IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
KOZINA and ANDREAS SOTIRAS, No. 94-11237
Debtors Kozina and Andreas Sotiras originally filed a Chapter 7 bankruptcy petition in which
they made no mention of owning an interest in real property in Greece. A few days before the
341 hearing, they amended their schedules to disclose an interest in the property. The trustee
arranged to sell the debtors' interest in the property for $10,000.00. The debtors then converted
the case to Chapter 13 and propose in their plan to pay $10,000.00 to creditors over 60 months.
Creditor Pauline Tasiopolos has objected.
Most of Tasiopolos' arguments have no basis in the law or are easily dealt with by simply
amending the plan to be a pro tanto plan rather than a fixed-dividend plan. The only real issue
the court can see in the case is whether the debtors have conducted themselves in good faith.
It is not bad faith for the debtors to use Chapter 13 to avoid liquidation of their assets. That
is a fundamental purpose of Chapter 13. So long as the debtors pay to the Chapter 13 trustee the
same $10,000.00 the Chapter 7 trustee would have realized for the estate, and they propose to
pay all their disposable income for three years, their plan should be confirmed. Contrary to the
arguments of Tasiopulos, there is no present-value discount involved for unsecured claims.
The true bad faith issue arises from the initial schedules, which failed to mention the property
in Greece. If the mistake was innocent and corrected by amendment before anyone else
discovered the omission, then there may have been no bad faith. On the other hand, if the
debtors amended the schedules only after they became aware that the trustee had been told about
the property, then there may well have been bad faith. The fact that the debtors used some
"paralegal" rather than attorney may give them a claim against the paralegal, but is not likely to
excuse their conduct.
If the court finds the debtors perjured themselves when they filed their original papers, then
their belated amendment to exempt a portion of the property will not be allowed. Matter of
, 672 F2d. 831, 833 (11th Cir.1982). If the exemption is not allowed, the Tasiopulos
judgment lien on the property in Greece cannot be avoided. If it cannot be avoided, then the plan
cannot be confirmed because it is predicated on avoidance of the lien. Pursuant to section
1325(a)(5)(B)(ii) of the Bankruptcy Code, the claim would be entitled to interest which the
debtors cannot afford.
The court will hold a further hearing on October 23, 1995, at 9:00 A.M. Direct testimony
shall be in the form of declarations filed and served at least 10 days before the hearing, with
declarants available in court unless the right to cross-examine is waived. If the court finds that
the debtors intentionally omitted the real property from their original schedules and filed the
amendment only after realizing that the trustee had learned about the property, the plan will not
be confirmed. If the court finds that the omission was innocent, it will consider such other
objections as Tasiopulos can clearly present to the court.
Tasiopulos is cautioned that at the further hearing the court will entertain no objection which
does not specify which subsection of section 1325 is the basis for the objection and does not cite
all relevant cases.
Dated: September 18, 1995 _______________________