Meyer v. Lepe (In re Lepe), 470 B.R. 851, 856–62 (B.A.P. 9th Cir. 2012) (Pappas, Dunn, Markell)

Not bad faith that plan strips wholly unsecured junior lien and pays at least 17.5% of resulting unsecured claims. Debtor was not balance-sheet insolvent. Filing solely to strip unsecured lien is not prohibited when other good-faith factors favor debtor. Citing Goeb v. Heid (In re Goeb), 675 F.2d 1386 (9th Cir. May 3, 1982) (Choy, Schroeder, Hatter), “in this circuit, a good faith determination in connection with chapter 13 plan confirmation cannot be based on any single factor or feature of a proposed plan, to the exclusion of review of all other relevant information. Importantly, it is of no moment that a single factor may be indicative of bad faith, or that a specific plan feature is not consistent with the ‘spirit of chapter 13’ or may indicate manipulation of the Bankruptcy Code. Factors indicating good and bad faith may not be considered in isolation, but must always be weighed against the totality of the circumstances in each case. . . . The Ninth Circuit has held that the debtor’s insolvency, while relevant, is not a requirement for finding that a debtor has proposed a plan in good faith in a chapter 11 case. . . . The Ninth Circuit has also held that a debtor’s chapter 13 plan may strip the lien of a creditor holding a claim secured by the debtor’s house where there is no value to support that lien . . . . Lepe’s amended plan therefore proposes to do only that which the Bankruptcy Code allows. As a result, the plan’s lien-strip provision, standing alone, cannot support a finding that Lepe lacked good faith.”

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