The debtor inherited the home from his deceased spouse. Before she died, the deceased spouse obtained a loan from another entity, which was evidenced by a note and secured by a deed of trust. The debtor defaulted on the note, and the creditor-initiated foreclosure proceedings on the home, which the creditor ultimately purchased at the foreclosure sale. The day after the foreclosure sale, the debtor filed for Chapter 13 bankruptcy. The creditor was the only one to file a proof of claim, which included a secured claim and delinquency amount. Shortly after filing the bankruptcy, the debtor brought an adversary proceeding, and the bankruptcy court dismissed all causes of action brought against the creditor. In the main bankruptcy proceeding, the debtor objected to the creditor’s claim, putting in the proposed plan that the secured claim was “fraudulent, void, and unenforceable.” The debtor also sought to confirm his proposed plan, which provided for $20 monthly payments over the course of 60 months to the trustee, but no plan payments to the creditor. The debtor had a negative disposable income of over $1,500 per month. The trustee moved for dismissal of the bankruptcy case for failure to propose and confirm a Chapter 13 plan.
In In re Wilkinson, No. 24-24334, 2025 WL 3237041, 2025 Bankr. LEXIS 3023 (Bankr. E.D. Cal. Nov. 19, 2025) (unpublished opinion), the bankruptcy court sustained the debtor’s objection to the creditor’s claim without prejudice but denied the debtor’s proposed plan and granted the trustee’s motion to dismiss the case. First, the court held the creditor’s claim was not in substantial conformity with Rule 3001 because it failed to show “a chain of assignments from the originator of the loan to itself.” Further, the creditor failed to present an “itemized statement of the principal amount and any interest,” preventing the claim from receiving the Rule 3001 presumption of validity. Fed. R. Bankr. P. 3001(c)(2)(A). Next, the court denied the debtor’s proposed plan because it was not feasible under 11 U.S.C. § 1325(a)(6) and failed to provide for the secured claim under § 1325(a)(5). The bankruptcy court found the debtor’s plan was not feasible because the debtor possessed (1) no disposable income, (2) provided no income to the creditor, and (3) curing the high delinquency amount was unfeasible. Finally, the court found that cause existed to dismiss the case because it was more than 14 months old, the debtor’s plan confirmation had failed, and the trustee’s dismissal motion had been pending for more than 14 months. Accordingly, the court sustained the debtor’s objection to the creditor’s claim without prejudice, denied the debtor’s plan, and granted the trustee’s motion to dismiss the bankruptcy case.
By Charlie Cole [email protected]
Edited By Landon Womack [email protected]
Edited By Kristin Meurer [email protected]
Edited By Hayden Mariott [email protected]