A bank-initiated foreclosure proceedings on a property bequeathed to the debtor by his late wife. The superior court ruled for the bank, and both the highest state court and the United States Supreme Court denied further review. Thereafter, the debtor filed for Chapter 13 bankruptcy, representing himself pro se. During the case, the trustee objected to the confirmation of the debtor’s Chapter 13 plan because the debtor lacked regular income, among other deficiencies. The bankruptcy court also granted the bank relief from the automatic stay. The debtor later moved to recuse the presiding judge. The bank and the trustee later filed responses arguing that the debtor’s case should be dismissed and requesting that the debtor be barred from filing another bankruptcy case for two years. The debtor failed to attend the hearing regarding his motion for recusal, and the court denied it, dismissing the case altogether. Subsequently, the debtor appealed to the district court, arguing that the bankruptcy court erred in granting the bank relief from the automatic stay, dismissing his Chapter 13 case and related motions, and denying his motion for recusal and request for direct appeal.
In Clark v. Santander Bank, N.A., 670 B.R. 367 (D. Conn. 2025), the court affirmed the bankruptcy court’s rulings. 11 U.S.C. § 362(d) permits a court to grant relief from the automatic stay for cause, including where a party in interest’s property interest is not adequately protected. Section 362(d) provides that cause includes the filing of a bankruptcy in bad faith. Factors relevant in determining whether the debtor filed in bad faith include whether the filing was intended to frustrate secured creditors’ legitimate enforcement efforts, whether the debtor filed multiple bankruptcy petitions, and whether the petition was filed on the “eve of foreclosure.” Here, the court agreed with the bankruptcy court that the debtor filed for bankruptcy to prevent legitimate foreclosure proceedings. Therefore, it held that evidence of a bad-faith filing was sufficient to grant the bank relief from the automatic stay. Next, the court affirmed the dismissal of the debtor’s case because a court may dismiss a case filed in bad faith on an interested party’s motion or sua sponte. In determining whether a bankruptcy case is a bad faith filing, the court employed a totality of the circumstances test that considers factors such as serial filings, insufficient income to reorganize, use of the petition to resolve a two-party dispute, and use of the filing solely to obtain the benefit of the automatic stay. The evidence from the bankruptcy court showed that the debtor was unlikely to make regular payments, did not currently possess a source of income, and was ineligible for social security. Additionally, the debtor filed the Chapter 13 petition in bad faith, without making a legitimate effort to reorganize. Therefore, the district court affirmed the dismissal of the debtor’s Chapter 13 case. Addressing the final point of error regarding the debtor’s direct appeal and motion for recusal, the court found that the debtor failed to provide any legal or factual basis sufficient to warrant direct appeal. Regarding the motion for recusal, the court found that the debtor filed it “clearly in response to unfavorable rulings” entered by the bankruptcy court, which did not constitute a valid legal reason for recusal. Therefore, the district court affirmed the denial of the debtor’s certification of direct appeal and motion for recusal.
By Jace Brown [email protected]
Edited By Charlie Cole [email protected]
Edited By Callighan Ard [email protected]