Reversing In re Puffer, 453 B.R. 14 (D. Mass July 8, 2011), the First Circuit Court of Appeals said that a “fee-only” Chapter 13 plan (i.e., a Chapter 13 plan under which the only creditor receiving significant payment is the debtor’s attorney) is not necessarily proposed in bad faith for the purpose of Code §1325 (a)(3), nor is a Chapter 13 case necessarily filed in bad faith for the purpose of Code §1325 (a)(7) because the debtor proposes a fee-only plan. While fee-only plans should not be used as a matter of course, the court said, there may be special circumstances, albeit relatively rare, in which this type of odd arrangement is justified. The judge concurring in the judgment said that he would leave application of the test entirely to bankruptcy judges instead of prescribing a rule requiring “special circumstances” limited to “relatively rare” instances. In re Puffer, —F.3d—, 2012 WL 954860 (1st Cir., March 22, 2012).
Chapter 13- Confirmation of plan- Good faith- Fee-only plan
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