Filing in BAD faith

[Lisamlacy]

Just curious...what are some key points or real red flags to prove someone is filing in "bad faith" and have their bk dismissed with or without predjudice? Does anyone know a good link to any articles or have any good info themselves? My attorney is going after my ex for filing on my divorce settlement in bad faith and I just want to know in general how bad faith is usually proved. It seems like somewhat of a grey area from what I have read.

[tigergem]

Well, this is my understanding of it.

First, look at the definition of bad faith:

Intention to mislead or deceive; conscious refusal to fulfill some duty. Implies active ill will, as opposed to negligence. Bad faith is not bad judgment; it requires conscious wrongdoing.

It is my understanding that the Bankruptcy courts employ no particular test to determine bad faith; rather, they use their equitable discretion to apply several tests and to examine several key factors.

A finding of bad faith is based on the facts. The court inquires into the "totality of circumstances" to determine whether the purposes of the Bankruptcy Code would be furthered by permitting the petitioner to avail itself of the protections of bankruptcy, or whether the petition was filed with an intent to abuse the judicial process and the purposes of reorganization.

A plan is deemed to have been proposed in bad faith if there is no realistic possibility of successful reorganization.

With respect to subjective bad faith, the courts have identified several recurring but nonexclusive fact patterns from which bad faith may be inferred. The aim of the subjective bad-faith inquiry is to determine whether the petitioner's real motivation is to abuse the reorganization process and to cause hardship or delay to creditors by resorting to the bankruptcy process.

However, because the inquiries are factual and based on the totality of the circumstances, and because the courts and judges vary in their degree of pro-debtor leaning, it is often difficult to predict the outcome of bad faith decisions.

Sorry, I don't remember where I found that information, but I looked it up when the Trustee accused me of acting in "bad faith" by not submitting requested documents he had requested. I was rather insulted because the error was on the part of his staff, failing to "check off" that the documents were received. So the matter was resolved, but it is clear that "bad faith" can be asserted for almost any reason at all.

[lrprn]

Just curious...what are some key points or real red flags to prove someone is filing in "bad faith" and have their bk dismissed with or without predjudice? Does anyone know a good link to any articles or have any good info themselves?

Here's a link to a thorough discussion of the common ways bankruptcy fraud is committed with the red flags that point the trustee to suspect that fraud is involved - http://www.crfonline.org/orc/pdf/ref11.pdf . Happy reading!