Order Denying Debtors' Motion to Convert

JANICE MILLER KARLIN, Bankruptcy Judge.

Debtors Frederick and Rosella Prins ("Debtors") move to convert their Chapter 7 case filed two years ago, in August 2014, to a Chapter 13, relying on 11 U.S.C. § 706(a).1 The Chapter 7 Trustee, Christopher Redmond ("Trustee" or "Chapter 7 Trustee"), objects, arguing that Debtors cannot convert their case because they are not eligible to be debtors under Chapter 13 as required by § 706(d). He argues Debtors are attempting to abuse the bankruptcy process and further delay the equitable administration of their Chapter 7 estate through conversion.2 Because a converted case would undoubtedly be subject to a dismissal for cause under § 1307(c) due both to Debtors' failure to act in good faith and their inability to consummate a plan that would allow them to retain their residence—their stated goal—the Court denies Debtors' motion.

I. Findings of Fact and Procedural History3

The main source of contention surrounding Debtors' bankruptcy filings concerns debts they owe for the purchase of their primary residence located in Leawood, Kansas. They purchased the home in December, 2013 for approximately $483,460. North American Savings Bank ("NASB") loaned Debtors $311,500 and the rest of the purchase money came from two sources: $162,534 from Mr. Prins's boss, Robert Balderston and $9,425 from Debtors. Debtors agreed to give Balderston a second mortgage to secure the loan, but Balderston failed to record the mortgage until almost nine months later, on September 5, 2014. Debtors had filed their Chapter 7 case eight days earlier.

Mr. Prins lost his job with Mr. Balderston a few months later—in April, 2014, and Debtors were unable to make the required payments of $2,810 and $2,000, respectively, owed to NASB and Balderston.4 Although Mr. Prins found another job within a few months,5 which paid an even higher salary than his job with Balderston,6 Debtors were unable to cure the delinquency then owed to NASB because it demanded Debtors cure the entire (then four month's) delinquency.

Debtors filed a Chapter 7 petition on August 28, 2014; their budget showed a negative $3,244 cash flow even though Mr. Prins was now earning gross monthly wages of $11,249. In their schedules, Debtors valued their home at $445,000 and listed NASB and Balderston as secured creditors holding claims totaling $473,397. Debtors claimed an exempt interest in the property under Missouri law— specifically RSMo § 513.430.1(3)7—but valued that interest at $0.00.8 Debtors also stated on Schedule B that they owned two cars—a 2011 Ford Explorer worth $28,000 and a 2007 Hummer H3 worth $15,000. Debtors listed both vehicles as exempt on Schedule C but, again, valued the exemption at $0.00.9 No party objected to Debtors' exemptions and they were thus allowed for the amounts claimed.

Beginning in October, 2014, the Chapter 7 Trustee made several requests for copies of Debtors' 2014 state and federal tax returns and informed Debtors they were not to dispose of any refunds until the Trustee had received the returns. Those returns were, obviously, not due until mid-April, 2015, so these requests appear aimed at insuring Debtors understood their duty to produce those returns when timely filed, and at insuring Debtors understood the estate was entitled to receive almost 8/12 of any refund.

Debtors received their general discharge on January 13, 2015. The Trustee continued to send Debtors requests for a copy of their 2014 tax returns through September, 2015; Debtors ignored those requests. Only after the Trustee was forced to file a motion to compel turnover of the returns—on September 3, 2015—did Debtors finally provide copies to the Trustee. The Trustee responded—the very same day he received the returns—that under a pro rata formula, Debtors were required to turnover $9,198.25 of the $13,989 refund.

Notwithstanding numerous reminders from the Trustee that they were not entitled to retain $9,198.25 of the refund, Debtors spent the entire $13,989. Mrs. Prins testified she opted to use the money to pay their sons' education expenses (in mid-October 2015) instead of turning over any portion to the Trustee. The Trustee continued to inquire about the status of the refunds and request the amount owed the estate, but Debtors continued to ignore his inquiries. The Trustee was forced to file yet another Motion to Compel, this time for turnover of the refund, due to Debtors' total lack of cooperation.10

Simultaneous to the above dispute over tax returns, both NASB and Balderston requested and received relief from the automatic stay so they could pursue their in rem rights against Debtors' Leawood property.11 NASB filed a foreclosure petition in state court requesting foreclosure of its mortgage (noting Debtors still owed the principal amount of $310,962.11) and an order of sale. An unopposed judgment was entered ordering a foreclosure sale with the proceeds going first to NASB and then to Balderston.12

On the eve of the sheriff's sale—October 27, 2015—Debtors filed another bankruptcy while their Chapter 7 case remained open for administration. The second filing, a Chapter 13 petition, was assigned to the Honorable Judge Robert Berger ("the Chapter 13 case").13

Debtors' Chapter 13 schedules were distinctly different from those filed in their Chapter 7 case less than a year earlier. First, Debtors now valued their house on Schedule A at $456,000, instead of $445,000, and listed $544,000 of debt secured by the house, up significantly from the value listed on Schedule A in their Chapter 7 case ($473,397). Second, Debtors now attempted to exempt their house under Kansas exemption laws (although it had been found non-exempt in their Chapter 7) and claimed an exemption of $81,000. Third, on Schedule D, Debtors listed NASB as a secured creditor with a $375,000 claim and Balderston with a $169,000 claim—adding the note that Balderston did not have a "valid mortgage, recorded in violation of the automatic stay."14 Fourth, during 2015, Debtors replaced their 2011 Ford Explorer with two used BMW vehicles—a 2007 328i valued at $7,714 and a 2010 X3 valued at $13,204. Finally, Debtors' Schedule I revealed Mr. Prins had a different employer than when he filed the Chapter 7 case—and that his net income from that employment was now $10,000 monthly.15 This Schedule I also reported that Mrs. Prins was now receiving Social Security income of $2,800 a month, although she testified $900 of that actually belongs to one or more of their children.16

Although fourteen months earlier Debtors had sworn they had a negative cash flow of $3,244, they now filed a plan in this new Chapter 13,17 calling for monthly plan payments of $5,813. The plan proposed to pay NASB $2,800 a month in post-petition mortgage payments while paying their pre-petition arrearage pro rata through the Chapter 13 Trustee, William Griffin. In the non-standard language section of paragraph 9(b) of their plan, Debtors stated: "There is a second mortgage on Debtor's [sic] home held by Robert Balderston. The mortgage was recorded on September 5, 2014 in violation of the automatic stay on their previous Chapter 7 filed on August 28, 2014. This lien will be avoided."18 Debtors also proposed to repay at $400/month the $9,198.25 refund they had improperly withheld from the Chapter 7 Trustee, $957 to three car creditors, and 100% to their unsecured creditors.

Both the Chapter 7 Trustee and Mr. Balderston objected to Debtors' plan. The Chapter 7 Trustee objected on the grounds that Debtors claimed their house as an exempt asset of the Chapter 13 estate when it remained a non-exempt asset of the still open Chapter 7 estate. He noted that because Debtors have no right, title, or interest in it, they could not propose to retain it. Balderston objected to Debtors' plan because it did not provide for the repayment of his lien. Additionally, the Chapter 13 Trustee filed a motion to dismiss because Debtors failed to make the required $5,813 monthly plan payments.19 By the time of the March 22, 2016 hearing on the objections to confirmation and motion to dismiss, Debtors were already over $23,000 delinquent in their plan payments, and another $5,813 plan payment was due in nine days.20

Debtors' counsel advised the Court at the hearing that Debtors preferred to deal with the issue surrounding Balderston's mortgage and potential equity in the house in their still-pending Chapter 7 case. As a result, Debtors agreed their Chapter 13 case could be dismissed.21

Within a few months of the dismissal, however, Debtors apparently had a change of heart and filed three motions in their Chapter 7 case. Again, that case remained open because the Trustee had assets to administer—specifically, the estate's portion of Debtors' 2014 refund and potentially Debtors' non-exempt residence if the Trustee determined the estate would benefit from its sale. Debtors' three motions requested orders from the Court: (1) vacating their discharge;22 (2) vacating the order granting relief from stay to Balderston;23 and (3) converting their case to one under Chapter 13 (although their counsel had expressly admitted the Chapter 7 proceeding was the better forum for adjudicating issues surrounding the Leawood real estate).24 This Court has recently denied both motions to vacate on procedural grounds.25 As to the third motion, however, the Court required evidence before deciding whether to grant Debtors' motion to convert.

At the trial, Stephanie Wright (an assistant vice president and default manager at NASB), William Griffin (the Trustee in Debtors' Chapter 13 case), and each of the Debtors testified. Debtors, who the Court found articulate and seemingly well-educated, testified primarily on the circumstances surrounding their two bankruptcy cases and their motivation for filing for bankruptcy relief—supposedly to save their home. Both admitted that they had spent the entirety of their 2014 tax refund (which totaled $13,989) on personal expenses when they knew a substantial percentage of it ($9,198.25) was an asset of their Chapter 7 estate and not theirs to spend. Debtors testified they hope to make a second Chapter 13 plan work, though they recognize that their plan payment would have to substantially increase to "between $6,200 to $7,000" from the $5,813 they were unable to pay under their last Chapter 13 case.26 In fact, although their prior Chapter 13 case was pending for five months, meaning they should have made payments for at least four of those months (approximately $23,252), the total Debtors paid during that entire plan was $2,762.50. And the Chapter 13 Trustee was required to return all but $158.84 of that to Debtors when their case was dismissed.

Debtors therefore retained over $23,000 during the pendency of their case and simply spent it. They saved nothing between the dismissal of their Chapter 13 case and the hearing on their motion to convert, admitting at trial that, at most, they might have $1,000 total savings.

Debtors did not produce at trial an updated budget (which most debtors provide in the form of amended Schedules I and J) to support their optimism that they can now pay $6,200-$7,000 monthly if allowed to convert. Nor did they submit to the Court a proposed Chapter 13 plan so the Court, the Trustees, or Mr. Balderston could analyze its feasibility.

The Trustee called NASB's representative, Ms. Wright, to testify about its records. She testified that between the time the loan closed in December, 2013 and the trial approximately 32 months later, Debtors made a total of two mortgage payments (on March 31, 2014 for the months of February and March, 2014). One other payment, made June 30, 2014, was returned due to insufficient funds. Thus, the March 31, 2014 payment was the last time NASB received any money on its loan. As of the hearing, the delinquency on NASB's loan had grown to roughly $80,000.27

Finally, Mr. Griffin—the Chapter 13 Trustee on the first Chapter 13 case and the person who would be the Trustee were conversion allowed—testified to the events that occurred in Debtors' previous Chapter 13 case. He also testified, after hearing Debtors testify to their albeit vague potential Chapter 13 plan and after hearing the testimony from the NASB representative, about the feasibility of a possible plan.

According to Mr. Griffin, and after a review of Debtors' prior Chapter 13 plan, Debtors would need to propose payment of the following over the remaining approximate 48 months to have a confirmable plan:

1. $80,000 delinquency to NASB;

2. the ongoing $2,810 mortgage payment to NASB (× 48 months = $134,800);

3. at least the value of the non-exempt real property over and above NASB's debt (if Balderston's lien can be avoided), estimated at approximately $70,000;28

4. $9,198.25 owed to the Chapter 7 Trustee;

5. payments on the three automobiles that Debtors' prior plan proposed at $957 per month; and

6. at least $2,500 in their own attorney fees.29

This sum would be on top of Debtors' monthly household expenses, which they reflected in their 2015 Chapter 13 Plan totaled $5,250 per month (excluding their house payment). Mr. Griffin testified that, based on his twenty six years experience as a Chapter 13 trustee, and Debtors' demonstrated poor performance in their recent Chapter 13, his opinion was that Debtors could not feasibly sustain a budget and plan payment that met that criteria.

II. Conclusions of Law

Debtors request the Court allow them to convert their two-year old Chapter 7 case to one under Chapter 13 so they may continue to occupy their home, attempt to avoid Balderston's mortgage and pay the value of his avoided lien to unsecured creditors, and cure the ever-increasing delinquency they owe NASB. A hearing to determine whether a debtor's estate should be administered under Chapter 7 or Chapter 13 is a core proceeding under 28 U.S.C. § 157(b)(2)(A), over which this Court may exercise subject matter jurisdiction.30

A. Standard of Review under § 706(a)

Section 706(a) states that a "debtor may convert a case under this chapter to a case under chapter 11, 12, or 13 of this title at any time, if the case has not been converted" previously. Subsection (d) continues: "Notwithstanding any other provision of this section, a case may not be converted to a case under another chapter of this title unless the debtor may be a debtor under such chapter." The Supreme Court interpreted these two subsections in Marrama v. Citizens Bank of Massachusetts31 to include an implicit reference to § 1307(c) and held that "a chapter 7 debtor may forfeit his right to proceed under Chapter 13 if the converted case would be subject to immediate dismissal or conversion for cause under § 1307(c)."32 Thus, the Court evaluates a motion to convert under § 706(a) based on what constitutes cause for dismissal or conversion under § 1307(c).33

Subsection (c) of § 1307 contains a non-exclusive list of eleven causes for dismissing or converting a Chapter 13 case.34 In Gier v. Farmers State Bank of Lucas, Kansas (In re Gier),35 the Tenth Circuit recognized bad faith (or a lack of good faith) as an additional "cause" under § 1307(c) to convert or dismiss a Chapter 13 case.36 According to Gier, in order to dismiss or convert a case under § 1307(c) for bad faith, courts should analyze the facts under a "totality of the circumstances" test.37 The Gier court adopted the Seventh Circuit's analysis in In re Love,38 which "provided the following nonexhaustive list of factors relevant to a § 1307(c) bad faith inquiry:

The Gier court stressed that the ultimate question is "whether or not under the circumstances of the case there has been an abuse of the provisions, purpose, or spirit" of Chapter 13.40

The Trustee has the burden of proving that Debtors lack the requisite good faith to convert their case under § 706(a).41

B. Application of the `Totality of the Circumstances' Test

The Trustee alleges the following facts support a finding that Debtors are attempting to convert their case to Chapter 13 in bad faith:

1. Debtors' Prior Chapter 13 Case

While a Chapter 13 plan's feasibility is not required to be shown at the conversion stage,42 the recent dismissal of a previous plan for failure to make plan payments can be a factor when determining whether a debtor seeks conversion in good faith.43 Debtors explained that their first Chapter 13 case failed because they misunderstood when they needed to make their first payment (they believed they needed to start payment some time in January, 2016, not within the required 30 days from the date of filing—by November 27, 2015). They also testified to an unknown clerical error with the income withholding order, causing Mr. Prins's employer not to withhold and pay over the monthly plan payment. Once Debtors realized Mr. Prins's employer was not making their plan payments, they then made one partial direct payment to the Chapter 13 Trustee of $2,762.50—almost $3,000 short of one full payment—in January, 2016.

But this explanation wholly ignores why, after realizing their plan payments were not deducted from Mr. Prins's paycheck, they elected not to make the required payments to the Chapter 13 Trustee. The employer's failure to withhold $5,813 from Mr. Prins's employment check means his check was $5,813 higher than expected in January and February and March, 2016.

After realizing the mistake, Debtors should have been able to make the payments directly. Debtors, however, made no effort to make a full direct payment to the Chapter 13 Trustee during the first three months of 2016 nor did they put the money aside so they could later use it to save their house. And they never corrected the alleged clerical error associated with the employer pay, since the Trustee never received a payment from that source, either. Instead, Debtors spent Mr. Prins's entire paycheck (plus the $2,800 Social Security benefit), including the amount they had promised to pay to the Chapter 13 trustee, for something besides their mortgage payments or insurance or property taxes.

While Debtors' misunderstanding of when they were to begin plan payments and their difficulty with the employer pay process are understandable, their inability to explain what they did with that money is not. The Debtors provided no credible testimony why they can or will do now what they chose not to do in the prior Chapter 13 case. They have had an opportunity to put their very substantial money where their mouths are. They now claim they want to make plan payments to pay off their creditors and remain in their home, but given an opportunity to spend their substantial income elsewhere, they have consistently taken that route. The Court has no faith they are sincerely motivated to make responsible decisions now.

Again, Debtors made $2,762 in plan payments during a time when almost $28,000 was due to the Chapter 13 Trustee. Debtors admitted their $12,800 a month projected income stream was accurate and uninterrupted during that time. Debtors either tremendously understated in Schedule J their true living and other expenses, or they are hiding where they are truly spending their income. Were the Court to allow Debtors' conversion, it would likely only further delay an inevitable dismissal or reconversion while negatively affecting Debtors' creditors, whose collection rights have already been essentially stayed for two years. It would also delay the Chapter 7 Trustee's recovery of the substantial 2014 refund Debtors have now withheld for almost a year.

As the impact a debtor's actions have had on his creditors is a factor the Court must consider under the Gier test, and the weight of evidence supports the Trustee's argument that Debtors will not be able to propose and/or consummate a confirmable Chapter 13 plan, the Court finds that Debtors' actions in their previous Chapter 13 plan display a lack of good faith.

2. Debtors' 2014 Tax Refunds

Debtors' total disregard of the Trustee's consistent inquiries regarding their 2014 tax returns and refunds also exhibits a lack of good faith44 and violates their duty to comply with Trustee requests under § 521(a)(3) and Federal Rule of Bankruptcy Procedure 4002(a)(4).45 The Trustee sent six requests for copies of Debtors' 2014 state and federal tax returns to both Debtors and their attorney—all of which were ignored. While Mr. Prins quibbled about whether he received each of the six Trustee email requests on which both Debtors were copied, he did not explain the following email from his own attorney dated June 15, 2015, almost three full months before the Trustee filed his Motion to Compel:

Thus, Debtors ignored their own attorney's plea to promptly perform their statutory duties. This caused the Trustee to expend estate resources to compel performance.

Debtors testified that they requested and received an extension to file their 2014 taxes and thus were unable to supply those returns to the Trustee until September 3, 2015—after the Trustee filed his motion to compel Debtors to provide copies of their returns. While it may certainly be true that Debtors received an extension, this does not explain why Debtors ignored (for months) their own attorney's and the Trustee's requests. This behavior not only violates Debtors' duties under the Code, but, in conjunction with Debtors' conduct during their Chapter 13 case, presents a pattern of inexcusable neglect of required obligations.

Additionally, Debtors do not dispute they are required to turnover assets of the Chapter 7 estate to the Trustee, including the estate's portion of tax refunds.47 Failure to do so can result in a denial or revocation of discharge and possibly criminal liability.48 While the state of Debtors' discharge is not at issue, the Court notes these consequences to highlight the importance of communicating with the Trustee and complying with requests for turnover of documents and estate property. So important are these duties that the entire purpose of filing a bankruptcy petition—to discharge debt—can hinge on their performance. Debtors have not been forthcoming with the Trustee or the Court and have created unnecessary administrative work and expense for the Trustee—both of which are factors the Court considers under the Gier test.

Debtors ultimately justified knowingly spending their entire refund, even that portion owed their estate, by claiming it went to pay education expenses for their children.49 The Court can appreciate that, in the face of immediate or unexpected expenses, turning over a tax refund may sometimes not seem a viable option. Some low income debtors opt to keep the lights on, pay prescription costs, or feed their children instead of turning over the estate's portion of their refund. The Prins, however, are not low income debtors.

Being well above-median-income debtors, the Prins failed to satisfactorily explain why they had to rely on their tax refund to pay their education costs in the first place. Debtors did not claim that the expenses were unexpected and, at the time Debtors opted to use their refund to pay the education costs, their household income was at least $12,800 per month50—Mr. Prins enjoyed relatively stable employment, making at least $10,000 a month, while Mrs. Prins received $2,800 a month in Social Security benefits. Additionally, Debtors elected not to make their mortgage payments, lowering their monthly expenses significantly. What, then, were Debtors doing with their substantial income, as they admittedly were not saving it for anticipated expenses (such as tuition)? The answer is still a mystery.

Based on Debtors' last submitted budget,51 which showed $5,530 excess income, the Court finds it unreasonable that Debtors did not have enough saved to pay their completely predictable education expenses. Debtors' inability—or unwillingness—to budget for this expense, and thus their resort to knowingly expending estate funds to which they were not entitled, leads the Court to conclude that, even after their general discharge, Debtors chose not to live within their means.

Not only do these circumstances reflect Debtors' disregard for the required sacrifices of the bankruptcy process, but they also suggest that Debtors' expenses are not accurately reflected in their November, 2015 budget—violating Gier's emphasis on accuracy and transparency. Debtors knew they were responsible to the estate for $9,198 and made no effort to discuss their purported budgetary issues with the Trustee or set up a repayment plan. Additionally, Debtors did not own up to their actions until long after they spent the money, further delaying the resolution of the problem and administration of the asset. The Chapter 7 Trustee had to file his Motion to Compel Turnover, again using estate assets, because Debtors deliberately failed to follow the rules. The Court cannot ignore Debtors' complete lack of communication or transparency with the Trustee over the course of their Chapter 7 case.

Gier also directs the Court to consider Debtors' motivation and sincerity and analyze whether Debtors are attempting to abuse the bankruptcy process. Overall, Debtors' actions regarding their 2014 refunds reflect a total indifference to their obligations and a complete lack of good faith to abide by the rules of the Code. Again the Court notes that Debtors claim they wish to repay their creditors while remaining in their home, but their actions instead display an inability or unwillingness to budget effectively and a tendency to conceal the truth about their income and expenses.

3. Debtors' Residence

The Court recognizes that converting from Chapter 7 to Chapter 13 to retain potential equity in a residence can be a legitimate use of the Bankruptcy Code.52 However, the Court must consider all the circumstances surrounding a motion to convert to determine whether debtors are able, in good faith, to retain equity in their house and pay what is required to their creditors or whether they, in bad faith, wish to continue living in their house while further delaying the administration of their estate.

The most significant evidence weighing against a finding that Debtors seek to convert in good faith is Debtors' inability, almost from the moment they purchased their home, to pay their mortgage creditors as promised. Debtors have made only two mortgage payments to NASB since they bought the house in December, 2013—nearly three years ago. There is no evidence what payments Debtors made to Balderston, even before they realized he had not properly perfected his mortgage. While Mr. Prins has had essentially stable income since July, 2014, and Mrs. Prins has received $2,800 every month in Social Security disability since then, they have been wholly unable or unwilling to use their considerable income to make house payments. Even when their Chapter 13 plan required them to commence payments that would, in part, have gone to NASB as payment on their first mortgage, they failed to make even a single full payment to the Trustee.

It is important to note, also, that were Debtors allowed to convert, they would have to pay the same claims they proposed, but were ultimately unable to pay, in their prior Chapter 13 case dismissed only a few months earlier. The only difference, in fact, is a higher arrearage owed to NASB, as Debtors have continued to withhold any payment on their first mortgage. They instead elected to spend $12,800 a month on other expenses while NASB was required to advance $21,738 in taxes and insurance—thus living rent free. NASB should not be required to wait any longer.

Debtors also predicate their conversion on the assumption that Balderston's mortgage will be avoided. Debtors testified that they are willing and able to pay whatever is necessary into the Chapter 13 estate to retain the value of their admittedly non-exempt home. Mr. Griffin testified that if the Court allowed Debtors to convert their 2014 Chapter 7 to a Chapter 13, and Debtors were successful in avoiding Mr. Balderson's lien on their residence, they would need to pay roughly $70,000 over the course of their Chapter 13 plan in order to remain in their home. Conversely, if Debtors are not successful in avoiding Balderston's lien, Debtors will be responsible for paying off any pre-petition arrears on that mortgage over the length of the plan.

The Court simply did not believe the Debtors when they testified they are sincerely motivated to save their house. Instead, the Court believes Debtors are motivated to delay as long as possible the day they are evicted for paying nothing to live in their home. As a result, this Court finds Debtors have, in bad faith, used their back-to-back bankruptcies, well timed to stop a foreclosure sale, and now coupled with this motion to convert, to manipulate their financial affairs to their sole benefit.

III. Conclusion

Courts have repeatedly noted that the "central purpose of the Bankruptcy Code is to give debtors a fresh start by discharging their preexisting debt."53 Also true, however, is that the Code "does not dole out this substantial benefit indiscriminately," and "the opportunity for a completely unencumbered new beginning is reserved only for the honest but unfortunate debtor."54 The Prins are not "honest but unfortunate" debtors.

Debtors have very high income, but opted not to discipline their spending to live within their substantial means. Debtors have been sending at least one child to private school, retained and purchased high prestige cars (two BMWs and one Hummer), and stayed in their high value home while not paying the mortgages. They sincerely want that high lifestyle, but they do not have a sincere motivation to pay for it. By ignoring requests by the Chapter 7 Trustee and failing to maintain their previous plan payments, Debtors have cost their estate and their creditors valuable time and money. Even now, Debtors are likely not complying with the Internal Revenue Code by opting not to withhold income taxes from Mr. Prins's wages while also failing to file or pay estimated taxes.

Debtors have spent all but $1,000 of their substantial income since their last failed attempt at paying their creditors through Chapter 13. They nevertheless ask the Court to allow them to try again at a payment plan. Debtors may genuinely wish to continue to live in their house for a few more months while they file a new plan—a plan doomed to failure based on their demonstrated spending habits coupled with the amount of debt they would have to pay—but that motivation is not accompanied by any demonstrated willingness to play by the rules and make required plan payments. Debtors had a very recent chance to prove they could cash flow a plan, and demonstrated they cannot.

The Court also notes that because Debtors earn above-median income, any plan would have to last 60 months. That means that a future Chapter 13 Trustee will need to annually review Debtors' tax returns for four more years to insure there is no increase in income justifying a plan amendment, to insure there is no decrease in income that could impair future feasibility, to insure Debtors are not incurring postpetition tax debt, and to insure Debtors are, in fact, timely complying with tax filing requirements. Debtors' demonstrated non-cooperation with the Chapter 7 Trustee regarding only one year's tax returns would suggest that the administrative burdens on a future Chapter 13 Trustee could be enormous.

As a result, under the totality of the circumstances, the Court finds that allowing these Debtors to convert their two year old Chapter 7 case to Chapter 13 would be an abuse of the provisions, purpose, and spirit of the Bankruptcy Code. It would simply further delay the administration of their Chapter 7 estate while rewarding Debtors' irresponsible financial decisions and lack of transparency. Debtors' motion to convert55 is therefore denied.

It is so ordered.